Posted on August 20, 2025
Key Points and Summary – The United States Navy’s industrial base is facing a full-blown crisis, threatening America’s status as the world’s dominant naval power.
-Decades of unstable funding, aging infrastructure, and overly complex designs have trapped the Navy in a “doom loop” of maintenance backlogs and new-construction delays.
-This has shrunk the U.S. fleet to its smallest size since before WWII, while state-subsidized Chinese shipyards produce modern warships at a pace not seen in generations.
-Without urgent, sweeping reforms to modernize its shipyards and streamline production, the U.S. risks falling irreversibly behind its primary global competitor.
The US Navy Is Losing the Warship Race to China—And It’s a National Crisis
The United States Navy is in a race that it cannot afford to lose—but one that it is losing anyway.
Legacy costs, stovepiped maintenance depots, aging infrastructure, and a workforce stretched to the breaking point have left America’s domestic shipyards unable to keep up with the requirements of modern naval production.
Years of maintenance backlogs have led to serviceable ships being laid up or even prematurely retired, as much-needed new-construction warships take years to enter the fleet—if they ever make it there at all. This has created a new-construction and delayed-repair “doom loop,” a vicious cycle in which delivery of new ships is slowed by bottlenecks that keep older ones out of service, thus steadily eroding both fleet size and readiness. The statistics are stark: even the Navy’s best programs are years behind schedule; submarine output hovers at a few per year, far short of what is needed to meet US and allied commitments; and new destroyers, frigates, and amphibious ships routinely come in billions over budget and riddled with defects and work stoppages. The result is a fleet now as small as it has been at any time since before the Second World War.
Paced Out By Near Peer
Meanwhile, Chinese state-subsidized shipyards—unencumbered by many of these cost drivers and often with twice as many workers—are cranking out modern, combat-ready warships at a scale and tempo the United States has not seen in generations. This disparity is not just a matter of maintaining ship numbers, but a question of whether Washington still has the industrial base to support America’s position as the world’s dominant naval power. Without urgent, whole-of-government action to reverse these trends, the answer will soon be an unequivocal “no.”
Long-Term Growth Goals for the US Navy
One obvious reason for this malaise is the political short-termism with which the Navy’s shipbuilding budget is managed. Programs are often initiated, altered, delayed, or canceled in response to shifting political pressures rather than strategic needs, leading to constant cycles of hiring and layoffs that erode institutional expertise.
Without multi-year procurement stability, there will be no new investment in the machinery, training, or expanded capacity required to accelerate delivery. In its current state, even the most efficiently run shipyard will inevitably be wasteful. Predictable, long-horizon funding is the prerequisite for any recovery and the first thing Washington has not provided.
Equally corrosive is the Navy’s preference for complex, bespoke ship designs that try to cram every possible desired capability into a single platform. The end result of this “gold-plating” tendency is a steady diet of ships that are so difficult and expensive to build, maintain, and modernize that they cannot be produced at scale.
China has developed an iterative approach to ship design that allows the gradual integration of new technologies and standards across successive production runs without impeding the build cycle. If the US Navy continues to fetishize novelty at the expense of repeatable manufacturing efficiency, its shipyards will never emerge from their spiral of delay and cost escalation.
Repairing the problem will require more than just adjusting the acquisition policy. It will require a wholesale cultural shift inside the American naval-industrial complex. Yard modernization must move from budgetary afterthought to strategic imperative.
Facilities need to be retooled for modular construction and digital integration, where component parts are built in parallel and assembled in highly precise engineering blocks. Automation, data-driven workflow management, and cross-training of the workforce are not luxury requirements—they are the prerequisites for regaining any kind of competitiveness. This will mean breaking with the slow, craft-heavy build methods that have come to define the Navy’s major yards over decades.
Looking Ahead
The Trump administration has taken the first steps toward exploiting allied industrial power to close the gap, most visibly in the awarding of US Navy maintenance contracts to South Korean yards. In Ulsan, HD Hyundai is set to overhaul Lewis-and-Clark-class dry cargo ship USNS Alan Shepard this fall, bringing to bear techniques that have made South Korean shipbuilding a global standard for speed and efficiency.
Such partnerships should be expanded, not as a replacement for American yards, but as a means of infusing them with new practices, training methods, and management models. The acquisition of Philly Shipyard by South Korea’s Hanwha Group in September, bringing new capital, automation, and export-oriented discipline to its facilities, should serve as a model for such revitalization.
While the headlines and the angst rightly focus on capital-ship programs, the Navy must also come to terms with the need to scale up the production of affordable, rapidly produced auxiliary and logistics ships. The Next-Generation Logistics Ship program, slated to begin procurement in 2026, is an opportunity to put in place a modular approach that will allow the fleet to be supplied and sustained at range in a contested environment. These ships will not win battles on their own, but without them, no high-end combatant can survive far from land. Delivering them on time and in quantity will require Washington to think of auxiliary shipbuilding as a core mission, not a necessary but secondary concern.
Reform must go further and include how the Navy thinks about its own industrial workforce. Skilled shipbuilders are not interchangeable cogs or even labor; they are the living capital of the fleet. Yet decades of cyclical layoffs and poor retention planning have hollowed out this core. The US government must make naval shipbuilding a profession with a clear, secure career path, supported by federally backed training pipelines that can replenish skills at every level from welders and electricians to systems engineers and project managers. The alternative is permanent dependence on an overextended and aging workforce.
None of this will matter, however, without a strategic concept that links industrial capacity to operational requirements. The Navy’s shipbuilding plan must be based on what the fleet actually needs to deter and, if necessary, fight in the Western Pacific—not on an abstract force structure goal that’s divorced from the realities of production. Washington should instead adopt a tiered approach, with high-end combatants built in predictable, repeatable batches; mid-range multipurpose ships with an emphasis on speed and modularity; and auxiliaries churned out in quantity to keep the fleet forward deployed. Such an approach will not keep pace with China’s shipbuilding efforts in raw tonnage, but it will put the Navy in a position to field a force optimized for sustained, real-world operations.
Some will say this is all too ambitious, that the political will for such reforms will not be sustained. But the costs of the alternative are far greater. If the US Navy continues on its current trajectory, it will enter the 2030s with a fleet too small, too old, and too fragile to contest sea control in its most vital theaters. The result will be an irreversible shift in the balance of power, one from which the United States may never recover. China does not need to win a war or a single battle to achieve its objectives. It only needs to convince the world that America cannot build ships fast enough to fight.
The truth is blunt. America’s naval future will be decided not on the waters of the South China Sea or the Taiwan Strait but in the dry docks and fabrication halls of its shipyards. If Washington cannot marshal the discipline to build quickly, in quantity, and with ruthless efficiency, then no war plan, no alliance, no technological advantage will matter. China understands this and is acting accordingly.
The United States has the industrial capacity, allied networks, and financial means to close the gap, but only if it stops pretending this is a problem it can manage on the margins. Shipbuilding is now the front line. Win it, and America retains its position as the world’s leading maritime power.
Lose it, and the US Navy will become a cautionary tale about how great powers die at sea.
