In The Navy: A Look at U.S. Naval Production
The US is Falling Behind in Navy Production
Welcome back to Sullivan CapitalMap — where we aim to help you analyze more and understand better by cutting through the noise with independent geopolitical and financial insight.
The Silent Crisis in Drydock:
While headlines are dominated by America’s high-tech race with China and defense budgets that break records annually, a quieter yet consequential crisis is brewing below the surface—literally. The United States Navy is falling dangerously behind schedule in producing the ships and aircraft carriers it needs to maintain global maritime dominance. The delays in the military-industrial complex's ability to deliver naval vessels are no longer just a bureaucratic inconvenience—they are now a structural weakness with far-reaching geopolitical and economic implications.
The Numbers: Billions Spent, Years Behind
The U.S. Navy currently has a publicly stated goal of maintaining at least 355 manned ships, a benchmark authorized by Congress and deemed necessary to compete with rising Chinese naval power. As of mid-2025, the Navy fields just 292 deployable battle-force ships, a net increase of only six ships since 2018. Worse still, the average delay for large surface combatants exceeds 18 to 24 months, and for aircraft carriers, the delays are stretching past 36 months.
Take the USS Gerald R. Ford class supercarriers. The first ship of the class was commissioned in 2017 but did not complete full deployment readiness trials until late 2022, nearly five years behind original projections. Meanwhile, USS John F. Kennedy and USS Enterprise have also suffered cascading delays due to supply chain issues, labor shortages, design flaws, and funding shortfalls—despite cost overruns exceeding $13 billion per vessel.
A June 2025 GAO report found that over 70% of the Navy’s shipbuilding programs are either over budget, behind schedule, or both.
How Did We Get Here?
1. Over-consolidation and Underinvestment
Post-Cold War defense consolidation led to a military-industrial ecosystem where just two major U.S. shipyards—Huntington Ingalls and General Dynamics Bath Iron Works—handle the majority of Navy shipbuilding. This duopoly stifled competition, weakened innovation incentives, and introduced systemic fragility. When a labor strike or supplier delay occurs, the ripple effect can last years.
2. Workforce and Skills Drain
Skilled welders, naval engineers, and maritime systems integrators are in short supply. The U.S. has lost over 20% of its skilled defense shipbuilding workforce since 2000, exacerbated by retirements and underinvestment in vocational training. Even with aggressive recruitment, onboarding and upskilling new labor takes years—not months.
3. Supply Chain Globalization and COVID-19 Legacy
Despite its status as a defense priority, U.S. shipbuilding is deeply entangled in global supply chains. Components like advanced turbine blades, radar systems, and specialized steel often come from a limited set of foreign suppliers. The aftershocks of COVID-19 and Russia’s war in Ukraine have created backlogs in essential components ranging from propulsion to sensors.
Raw Materials Bottlenecks: Steel, Semiconductors, and the Rare Earth Chokehold
At the heart of every warship and aircraft carrier lies a dense ecosystem of raw materials—everything from ballistic-grade steel to lithium, rare earth magnets, and advanced semiconductors. The U.S. naval manufacturing delay is not just about workforce and logistics—it’s also a story of strategic materials scarcity and sourcing vulnerability.
1. Specialized Steel and Titanium
Modern naval vessels require high-strength, corrosion-resistant steel, often in specialized formats like HY-80, HY-100, and HY-130—used in submarine hulls and carrier decks.
The closure of Allegheny Technologies' steelmaking in 2020 removed a key domestic supplier.
The lead time for naval steel orders now averages 12–18 months, up from 6–9 months in 2019.
Titanium, essential for armor and launch systems, is largely sourced from Russia and Kazakhstan, both increasingly unreliable.
2. Microelectronics and Semiconductors
Modern ships are data-intensive platforms requiring robust electronics:
The Navy relies heavily on legacy 28nm and 45nm semiconductors no longer favored by commercial producers.
The U.S. is over 75% reliant on East Asian chip manufacturing, notably in Taiwan and South Korea.
Domestic fabs funded by the CHIPS Act won’t be online at scale until 2027–2029.
3. Rare Earth Elements and Magnets
Electric propulsion systems, sonar, missile actuation, and radar depend on rare earths:
The U.S. produces only 15% of its rare earth magnet needs domestically.
China refines over 80% of global rare earths, even when mined elsewhere.
U.S. mining projects face permitting delays, and refining capacity remains nascent.
4. Copper, Cobalt, and Lithium
These underpin naval electrification, communications, and energy systems:
Cobalt and lithium mostly come from DRC and Chinese-owned refineries—a long-standing security concern.
Trump’s 2025 tariffs on copper imports (now at 50%) have raised domestic shipbuilding input costs by 5–8%, depending on class.
Geopolitical Consequences: Shrinking the American Ocean
The U.S. Navy plays a foundational role in securing global commerce. Nearly 90% of world trade travels by sea, and America has historically guaranteed open sea lanes—particularly through chokepoints like Hormuz, the Bab el-Mandeb, and the South China Sea. That guarantee is now in question.
China fields the world’s largest navy by ship count—over 370 ships, adding vessels 2–3x faster than the U.S.
U.S. freedom of navigation operations (FONOPs) have fallen by 20% since 2021, due in part to asset shortages.
In the Red Sea, naval strain was evident during Operation Prosperity Guardian, where UK and French ships contributed more tonnage than the U.S. for the first time in decades.
Allies are adjusting:
Japan and Australia are increasing their own naval procurement.
India is doubling its shipbuilding budget and pushing forward blue-water ambitions.
Even NATO partners are shifting procurement toward European builders due to U.S. delivery uncertainty.
Economic Fallout: Supply Lag and Strategic Drag
Naval shipbuilding is not only a defense issue—it’s a cornerstone of U.S. industrial strategy:
The Congressional Budget Office projects U.S. naval procurement spending to exceed $30 billion annually through 2035, yet deliver fewer ships than the Cold War peak.
Foreign buyers of U.S.-made naval equipment have declined 17% since 2020, with nations like the Philippines, Indonesia, and Egypt pivoting to South Korean and Italian shipbuilders.
U.S. defense primes now face political pressure to prioritize speed over innovation, risking long-term technological leadership.
Allies in the Waiting Room:
NATO and Indo-Pacific partners remain aligned with Washington in strategic terms—but confidence in U.S. naval capacity is wavering:
France and the UK are deepening bilateral maritime operations, investing in their own nuclear deterrent capacity.
AUKUS timelines for Australia’s submarines are now in doubt, with Congress questioning whether U.S. yards can deliver on time.
Canada and Japan are pursuing domestic anti-submarine and missile-defense programs instead of relying on U.S. platforms.
Conclusion: From Arsenal of Democracy to Bottleneck of Bureaucracy?
The U.S. still possesses unmatched naval technology and blue-water power projection. But without urgent reforms to the shipbuilding ecosystem—diversifying supply chains, revamping labor pipelines, expanding shipyard capacity, and ensuring steady funding—America risks losing its maritime edge not to war, but to inertia.
And raw materials are the backbone. Without secure access to the steel, semiconductors, rare earths, and batteries that drive the modern fleet, even the world’s largest defense budget can’t buy readiness.
In a multipolar world defined by contested sea lanes and coercive geoeconomics, naval strength is not just about ship count—it’s about delivery, deterrence, and durability. The clock is ticking, and the tide may not wait.
Sullivan CapitalMap
Independent intelligence at the intersection of finance, strategy, and geopolitics.