Can the American military maintain deterrence in East Asia without fixing its shipbuilding? The U.S. Navy’s fleet is rusting and shrinking, while China’s grows. Last week, new data showed Chinese shipbuilding again accelerating relative to American, with 54 percent of global output, up from 35 percent a decade ago. “All of our programs are a mess,” said Secretary of the Navy John Phelan before the Senate. Chinese military planners may conclude it is time to risk their fleet against America’s. Without strong shipbuilding, the Pentagon may hesitate to commit a fleet it cannot regenerate.
Into this tense moment steps a new generation of political and industrial leaders. Tech and finance executives now leading in the Pentagon are laying siege to underperforming shipbuilding programs. From industry, a new Silicon Valley-backed company seems to charge into the breach of maritime defense tech every day. But most of these companies offer software rather than steel.
Traditional shipbuilders seem skeptical of new entrants who promise to transform the industry. None of them has yet built a ship. This sentiment echoes the feelings of the Pentagon’s chief weapons buyer two years ago, at the height of the artillery ammo crunch in Ukraine: “The tech bros aren’t helping us.” Traditional ammo factories fed Ukrainian shell hunger, as Cold War shipyards, not new entrant tech companies, generate the U.S. fleet.
I am one of those new entrants, as co-founder of a shipbuilding and technology company making autonomous ships for the Navy. Although some might label me a “tech bro,” I work alongside shipbuilders every day. Because our work straddles the tech and shipbuilding worlds, I see the skepticism identified above. But I also see opportunity.
Shipbuilders are right that you can’t “just do it differently” as some tech executives opine on conference panels, wooing investors with talk of revolutionizing American shipbuilding. They know that when you go to build a ship, you quickly run into the physics of bending steel and laying down a keel. Shipyards already do this in the most efficient way they can. Even with a factory of the future to assemble ships, lead times for most maritime industrial hardware run 6–18 months and depend on one to two suppliers for the engine or propeller you need.
Defense tech entrepreneurs, shipbuilders, and acquisition reformers have a lot to accomplish together. Yards are digitizing. The Pentagon is adapting. But neither will move with blistering speed.
Cracks in the Hull: The Root Causes of the Shipbuilding Crisis
The core weaknesses that drove America’s shipbuilding industry to this vulnerable moment will not suddenly recede. However, three of them can be attacked by the right techno-shipbuilding teaming. Supply-side industrial fragility can be addressed by tech-centric productivity increases, while leadership from Pentagon process hackers and bold bet takers can continue to chip away at the cultural conservatism and acquisition paralysis holding back America’s ship output.
Industrial Fragility
With fewer yards, a shrinking workforce, and fragile supply chains, the U.S. industrial base to build ships has simply atrophied. Shipbuilders like Huntington Ingalls are training new welders. The Navy is so desperate for workforce it is funding an ad campaign to make welding cool again. Where tech companies can help: increasing productivity per worker.
Enter software promising to transform shipbuilding with a fully digitized industrial operating system, such as the much-hyped Warp Speed (with which I have no relationship). But software isn’t bending steel. Welding automation has been slowly gaining adoption. When I visit metal shops, I see it occasionally, and for specific tasks. Some universities tout 3D printed ships, but impact seems limited to prototyping and components.
When tech companies confidently talk of new yards solving America’s shipbuilding crisis, existing shipbuilders often wonder what exactly can be done differently, and what would be duplicative. New shipyards don’t add capacity, because existing facilities are underutilized and there are no more workers. So goes the argument. None of the defense tech entrants (mine included) who say they’re building medium-to-large ships has publicly displayed one.
However, a “greenfield” yard built on untouched land would offer a fresh layout and start with high levels of automation — such a yard could offer higher productivity than a traditional, similarly manned and capitalized yard. Announcements of futuristic shipyards and fresh investment bring energy that surely helps the space.
Acquisition Paralysis
Traditional shipyards also doubt that defense tech firms can unjam or accelerate a broken Navy buying system. The Naval Sea Systems Command’s ship programs are a mess. The Navy’s requirements process is a core problem industry cannot fix. Ships that make it from requirements to acquisition face a gauntlet of drawing reviews, technical warrant holders, and contracted consultants paid by the hour, or by the comment, to review designs. The Navy is paying and promoting its people to make shipbuilding harder.
Here, the fresh leaders in the Pentagon are industry’s greatest hope. Traditional shipyards are accustomed to dogmatic rulesets emanating from the Washington Navy Yard, but tech executives have little patience for rules that slow their product velocity. Tiny defense tech firms like mine are not going to fix how the Navy buys ships, but we might just be the first to sell into a process with commercial standards for a warship.
Defense tech firms, unlike traditional yards, were forged in the crucible of acquisition reform. New playbooks to sell hardware into the Pentagon are in execution mode. While shipbuilders are incentivized to follow cost-plus contracts to the letter, tech entrants are rule benders and invest up front to create the future.
Cultural Conservatism
If yards are somewhat conservative, they are at least rational. The Navy, however, is conservative to the point of mission paralysis. It is still buying few new capabilities, even those proven in combat and easily produced.
The Navy doesn’t only need big steel ships, but its budgets belie this fact. Ukraine, without a single warship, has decimated Russia’s once-mighty Black Sea Fleet. Over twenty companies — these range from startups to primes — make autonomous speedboats like those used in Ukraine.
Defense tech firms and shipyards together can offer the Navy a lot on smaller ships. Unmanned ships look like the next big Navy program to kick off. In a risk-averse Navy, the tech bureaucrats buy must work, reliably, if admirals and congressional committees are to get on board. Some orders will likely go to small and medium shipyards — yards experienced and equipped in the right size range for steel and aluminum. Today, six specialized shipyards produce almost all the Navy’s ships. But many more can enter the fray if the Navy starts ordering 100-to-200-foot unmanned ships. Ships of this form factor are what most of America’s commercial yards prefer to build — but these lower-tech yards will need defense tech partners to build the autonomous future fleet.
The Navy’s cultural conservatism favors exquisite, proven capability that only a few yards can produce. But together, shipbuilders and defense tech can build the future fleet and grow the defense industrial base.
Speed and Talent
“History punishes the slow,” wrote Ryan Evans when launching this publication. Shipbuilding may be slow, but in all the ways it is, small tech firms like to be fast. As smaller organizations with different culture and incentives, speed is built into their code.
Tech firms also offer talent. They’re bringing highly capable engineers from software, robotics, and aerospace into the maritime industrial column, part of a broader trend in America’s highly capitalized and automated factory workforce. The first engineers at Blue Water previously built Roombas, warehouse robots, and autonomous mining vehicles — now they’re building a ship.
Reality Check the Tech Squad?
Visions of greenfield yards adding tens of percentage points to U.S. shipbuilding capacity will face limitations imposed by physics. It takes a certain amount of steel to build a ship. It takes a certain number of hours to weld that steel and run cable through it. Tech that enhances shipyard worker productivity should be encouraged (and probably subsidized by the federal government). But there is no room in shipbuilding for handwaving about building hardware differently. Yards with sophisticated plants and processes should highlight bad — and especially made-up — economics when they exist.
Digitizing shipyards further will also take time. Shipyards are capitalized over decades-long cycles. Their workers are trained slowly, and many are old. Taking paper instructions to tablets — this will take time. Training more workers and making existing workers more productive — this is a generational challenge. It will take decades. Software won’t eat steel yet, but it is doing so, slowly.
Austin Gray is the co-founder and chief strategy officer of Blue Water Autonomy, a defense-first builder of autonomous ships. He previously worked in the Kyiv Engineering Corps and served in the U.S. Navy as an intelligence officer. He holds degrees from Davidson, MIT, and Harvard.
Image: Released to U.S. Navy, courtesy of Huntington Ingalls Industries.
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