Ships for America

This piece was originally published in Arena Magazine.

Most stories about American industrialism have turned from inspirational myths into cautionary tales. One such story is that of the New York Shipbuilding Corporation in Camden, New Jersey. Founded in 1899, New York Ship grew to become the largest shipyard in the world by 1917. World War I sparked such a shipbuilding boom that the War Department had to fund a new city — Yorkship Village — just to house the labor force for New York Ship; it was the first federally funded planned community.

By the Second World War, New York Ship employed 47,000 across a 160-acre site along two miles of the Delaware River. What started as a factory had become an entire economy built to power the largest and most productive shipyard on Earth. New York Ship delivered 670 merchant and naval ships during its life, including three nuclear submarines and even the first nuclear-powered merchant ship.

By the end of WWII, America’s fleet represented 50,000,000 deadweight tons — a measure of total carrying capacity — two-thirds of global tonnage. But after the war ended, the burden of upkeep for such a large fleet felt unnecessary, leading the US to immediately start mothballing and scrapping ships rather than maintaining them. The Cold War sustained demand for specialized naval work, like nuclear submarines and carriers, but that work concentrated in a select group of dedicated yards. Meanwhile, commercial shipbuilding migrated to lower-cost foreign yards. Caught between a shrinking commercial market and increasingly specialized naval contracts, New York Ship didn’t have the business to stay afloat. By 1968, it had shut its doors. Camden, the city that powered New York Ship, tracks an eerie road map for what happens when industrialism falters. The city lost a third of its population, including 30,000 manufacturing jobs. It now faces a poverty rate of 28.5% and has become one of the most dangerous cities in the country.

The New York Shipbuilding Corporation is just one of dozens of examples of the cost of assuming that America no longer needed a strong industrial base. Particularly in the 1980s, the US came to the conclusion that manufacturing and shipbuilding were commodity processes better suited for lower-cost labor markets in Asia. We’ve seen the same dynamic play out in semiconductors, batteries, mining, and pharmaceuticals. But shipbuilding represents a distinctly gnarly systems problem tangled between defense funding, policy, and a fading American manufacturing core.

Any national soul-searching about reindustrialization must start by disabusing ourselves of the notion that we don’t really need to build our own ships. We do. For most Americans, boats are a leisure category — a pleasure cruise, a fishing trip — while the working ocean has faded from the national imagination in a way that airports and interstates haven’t. While airplanes and highways may feel like the global connective tissue, the reality is that 80% of trade volume moves by sea. Without domestic shipbuilding capacity, the flow of global trade, including energy, raw materials, and consumer goods, is ultimately at the mercy of those who do control it.

The last few years have given us countless examples of that vulnerability. COVID pushed the median cost of transporting a shipping container from $2,000 to $20,000. When the Ever Given, a massive container ship, blocked the Suez Canal in March 2021 for six days, each day of disruption held up over $9 billion worth of goods. And when the recent US-Israeli strikes on Iran led Iran to effectively halt shipping through the Strait of Hormuz, it cut off 20 million barrels of oil per day, representing roughly 20% of global seaborne oil volumes.

Alfred Thayer Mahan, a Navy officer and historian described as “an apostle of sea power,” famously argued that “whoever rules the waves rules the world.” He saw the need for a navy as springing from the existence of peaceful commercial shipping. Increasingly, we live in a world where “peaceful commercial shipping” is more at risk than it has been in decades, owing to the volatility surrounding global chokepoints like Hormuz and the Taiwan Strait. The Council on Foreign Relations has put the odds of “a cross-strait crisis between China and Taiwan” at 50% in 2026. Such a crisis could dwarf a Hormuz closure in its ramifications for the global economy; nearly half of the world’s container shipping passes through the Taiwan Strait each year.

The seafaring domain is critical. The threat of great power conflict draws closer; a conflict between the US and China that may define the 21st century; a US-China war over Taiwan could deliver a roughly $10 trillion shock to the global economy in its first year, nearly 10% of global GDP — larger than COVID, the 2008 financial crisis, or the war in Ukraine. The US itself would absorb a 6 to 7% GDP hit, primarily through severed access to advanced semiconductors and the collapse of shipping through one of the world’s busiest sea lanes. Unfortunately, the majority of the ocean-going vessels are built by our would-be competitor.

In 2024 alone, one Chinese company built more commercial vessels by tonnage than the United States has produced since the end of World War II. Today, the US accounts for roughly 0.1% of the global commercial shipbuilding market while China accounts for 53%, up from just under 10% in 2000. China has become the dominant global shipbuilding superpower. It builds the vast majority of global shipping, including shipping critical to US naval power. Three of the ten oil tankers in the US fleet designed to carry fuel for military operations were constructed in Chinese yards. Seven of the twelve ships in the Maritime Security Fleet are made in China. The dependence is reckless, but the economic justification is straightforward: Regulators only require these ships to be US-flagged and crewed; otherwise, the ships would cost roughly $200 million, instead of their current sticker price of $50 million.

Meanwhile, domestically, US shipyards are failing to deliver on Navy shipbuilding goals. Some projects, like the Virginia-class submarine program, running at just 60% of its target production rate, with some ships delayed by as much as three years. Going forward, the US Naval fleet is already 20% short of the minimum capacity needed to carry out core missions. And that shortfall will continue to grow as maintenance backlogs pile up.

Meanwhile, the Chinese Navy, which surpassed the US Navy in total fleet size around 2020, keeps extending its lead. Huntington Ingalls Industries, the US defense prime most focused on seafaring, reported a backlog of $56.9 billion in 2025 — roughly five-years of work at current production rates. Even if Congress tripled shipbuilding appropriations tomorrow, Huntington Ingalls couldn’t build meaningfully faster. China’s advanced capacity, meanwhile, enabled it to add 30 ships to its fleet last year, while the US decommissioned 19 ships and built six, for a net loss of 13. In a protracted naval conflict, China can replace what it loses. We cannot.

To address this vulnerability, we must resurrect our national shipbuilding industry. But any attempt to do so must reckon with the chicken-and-egg problems inherent in bootstrapping a dying industry back into global competitiveness.

Every industrial process is a system; each input has process and timing dependencies, and every output demands execution. But when the process includes dozens of states and countries, multiple regulatory bodies across land and sea, and thousands of suppliers, each with their own regulatory regime and manufacturing idiosyncrasies, that system becomes almost hopelessly complex.

Regaining domestic shipbuilding capacity in the US means reckoning with a doom loop of interdependencies: labor, stable demand, competitive costs, scale, supply chain depth, and functional shipyards.

You can’t attract workers without stable demand: Shipbuilding apprenticeship completion rates sit below 35%. Even major shipyards, like Puget Sound, only begin with around 200 apprentices. The US Merchant Marine Academy, which offers a Marine Engineering and Shipyard Management major, was described by Transportation Secretary Sean Duffy as “dilapidated”. For those who make it into the shipbuilding industry, first-year attrition runs around 50-60% even at the most consistent shipyards. This attrition happens because there is no confidence in demand signals relative to more reliable industries, like oil and gas or construction. What’s more, around 27% of maritime workers are over the age of 55, meaning we’ll see a silver tsunami of retirements over the next decade.

You can’t generate stable demand without competitive costs: Asian shipyards produce at 5-6x lower prices and twice the delivery speed, driven in part by the massive regulatory burden American shipyards carry. Every input in the US, from labor to steel, is dramatically more expensive. No rational commercial buyer will pay that premium unless compelled by law or subsidy. Even artificial demand from the US government has wavered, with multi-billion-dollar shipbuilding contracts fluctuating between administrations.

You can’t achieve competitive costs without scale: China builds 1,000 commercial ships per year compared to about 10 in the US. Everything gets cheaper with scale. Workers move down learning curves faster with repetition, suppliers price lower with volume, and large workforces can specialize instead of generalize. As a result, the fixed costs of running a shipyard — the cranes, docks, management, financing — spread across more ships, making each one cheaper.

You can’t achieve scale without supply chain depth: Even a simple commercial ship requires thousands of components from hundreds of suppliers. Since 2000, the US has lost more than 25,000 of those suppliers. Some components, like marine diesel engines or marine-grade steel, have limited or no domestic production left. Of the six American companies manufacturing large marine diesel engines before 1980, only one — Fairbanks Morse Defense — still exists, surviving exclusively off of military contracts. Suppliers have done the math and found the US market wanting. No one will invest in marine diesel engine production for a market of ~10 ships per year.

You can’t achieve supply chain depth without functional shipyards: Of all the bottlenecks, shipyards themselves may be the hardest to resolve. You need deepwater coastal sites — exactly the kind of sites that attract the most onerous regulation — including 50-100+ contiguous acres of waterfront with deep draft access, heavy industrial zoning, and proximity to rail or highway. There are vanishingly few sites in the US that meet all those criteria and aren’t already developed.

Which brings us back to labor: Even if you could build a functional shipyard, with access to a deep supply chain, commanding sizable demand at competitive prices, you still need workers to staff it. Which brings us full circle.

No matter which lever you pull, nothing makes enough of a difference on its own. Legislation can artificially lift demand, but it cannot sustain a workforce. Foreign expertise can bridge some of the knowledge gap, but it can’t magically spin up a supplier base. What’s more, solving all of these issues simultaneously requires a level of sustained, coordinated, multi-decade industrial policy that the US hasn’t demonstrated since before the Cold War.

The solution here isn’t akin to the CHIPS Act for semiconductors or the IRA for batteries, solutions that were, primarily, acts of capital deployment by the federal government. The closest analogy for a solution is the interstate highway system. From 1956 to the 1980s, the National Interstate and Defense Highways Act enacted a 20+ year, multi-administration, federally funded infrastructure program that required simultaneous land acquisition, engineering, workforce development, materials supply, and political consensus across all 50 states.

The above is an excerpt from our new deep dive on American shipbuilding. See the full report here.