Last Week, we wrapped up the Solid Rocket Motor series with a look at the Ammonium Perchlorate supply chain.

This week is a primer on the shipbuilding “crisis”

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In April 2024, the Navy completed a 45-day review of its shipbuilding programs: nearly every major program is behind schedule, some by two to three years. Even the Columbia-class ballistic missile submarine, the Navy’s highest priority program for over a decade, is now running 12 to 16 months behind schedule.

The Congressional Research Service characterized the situation plainly: the Navy is currently facing challenges in designing, building, crewing, and maintaining ships simultaneously. One would need to go back to the post-Vietnam era of the 1970s to find a comparable combination of institutional stress.

At a high level, U.S. naval shipbuilding is a system with four moving parts:

In 1953, the U.S. Navy peaked at 1,122 battle force ships at the height of early Cold War mobilization. Even as the fleet contracted in the years that followed, falling by roughly 300 ships, it still maintained a scale that dwarfs today’s force.

Richard Nixon began reducing the Navy as part of his broader strategy to end U.S. involvement in the Vietnam War and shift military focus. This decision was influenced by the need to balance the federal budget and reduce defense spending while maintaining strategic deterrence during the Cold War. 

The Reagan administration reversed that trend with an explicit goal of 600 ships, backed by sustained procurement increases through the 1980s. However, from the Late Cold War Era Peak of 568 ships in 1987, the fleet contracted sharply through the 1990s.

The post-Soviet "peace dividend" drove procurement down to historic lows, just four to five ships per year through the mid-1990s. 

By August 2003, the fleet had fallen below 300 ships and has not sustainably crossed that threshold since.

In December 2016, the Navy released a goal of 355 ships, which Congress codified into law in 2018 and in 2023, the goal expanded to 381 manned ships plus 134 large unmanned surface and underwater vehicles. The fleet today stands at 293.

The gap between stated goals and actual fleet size has been a recurring feature of Navy planning for three decades, widening during periods of low procurement, narrowing when budgets increased, but rarely closing entirely. 

The current debate often starts with a simple assumption: the Navy does not have enough ships, usually framed against the 600-ship fleet of the 1980s.

While intuitive, this could also be misleading.

As defense analyst Ronald O'Rourke notes, using historical fleet size as a yardstick is problematic because both the requirements placed on the Navy and the composition of the fleet evolve over time. And past fleet sizes themselves may have been insufficient or excessive for their missions.

The Shipbuilding and Conversion, Navy (SCN) account, the primary vehicle for new vessel construction, has grown substantially over the past 10 years, with recent requests and appropriations reaching levels well above historical norms.

Congress enacted $27.2 billion for FY2026, and the Trump administration's proposed FY2027 budget requests $65.8 billion, a roughly 50% increase over prior-year enacted levels.

The Congressional Budget Office estimates that fully executing the Navy's 30-year shipbuilding plan would cost an average of $40.1 billion per year, 46% more than the $27.5 billion the Navy has received annually on average over the past five years.

The Navy's own cost estimates run lower, but CBO's track record of accuracy on lead ship costs, versus the Navy's track record of optimism, suggests the higher is likely more accurate.

Beyond hull procurement, the Navy is spending billions on industrial base capacity directly. The Shipyard Infrastructure Optimization Program (SIOP) received $1.5 billion in FY2026 and $1.8 billion in the FY2027 request to modernize the four public naval shipyards, whose drydocks average 108 years in age.

Submarine industrial base funding, appropriated continuously since FY2018, has been used at Electric Boat, Newport News, and across the supplier base for both facility improvements and workforce development.

That spending, both for ships and for the capacity to build them, is concentrated among seven major companies. But money flowing into the system is not the same as the system functioning. The Navy is requesting more, Congress is appropriating more, and shipyards are receiving more than at any point in recent memory.

However, we are still in ‘crisis’ mode.

That's the central paradox this series will work through. Next week, we'll map the seven companies absorbing the bulk of that investment and turn to the programs themselves, what the U.S. is actually building, for whom, and whether the mix reflects where the threat is going.