Amid ongoing geopolitical and economic volatility in global trade, momentum is building to revitalize the US commercial shipbuilding market. The bipartisan support for the proposed Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) Act of 20251 reflects this growing momentum. First introduced in 2024 and reintroduced in April 2025 with additional provisions, the SHIPS Act aims to help ensure critical goods transport, support national security, and boost economic resilience amid heightened trade tensions, reliance on non-US shipping, and disruptions to major global shipping lanes. How? By helping to mobilize public funding, develop regional shipbuilding clusters, and derisk private capital, allowing the US commercial shipbuilding market to better position itself for sustained global competitiveness.
Bound by water on three coasts, the United States is, historically, a maritime nation. At the close of World War II, more than half of global merchant tonnage was launched in the United States.2 Today, the US market delivers less than 1 percent of that tonnage. The Chinese, Japanese, and South Korean markets combined account for more than 90 percent of shipbuilding’s global market value.3 Shipbuilding productivity and efficiency in the US market also lag behind that of other leading markets on a compensated gross tonnage (CGT) basis.4 One result: A liquefied natural gas (LNG) carrier costs $220 million to $250 million to build in South Korea and up to $1 billion in the United States.5
What could help reposition the US market as a globally competitive commercial shipbuilding player? Bold and broad-reaching actions: investing in modern shipyard infrastructure, closing domestic supply-chain gaps, and attracting and retaining a robust and ready US workforce, catalyzed by public and private partnerships. Together, these actions target the structural cost drivers in US shipbuilding and bend the long-term cost curve by improving throughput and schedule reliability while reducing workforce inefficiency, attrition, and supplier-driven delays.
Boosting US commercial shipbuilding market competitiveness: A three-part strategy
Modernized shipyards are the foundation of the current and future US commercial shipbuilding market. As McKinsey has written previously, redeveloping legacy shipyards6 and enhancing efficiencies in existing shipyards7 are keystones in this foundation, but they make up only one part of a larger ecosystem needed to support a globally competitive domestic industry marketplace. In the sections that follow, we outline a strategy for revitalizing the US commercial shipbuilding industry.
Invest in modern shipyard infrastructure
Redesigning shipyard infrastructure, ranging from layouts to operating systems and digital tools, can yield major productivity improvements—with some shipyards even doubling throughput by addressing prior bottlenecks.8 While this shift would dramatically narrow the efficiency gap between the US market and overseas industry leaders, it would require significant investment. According to our modeling, the investment needed to build a modernized, competitive-scale yard capable of capturing 2 to 3 percent of global demand by value would be roughly $10 billion to $15 billion.9 Such a shipyard would rank as roughly the fifth to tenth largest in terms of global demand, based on our analysis; in 2025, the world’s two leading shipyards have captured 7 to 8 percent and 6 to 7 percent of global demand value, respectively.
Where would that investment flow, in practical terms? To the following features, which differentiate high-performing global maritime players from their peers:
- Targeted machinery automation. Leading global shipyards combine full automation with collaborative robotics to enhance productivity and quality. Proven applications include CNC (computer numerical control) steel cutting, automated panel lines, and collaborative robot (cobot) welding for unit and block assembly. Next-generation yards can build on these foundations by adopting automation technologies already validated in adjacent industries, such as autonomous heavy-lift logistics and automated inspection systems.
- Digital enablement. Embedding robust data collection and management capabilities in shipyards is critical to sustaining operational excellence. Digital tools to optimize production scheduling, inventory optimization, and material flow management depend on a strong data backbone, something many heavy industrial players in the United States currently lack.
- Unidirectional material flows. Efficient shipyard design prioritizes linear, unidirectional material movement to minimize non-value-add activities such as rework, handling, and waiting. Optimized layouts—with dedicated zones for works in progress, proximate inventory storage, and integrated movement systems (such as conveyors and cranes)—can reduce cycle times by 30 to 60 percent and improve throughput significantly, according to McKinsey analysis.
- Competitive physical scale. Achieving global competitiveness requires shipyards that match the physical scale of yards in leading markets, encompassing four or more dry docks, multiship construction capacity, and space for future expansion. A 500- to 1,000-acre facility capable of producing up to 30 vessels annually could enable parallel production (multiple vessels produced simultaneously) and unlock economies of scale not currently available in the US commercial shipbuilding market.
An infrastructure success story, thanks to digital enablement. One US shipbuilder prioritized digital enablement as its highest-ROI lever within a broader modernization program and used targeted digital use cases to address production bottlenecks and accelerate throughput. The company faced constraints in rate capability and an immature digital infrastructure that limited cross-operational visibility. Teams mapped the value stream, identified critical constraints, and designed targeted digital use cases supported by a new IT/OT (information technology and operational technology) architecture. Pilot initiatives were launched to test impact and feasibility while ensuring cybersecurity and cost-effectiveness within an active production environment. In eight weeks, three pilots delivered a 40 percent increase in throughput, and they are now being deployed across the shipyard, providing a lighthouse case for digital enablement.
Close domestic supply chain gaps
Supply chain gaps continue to constrain US shipbuilders. Fragmented supplier networks, limited transparency throughout value chains, and long lead times can cause schedules to slip, increasing reactive expediting as well as costs. Addressing such inefficiencies can help capture substantial value. Supply-chain optimization measures should include strengthening planning and scheduling, tightening supplier performance management, and expediting qualification and certification pathways to improve delivery reliability.
Given the prevalence and criticality of supply chain gaps, increased supply-chain ownership is essential to achieving long-term US market competitiveness. A significant share of key inputs for US commercial shipbuilding is sourced internationally.10 Core components such as engines, LNG-rated generator sets, power systems, castings, and integrated bridge electronics are currently imported and often carry lead times that can be several years long.11 While existing domestic manufacturing could support steel structures and mechanical and electrical systems, significant investment would be required to reshore advanced electronics as well as very large castings and forgings for propellers and crankcases. While domestic sourcing may carry higher unit costs initially, the long-term resilience of a more stable supply chain, as well as potential future changes in industrial policy, could improve economics substantially.
Investment to reshore critical component manufacturing should focus on the following priority actions:
- Establish new greenfield industrial sites. Such sites would need to be equipped with heavy-lift wharves and purpose-built machinery for manufacturing and assembling large forgings and engines. Greenfield builds also present a chance to leapfrog legacy shipbuilding constraints by leveraging the latest tech from day one rather than retrofitting.
- Build domestic expertise and create certification hubs. Establish regional centers to accelerate time to capability (training, process know-how, and quality systems) and time to approval (testing, documentation, and supplier qualification pathways) so US suppliers can meet multilayered, international marine standards—reducing certification bottlenecks that drive multiyear delivery delays.
- Co-locate tier-two and tier-three producers near major shipyards. Long-term contracts, shared facilities, financial and tax incentives, workforce and certification support, and integrated logistics that lower suppliers’ costs and risks could help encourage producers to locate their facilities near shipyards and ultimately strengthen and sustain a globally competitive domestic supply base.
- Expand existing production capacity. Implement targeted supplier-health initiatives, such as grants and long-term purchasing agreements, to fund incremental tooling, additional shifts, and automation that increase throughput at critical suppliers and improve delivery performance.
Shoring up domestic supply. Key stakeholders are modeling a proactive approach to supplier constraints by developing upstream partnerships to bolster capacity, capability, and resilience. One approach being used for the defense shipbuilding supplier base could provide a road map for commercial shipbuilding. The US Navy has run an ongoing campaign of fiscal stimulus for US suppliers, spending $2.3 billion beyond production costs between 2018 and 2023, with approximately $4 billion more planned beyond 2023.12 Roughly 200 suppliers across 31 states have received grants to increase capacity, automate processes, and ensure their stability and efficiency as well as that of the entire value chain. This is aimed at helping suppliers meet increased demand for new defense ships. Additional funding is expected in anticipation of spikes in the need for repairs.
Existing suppliers have benefited immensely from the grants. For example, Scot Forge, a US supplier of castings and forgings, applied its more than $20 million in grant funding to the purchase of additional production equipment. The expanded equipment has enabled a 100 percent increase in capacity to process large forgings. Concurrently, Scot Forge has cut costs by 30 percent. Beyond supporting existing suppliers in lagging segments, the Navy has emphasized strategic outsourcing to help reduce the strain on existing shipyards and allow them to focus more resources on final assembly, outfitting, and testing. As part of this outsourcing initiative, Austal USA shipyard in Mobile, Alabama, is constructing steel modules for Virginia-class submarines. This will help the Navy in its effort to shift more than five million production hours of heavy manufacturing work to a broader network of suppliers.13
Build a ready and robust workforce
Labor challenges are a major driver of shipbuilding costs in the United States. Still, as McKinsey analysis underscores, the opportunity for better workforce management is significant. Addressing labor challenges holistically, with efforts aimed at improving attraction, retention, training, and development, can boost productivity by potentially 15 to 25 percent and reduce overall labor costs by up to 20 percent.
According to US Department of Labor projections, meeting expected military and commercial shipbuilding demand over the next decade could require on the order of 200,000 to 250,000 additional maritime workers across critical roles. If demand rises further, the associated workforce gap could expand as well.14 Meeting this requirement won’t be easy. Falling enrollment across the maritime education pipeline and a broader shift away from vocational labor in younger generations is placing additional pressure on shipyards, in particular. Over the past decade, enrollment has fallen by 30 to 35 percent in the six state maritime academies in the United States, driven in part by a negative perception of skilled trades among younger generations of workers.15 McKinsey has written extensively on the skilled-labor shortage in the United States, including how companies in aerospace and defense and other heavy industries are adapting through targeted recruiting, faster reskilling pathways, and stronger retention levers.16
Reflecting these unique challenges, McKinsey research across aerospace and defense finds that attrition in critical technical roles is approaching 15 percent, with turnover led by frontline and middle managers, who report intent to leave at nearly twice the rate of individual contributors.17 Because modern shipyards will need to be staffed by workers who are comfortable with digital tools, automation, and data-driven operations (capabilities still scarce in traditional manufacturing pools), employers must explore new ways to recruit tech-savvy young professionals and encourage occupational transfers from related sectors.
To close the technical skills gap and enable a new era of commercial shipbuilding, US shipyards will need to deploy the following actions in parallel:
- Attract talent. Talent attraction starts with reshaping the industry’s employee value proposition, combining effective messaging (such as emphasizing the national importance of shipbuilding) with targeted improvements to shipyard conditions and attractive incentives. In addition, by assessing their existing employee base and talent pipelines, shipyards can better identify and target high-potential talent pools, improving the quality of new hires.
- Retain talent. Deepening employee satisfaction means going beyond competitive wages and strengthening connection and belonging. Incentive-based pay tied to productivity and ownership, together with investments in affordable, high-quality housing near shipyards, for example, can help reduce attrition and boost engagement.
- Train talent. McKinsey’s manufacturing research shows that reducing time to proficiency (the time it takes a worker to reach full effectiveness) can unlock double-digit gains in throughput and quality, greatly enhancing productivity. For example, embedding structured training, digital learning tools, and simulation-based instruction into the onboarding process can shorten ramp-up times while equipping workers for more-automated and data-rich production environments.
- Grow talent. Forming partnerships with trade schools, maritime academies, and apprenticeship programs can help grow the talent pipeline. Engaging with high school and community college programs can spark interest in marine trades, for example, while reskilling initiatives for workers in adjacent sectors (such as defense manufacturing or heavy industry) can expand the available labor pool.
Together, these actions can help US shipbuilders build the organizational resilience needed to compete globally.
Analytics-driven recruitment supports workforce sustainability. An aerospace and defense manufacturer faced rising labor costs and mounting pressure to fill skilled-trades roles. To reduce the extent to which they were competing for the same talent as their industry peers and companies in other sectors, the company revamped their acquisition strategy using data and analytics. They created a cost-per-productive-hour metric to understand the real return on each hire and analyzed historical data to identify the schools and regions that produced the most effective employees. Based on these insights, leaders targeted two new geographies and rebalanced recruiting away from saturated local markets. The approach enabled the company to hire 70 percent more tradespeople—two-thirds at no additional cost—while lowering overall labor expenses and improving long-term workforce sustainability.
A combination of stakeholder alignments and efforts that could support US commercial shipbuilding
Key stakeholder efforts are essential catalysts for US commercial shipbuilding competitiveness, particularly where those efforts can help derisk capital, accelerate execution, and concentrate capabilities throughout the value chain. A combination of the following stakeholder efforts and alignments could unlock value for shipbuilders:
- Shipbuilders and suppliers. US shipyards could partner with experienced international shipbuilders and specialized suppliers to access proven designs, automation processes, and operating practices that accelerate production timelines and improve economics. These partnerships, especially with overseas shipbuilders, can be coupled with investment to foster a foundation for further growth.
- US industrial policy. In addition to providing fiscal stimulus and aligning domestic economic actors to help generate durable demand signals, industrial policy could shift more market share to American shippers and shipbuilders. The LNG export shipping requirements under consideration as part of the SHIPS Act, for example, aim to gradually mandate that a growing portion of US LNG exports be transported on US-flagged or -built vessels, reaching 15 percent over two decades.18 This shift would mark a significant departure from the current US standard: LNG carriers have not been constructed in the United States since before the 1980s.19 The SHIPS Act also includes provisions for tonnage-based penalty taxes on ships associated with foreign shipyards. This could potentially increase the operating costs of taxed vessels and channel more merchant tonnage to US-flagged and -built vessels.
- US regional and local coalitions. Regional efforts could strengthen talent pipelines by convening employers, education providers, and public stakeholders around shared outcomes. The Hampton Roads Workforce Council offers a lighthouse case across Virginia and North Carolina, aligning government with major employers (including Newport News Shipbuilding and Dominion Energy), community-based organizations, and education partners.20 Such efforts, in concert with the talent strategies outlined above, could further strengthen the labor pool and boost economic performance significantly via enhanced throughput, scheduling resilience, and lower frictional costs associated with hiring.
- Private capital. Private capital could complement public spending by building shipyard capabilities throughout revenue and cost functions. As McKinsey has written previously, private equity investors could benefit from helping shipbuilding address existing inefficiencies, growing demand, and long-term contracts.21 The cost discipline native to private equity could further promote lean growth in a sector in which cost overruns and delivery delays are common.
Advanced in parallel, the three-pronged strategy outlined above could reduce the delivered cost of US commercial shipbuilding via infrastructure modernization as well as reduce schedule and cost volatility by closing domestic supply gaps and strengthening talent pipelines and workforce readiness. Coupled with effective orchestration of the stakeholder ecosystem, these efforts could bolster economic resilience in a sector critical to national security.
