America’s difficult path to resurrect its shipyards

Donald Trump’s bid to resurrect American shipbuilding faces some stern demographic challenges. The American president has made shipbuilding a central plank of his industrial policies since returning to power in January. However, the maths behind having 250 US-built ships in 10 years’ time look daunting. 

A new report released by the Open Markets Institute shows that the US produces a mere 0.13% of the world’s large commercial vessels.

In 1975, before the elimination of shipbuilding subsidies, the US shipbuilding industry employed 180,000 workers. By 2021, the shipbuilding industry had lost nearly 70% of its shipyards and 45% of its workforce, the report shows, backing up a recent surveys that showed more than 80% of Americans woulds like to see more manufacturing move home, and yet the same poll showed less than 20% of the population would be willing to work in the manufacturing sector.

Putting the scale of how far behind American shipbuilding is to its Asian rival, China manufactured more commercial vessels by tonnage in 2024 than US shipyards have built since the end of World War II.

James Lightbourn, who runs Cavalier Shipping, an American boutique maritime advisory, has also been delving into the obstacles US shipyards face. 

In a Substack post, Lightbourn noted that over the past decade, large ocean-going commercial vessels built in the US originated from one of four domestic shipyards: General Dynamics NASSCO (NASSCO), Hanwha Philly Shipyard, Seatrium AmFELS, and the former VT Halter, now part of Bollinger Shipyards.

The peak productivity from these four yards during the past decade saw NASSCO churn out six product tankers in 2016, Philly Shipyard managed three product tankers the same year, VT Halter built two container vessels back in 2018, while Seatrium AmFELS built one large commercial vessel in the year 2023.
Assuming all four shipyards are simultaneously operating at peak capacity, they produce a total of 12 large ocean-going vessels annually, according to Lightbourn.

However, the SHIPS for America Act targets 250 US-built vessels in the strategic commercial fleet by 2035. 250 ships over a 10-year time horizon would be 25 ships built per year.

“The U.S. would need to more than double its peak shipbuilding capacity to hit that target–ignoring the major timeline variables of (1) first bringing additional shipyard capacity online and (2) balancing government vs. commercial shipbuilding needs,” Lightbourn wrote. 

Trump has spent plenty of time in the first months of his second term in office looking at ways to restrict China’s dominance in the shipbuilding sector, with new US port service fees on China-linked ships set to come into force later this year as well as the creation of a shipbuilding office in the White House. 

South Korea’s Hanwha Ocean has detailed this month how it intends to make its Philadelphia shipyard the top shipbuilder in the US.

Hanwha, which spent $100m buying Philly Shipyard from Aker last year, has outlined how it intends to increase production capacity at its American yard from 1.5 ships to 10 a year, a mix of naval and commercial ships, including LNG carriers. 

The aim is to increase revenues at Hanwha Philly Shipyard ten-fold in a decade to $4bn. An old drydock is being reactivated to help meet these new business objectives which have been massively inflated following the return of Donald Trump to the White House.