The Sinking Submarine Industrial Base


Submarines are an integral part of the U.S. Navy’s future force design, and rightly so. The United States needs more submarines if it is to deter China in the Indo-Pacific, particularly given the Chinese navy’s growing undersea fleet. But the question remains — can America build and maintain the number of submarines it needs? 

The end of the Cold War gave rise to a balancing act within the world of U.S. naval acquisitions — how to make cuts under falling defense budgets while retaining a sufficient industrial base for the future. The cancellation of the SSN-21 Seawolf program in 1992 was a rational choice in this context, but it led to a long hiatus in submarine construction. As a result, a decision that was reasonable in the short term has caused damage to the production capacity and workforce of the submarine industrial base that has not yet been repaired. 

Given the Navy’s plans to increase the size of the undersea fleet, which rely on increased production at private shipyards, these are problems that should be solved. While the Biden administration has recognized the need to take action and has made a solid start, it is imperative that long-term planning be prioritized and all options for durable and consistent investment in the submarine industrial base put on the table. This is not an issue set that can be resolved with the kind of short-term thinking that caused it in the first place. The difficulties within the American submarine industrial base have a decades-long tail and will take concerted effort over the next few decades to put right.



The Peace Dividend

Looking back at the defense cuts of the early 1990s with the benefit of hindsight is easy to do, but we should appreciate that the decisions made were rational in the short term given the context at the time. The Clinton administration believed that the end of the Cold War and the now unipolar pre-eminence of the United States meant that there would not be a conflict between large armed forces in the foreseeable future, and that the true challenge would be from technological competitors, particularly Japan. The administration felt that it was possible to scale down the U.S. military, limiting it to a smaller force protecting the homeland and defending vital American interests overseas. The consequent fall in defense spending, under this view, would mean that funding could then be redirected toward domestic matters, such as education, healthcare, and economic stability — the reprioritization of butter over guns. President Bill Clinton planned to incorporate the peace dividend into a large economic conversion plan, unveiled shortly after he entered the White House in 1993, which would use the savings from smaller defense budgets to enhance American competitiveness and reinvest in infrastructure, job training, and civilian research and development.

The United States therefore needed to shift its talent and investment into new technological paths, not dead-end Cold War projects aimed against a superpower rival that no longer existed. Without the Soviet Union, there was no nation that could come close to matching the United States in terms of aircraft, ships, submarines, and other large weapons platforms. The Clinton administration thus felt it was unnecessary to maintain the expensive capacity for the production of these types of platforms — capacity that had been viewed as imperative while the Soviet Union remained a threat. 

Seawolf and the Submarine Industrial Base

The SSN-21 Seawolf program was cancelled in 1992, a casualty of the fact that it was no longer needed to support blue-water counter-Soviet operations. Just before the end of the Cold War, an average build rate of three submarines per year from both the new Seawolf class and the SSN-688 Los Angeles class ensured ongoing regular business for the country’s two main builders, Electric Boat and Newport News. As the costs of Seawolf began to grow and the design and construction schedule started to fall behind, the Navy absorbed these cost overruns by cutting some funding from the Los Angeles program and extending follow-on buys for both, establishing a new average build rate of two boats per year in 1991. The cancellation of Seawolf the following year, however, was the start of the real problems — an industrial base expecting to build two or three submarines per year would now only end up building four total until the construction of the Virginia class began in 1998. No SSNs were authorized in five fiscal years during the 1990s (1992, 1993, 1994, 1995, and 1997), with the third modified Seawolf gaining congressional authorization for fiscal year 1996 as a bridge to the forthcoming Virginia-class construction. In 1989, there were 32 boats on the backlog list, 13 at Newport News and 19 at Electric Boat — but in 1997, that backlog was just three, all at Electric Boat.

This period of low-rate production meant that the submarine industrial base had to rationalize its facilities, workforce, and supplier base to weather the storm. Electric Boat mothballed two of its final assembly positions at its Groton yard, closed several off-site fabrication locations, and eliminated various laydown and warehousing sites around both Groton and Quonset Point. Similarly, Newport News closed down its offsite fabrication and machining facilities in North Carolina and Tennessee, consolidating the smaller number of necessary production amenities into the main yard instead. This rationalization of facilities was a logical response to such a drop-off in demand, particularly as there was no guarantee that things would pick up. There was no reason for the yards to waste money keeping facilities open and running if there were no boats to build there. 

This rationalization also affected the workforce. Constructing submarines requires a range of skilled tradespeople — welders, machinists, engineers, and so on — as well as workers who can perform functions like planning, procurement, quality assurance inspection, and other roles peculiar to the naval shipbuilding industry. While there is some overlap with other commercial industries, the specialization of building submarines for the military is such that it is not possible to easily acquire proficient workers from other sources to grow or shrink the workforce in response to shifting demand — skilled workers must be trained and developed over time, and retained. The sharp drop-off in demand following the cancellation of Seawolf led to an exodus from the submarine industrial base. The Groton yard had around 12,000 skilled workers at the peak of demand in the 1980s, but this was reduced to around 1,500 by the time the construction of the Virginia class began. Over the same period, the skilled workforce at Quonset Point fell from around 6,000 to fewer than 1,000 people. These people are not easy or cheap to replace, and losing such a large proportion of the latent skill within the workforce in such a short space of time was hugely damaging to the submarine industrial base. 

A similar rationalization was evident within the supplier base, those companies that provide resources, parts, and support for the construction of submarines. During the Los Angeles-class program and the Ohio-class program before it, there were around 17,000 companies within the supplier base, each of which represented a skilled workforce with latent proficiencies of its own. The lack of demand also caused a contraction among these companies — by 2017, there were only around 3,000 active suppliers within the submarine industrial base. As with skilled shipyard workers, it is not easy to build a supplier base back up once it has shrunk.

The Seawolf case shows the difficulty in balancing two overarching considerations — spending defense budgets wisely versus the need to retain a sufficiently resilient industrial base. While the cancellation of Seawolf made sense, there was clearly insufficient consideration given to the effect that such a sharp drop-off in submarine buys and such a long build hiatus would have on the industrial base. This would not have required continuing the Seawolf program at the full buy planned before the collapse of the Soviet Union. But more could have been done to create a bridge between the Los Angeles program and the Virginia program — one extra Seawolf was not enough. 

The rationalization of facilities, suppliers, and workers following the end of the Cold War was not limited to the submarine portion of the shipbuilding industry, and private shipyards have declined across the board to varying degrees. This is compounded by a similar contraction in facilities and workforces within the public shipyards. While these focus on maintenance rather than construction, a reliance on supplementing public shipyard maintenance capacity with outsourcing to private shipyards has a knock-on effect on acquisitions as well, as essential maintenance competes with new builds for facility space and work hours. Both Electric Boat and Newport News are currently taking some attack submarine overhaul work that should be the purview of the public yards, due to issues with capacity and workforce availability at the latter. And despite this, the number of attack submarines that are either waiting for or in maintenance has increased substantially over the last decade. Currently, over a third of the SSN fleet is unavailable for operational use. 

Build Boats, But Where?

Given the Navy’s goal of expanding the fleet, these are serious issues. It is all very well having the goal of a larger navy, but this will remain purely aspirational if there is insufficient capacity to construct all of these new vessels. As things stand, Newport News and Electric Boat are struggling to deliver their expected goal of two Virginia-class boats a year, with schedules slipping despite efforts at increasing build efficiency. The pressure to deliver the new Columbia-class ballistic missile submarines will only add to problems with capacity, compounded by the eventual addition of the next-generation attack submarine that will follow the Virginia class.

Under the Navy’s most recent 30-year shipbuilding plan, which includes three alternatives, the attack submarine force would reach a minimum of 46 boats in FY2030 and grow to 60, 69, or 63 boats (depending on which alternative plan is chosen) by FY2053. The Congressional Research Service notes that there will be a projected “valley” in submarine numbers through the 2020s and 2030s specifically due to the hiatus in procurement levels throughout the 1990s, something that the service’s researchers have repeatedly raised in reports and testimony since 1995. While the Navy plans to extend the service lives of up to seven Los Angeles-class boats (due to retire in the mid-2030s) to fill this gap, there could remain a period of both operational strain on the submarine fleet and weakened deterrence against China until the construction of additional Virginia-class boats can be realized. 

The Navy’s 20-year Shipyard Infrastructure Optimization Plan may help by improving the situation at the public shipyards, through billions of dollars of investment in recapitalization and modernization to get the four big public shipyards (at Norfolk, Portsmouth, Puget Sound, and Pearl Harbor) back on track for their maintenance duties. If this program is successful, it would take some pressure off the private shipyards and free up their capacity for construction, but this is still a big “if.” The Government Accountability Office has noted considerable problems with the program’s cost estimates and schedule, and in the five years since it began, only one key project (a dry dock at Portsmouth) has actually gotten underway. 

Sinking Submarines

The submarine industrial base continues to struggle with a lack of skilled personnel and rising costs of materials. While it is less exposed than surface-combatant manufacturers to inconsistent signals from the Navy on fleet size and acquisition priorities, there is still a divergence on planned SSN fleet numbers that needs to be addressed. Reversing the decline in the submarine industry over the long run requires a commitment to consistency and long-term planning. This will allow the private shipyards and their suppliers to make their own plans and invest in both their workforce and their facilities, avoiding the abrupt about-face that so damaged the industry in the 1990s. 

However, both the Navy and the government would do well to consider whether the industrial base can and should be left to achieve this investment itself. While direct government intervention in private markets is a rather difficult concept to sell in the United States, this is arguably a special case. The submarine market is both a monopsony (with the U.S. Navy as its only buyer) and a monopoly (although there are two headline suppliers, Electric Boat and Newport News, they each perform different manufacturing functions and thus do not compete directly for contracts). Given the importance of healthy and efficient submarine production, it is good to see that consideration is being given to this option. There have been encouraging signs recently, including three presidential determinations permitting the use of the Defense Production Act to strengthen the submarine industrial base. The White House has also requested an extra $3.4 billion in emergency supplemental funding for FY2024 to bolster the submarine industry. The Biden administration and the Navy should keep a close eye on progress here and ensure that enough is being done to guarantee resilience in the sector, and Congress should not allow its current paralysis to impact the provision of necessary funding. 

The AUKUS agreement, which includes the sale of three (with an option to increase to five) Virginia-class submarines to Australia, may also cause further complications. While it is likely that two of these will be existing boats, the United States will need to fill a three-boat gap in its own capability at some point during the 2030s. If the United States cannot fill this gap, there is always the risk that it could choose to retain some or all of these boats for itself rather than sell them as agreed. The AUKUS deal is too important to allow a paucity in American submarine production to endanger it, so bolstering industrial capacity in the United States will be hugely welcomed in Australia and the United Kingdom too. 

Consistent and effective investment in public shipyards is also vital. This will help to both maintain the current fleet of submarines and take the pressure off the private shipyards to supplement maintenance capacity, allowing facilities to be used for construction instead. The Navy should ensure renewed and enduring focus on the Shipyard Infrastructure Optimization Plan, and not allow it to slip further into becoming a well-intentioned but useless white elephant. A resilient industrial base and a strong submarine force ideally require targeted government support, but definitely require consistent and well-thought-out plans. The Navy and the Biden administration should provide them. 



Emma Salisbury is a Ph.D. candidate at Birkbeck College, University of London, and an associate fellow at the Council on Geostrategy. Her research focuses on defense acquisitions and the military-industrial complex. She is also a senior staffer at the U.K. Parliament. The views expressed here are solely her own. You can find her on social media @salisbot.

Image: U.S. Navy photo courtesy of Newport News Shipbuilding/Released