Shipbuilding, a priority of Congress and the Trump administration, is poised to grow significantly over the next five years as the Navy receives funding to build new vessels and to support maintenance, repair, and overhaul (MRO). This comes at a time when the Navy aims to shift away from government-funded expansion toward a model that incentivizes private investment.
Key Stats: The FY27 President’s Budget Request (PBR) calls for $66 billion for Navy shipbuilding, a 46% increase from FY26. But that’s only the start. Over the next 30 years, the Navy plans to grow its fleet by 100 ships—from the current 290 to 398—with private investment playing a greater role.
Investors Welcome: While the FY27 budget process is still in its early stages, the FY27 PBR is notable for a dramatic increase in spending on auxiliary ships, an area in which the Navy has traditionally underinvested and one that presents a major opportunity for new entrants in the maritime domain. The current Ready Reserve Force (RRF) consists of 43 ships averaging 41 years old, and the fleet will require 18 new ships over the next five years to offset any capacity loss from retirements. While spending in this area is relatively small, totaling between $1 billion and $2 billion annually, it is still a major change in government funding that investors should not miss.
Capital Demand: There is capital demand across the maritime industrial base (MIB) horizontally, such as for newly built auxiliary ships, module construction on warships, and repair of surface ships, as well as vertically, in the subsystems and components for Navy vessels. While manufacturers are struggling to meet the backlog for nuclear submarines and destroyers, so-called distributed shipbuilding—the practice of offloading significant construction work to facilities outside of a shipyard—will grow from 10% of the work on existing ships to 50%, aligning with broader efforts that emphasize modularity to mitigate major production bottlenecks.
