Executive Summary

The United States and its Indo-Pacific allies and partners face a shipbuilding dilemma. China already has the world’s largest navy, but its naval buildup is also part of a wider expansion of its commercial shipbuilding sector. The United States is trying to revitalize its commercial and naval shipbuilding industries in response, but it will take more than national renewal to restore a maritime balance of power with China. The United States needs help from its allies. It will require a collective effort and an Indo-Pacific Allied Shipbuilding Enterprise.

This Asan Report examines the potential for U.S. shipbuilding cooperation with Indo-Pacific allies and partners, such as South Korea, Australia, Japan, and the Philippines. It proceeds as follows. First, it outlines the scale of China’s naval and commercial shipbuilding challenge to the Indo-Pacific’s current maritime balance of power. China today has the world’s largest navy, with over 370 ships and submarines compared to 297 for the United States, and it already has a balance-of-forces advantage in the Western Pacific. Chinese shipbuilders also dominate the commercial shipbuilding industry, accounting for almost 40 percent of the global market.

Second, it identifies key sources of American shipbuilding decline. American shipyards built 5,000 ships during the Second World War. Today, all U.S. naval shipbuilding programs are behind schedule while American commercial shipbuilding is almost nonexistent. The current shipbuilding crisis stems from many factors, but one problem in particular is outdated protectionist legislation such as the Buy American Act and Jones Act which has stifled competition in commercial shipbuilding and efficiency in naval shipbuilding by prohibiting allied partners from helping.

Third, the report examines U.S. efforts to rebuild naval and commercial shipbuilding, including by the executive and legislative branches, the U.S. Department of Defense and U.S. Navy, and industry and organized labor. The first Trump administration set an ambitious target to build a 350-ship Navy. The Biden administration took bold steps through the AUKUS partnership to build up allies’ naval capabilities. The U.S. Congress put forward various legislation and amendments and the U.S. Navy’s Maritime Statecraft strategy tried to make it easier to work with allies on forward sustainment. Labor unions also petitioned to investigate Chinese trade practices. While these efforts may help reinvigorate parts of U.S. shipbuilding, most fail to leverage the industrial capacity of U.S. allies in the Indo-Pacific.

Finally, the report examines how a collective shipbuilding and sustainment enterprise in the Indo-Pacific could be created. It reviews four key pathways, including multi-national maintenance, repair, and overhaul (MRO) for ship sustainment, joint capital investment in shipyards throughout the region and in the United States, technology-oriented shipbuilding cooperation focusing on uncrewed vessels, and joint auxiliary ship and surface combatant production.

■ The first pathway is to expand ship maintenance, repair, and overhaul (MRO) in allied shipyards. This expands on recent contracts with Korean shipbuilders as part of the DOD Regional Sustainment Framework as well as expanding the precedent set by the 2024 AUKUS amendment to United States Code §8680 enabling submarine sustainment.
■ The second pathway is to promote new allied investment both into under-utilized U.S. shipyards and joint investments into Indo-Pacific shipyards such as in the Philippines to enable MRO work.
■ The third pathway is to move beyond “battle force ship” definitions to take advantage of the rapid manufacturing of uncrewed vessels to offset Chinese numerical superiority and alleviate workforce shortages.
■ The fourth and final pathway is to lay the legal groundwork to enable AUKUS-like allied manufacturing of auxiliary support ships as well as surface combatants such as frigates and destroyers.

The Asan Report contributes new insights into how allied shipbuilding and sustainment could realize its full potential to catch up to China and uphold a favorable maritime balance of power in the decades to come.

Table of Contents

 
Executive Summary

I. The Rise of Chinese Shipbuilding

II. The Decline of American Shipbuilding
1. Delays and Shortages
2. Naval Shipbuilding Protectionism
3. Commercial Shipbuilding Protectionism

III. Attempts to Revive American Shipbuilding
1. U.S. Executive Efforts
2. U.S. Legislative Efforts
3. U.S. Bureaucratic Efforts
4. U.S. Labor Efforts

IV. Towards an Allied Shipbuilding and Sustainment Enterprise
1. Collective Maintenance, Repair, and Overhaul
2. Shipyard Investment in the United States and Indo-Pacific
3. Technology-centric Shipbuilding
4. Surface Combatant Shipbuilding

V. Conclusion