Navy weighs foreign shipbuilding to ease labor strain

April 22, 2026

Summary

Navy Secretary John Phelan said the service will study foreign shipbuilding as it seeks to address U.S. labor shortages.

Why this matters

The remarks show the Navy is considering changes to how it builds and maintains ships as it tries to expand the fleet. The issue matters to defense planning, allied industrial cooperation, and the pace of future naval construction.

Navy Secretary John Phelan said Tuesday that the service would study whether foreign partners could help build U.S. warships as it seeks to address shipbuilding demands and labor constraints in the United States.

Speaking at a media roundtable at Sea-Air-Space 2026 in Washington, Phelan said, “Everything’s on the table. We just need to look at it, understand it, understand the implications behind it and decide if we think that makes sense or not.”

South Korean shipbuilding companies HD Hyundai Heavy Industries and Hanwha Ocean have already won three maintenance, repair and operations contracts from the U.S. Navy in 2026, according to The Chosun Daily, a South Korean publication. Most South Korean maintenance contracts involve U.S. Navy ships assigned to the Navy’s 7th Fleet, which is headquartered in Japan.

Chief of Naval Operations Adm. Daryl Caudle met with South Korean shipbuilders in November 2025 during his first international trip as chief of naval operations, where he reviewed shipbuilding practices that could help strengthen the U.S. maritime industrial base.

Phelan also said the Navy planned to revise contracting to encourage faster work by shipbuilders.

“One of the things we are going to do in our contracting is if you beat schedule, you’re going to get a bonus, but you’re going to share it with the workers,” Phelan said.

Phelan said contractors with multi-ship orders had been able to cut construction time for the same ship by eight to 11 months.

The proposed $1.5 trillion fiscal 2027 Defense Department budget asked Congress for $65.8 billion for shipbuilding, including 18 battle force ships and 16 auxiliary ships under the Golden Fleet initiative announced by President Donald Trump last December.

The Navy’s fleet now totals nearly 300 ships. The service has previously said it aims to expand that number to 381 over the next 30 years.

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Oil rose to a three-week high above $110 a barrel in London as traders awaited the U.S. response to an Iranian proposal to end the war and reopen the Strait of Hormuz.

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Secretary of State Marco Rubio said in a Fox News interview aired Monday that Iran appeared to want to retain control of Hormuz, which he said was unacceptable to the U.S. Before the war, about one-fifth of the world’s oil and liquefied natural gas moved through the waterway.

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