SCA’s Paxton Testifies to Congress on Bolstering U.S. Shipbuilding Base

[The following are exerpts and paraphrasing from testimony given by Matthew O. Paxton, President of the Shipbuilders Council of America (SCA), to Congress on the morning of February 26, 2025.]

While maritime strength and shipbuilding historically have been a cornerstone of global power, shifting times and geopolitical pressures impact readiness and output. Today, as the world’s geopolitical landscape shifts, so too does the reality of the U.S. shipbuilding and ship repair industry. In testimony before the U.S. House Armed Services Committee, Matthew O. Paxton, President of the Shipbuilders Council of America (SCA), laid out the challenges facing the shipbuilding sector and called for immediate action to assist the industry’s resurgence.

“The U.S. shipyard industrial base is a diverse and critical manufacturing sector of our nation’s economy,” Paxton said. “However, a series of compounding challenges, including budget instability, excessive oversight, and an outdated approach to ship acquisition, threatens our ability to compete with near-peer adversaries.”

At stake is not only America’s national security, but also an industry that supports more than 390,000 jobs and contributes over $42 billion annually to the economy, according to SCA. With global competitors—such as China, Russia, and even U.S. allies like South Korea and Japan—bolstering their shipbuilding capacities through subsidies and aggressive market strategies, Paxton warns that without a fundamental shift in approach, the U.S. risks further erosion of its maritime dominance.

The Jones Act: 'A Lifeline' for U.S. Shipyards

A central element of stability for the domestic shipbuilding industry is the Jones Act. Despite its significance, the Jones Act often comes under fire from those who argue it increases costs. Paxton counters, saying, “The Jones Act provides market certainty and stability, ensuring the existence of a domestic shipbuilding and ship repair industrial base. Without it, we risk losing the very foundation of our maritime capabilities.”

Newport News Shipbuilding contractors move steel plates into the catapult trough aboard the Nimitz-class aircraft carrier USS John C. Stennis (CVN 74), in Newport News, Virginia, July 27, 2023. John C. Stennis is in Newport News Shipyard conducting Refueling and Complex Overhaul to prepare the ship for the second half of its 50-year service life. (U.S. Navy photo by Mass Communication Specialist 3rd Class Max Biesecker)

Shrinking Fleet, Rising Demands

The numbers tell a stark story. In 1992, the U.S. Navy operated 471 active ships; today, that number has dwindled to 295. At the same time, ship designs have grown more complex, often leading to cost overruns and delays. According to Paxton, much of this stems from shifting government priorities and an inefficient approach to ship acquisition. “We’ve seen an overemphasis on competition at the expense of partnership,” Paxton explained. “Every shipbuilding contract turns into a race to the bottom, with contractors winning bids by taking on unsustainable margins and absorbing cost overruns.”
Case in point: the FFG(X) frigate program. Originally based on an existing design, the Navy added 3,000 pages of additional requirements before the contract was even awarded. By the time construction began, even more design changes were imposed, resulting in increased costs and delays. “We are over-designing platforms to the point that they are not able to be manufactured efficiently, forcing sailors to operate older vessels with fewer capabilities,” Paxton said.

Ship Repair: An Overlooked Crisis

While new shipbuilding garners much attention, the maintenance and modernization of existing ships are equally critical. Yet, the current approach to ship repair contracting—where each maintenance job is bid separately rather than as part of a strategic long-term plan—leads to inefficiencies and delays. “Ship repair is not a commodity; it’s a complex, heavy-manufacturing industry that requires stability,” Paxton said. “We must move beyond the stop-start nature of contracting and allow for strategic planning that optimizes capacity and workforce utilization.”

While there has been a successful call to engage shipyards outside the U.S. to help fill the ship repair and maintenance void, Paxton maintains that this, in and of itself raise concerns. “We absolutely support the Fleet’s need for emergency repairs overseas,” Paxton stated. “However, moving existing domestic repair work abroad would devastate our industrial base and reduce our ability to maintain readiness in times of crisis.”

Show Me the Money

Perhaps the most pressing issue facing the industry is the unpredictability of defense budgets, a situation that is not likely to be resolved soon. Continuing resolutions (CRs) and delayed appropriations create an unstable funding environment, making it nearly impossible for shipyards to plan long-term investments, according to Paxton’s testimony.  Since 2010, budget instability has plagued the sector, preventing meaningful progress.
“Unstable budgets and CRs introduce uncertainty, stifle innovation, and undermine workforce stability,” Paxton emphasized. “Congress must return to passing regular appropriations bills to provide the industry with the predictability it needs.”
Despite the challenges, Paxton remains optimistic that change is possible—if the right steps are taken. Among his key recommendations:

• Utilize existing capacity by recognizing that U.S. shipyards are capable of more than current contracting models allow.
• Streamline oversight to reduce bureaucratic bottlenecks and improve efficiency.
• Balance competition with collaboration by fostering partnerships between shipbuilders and the Navy.
• Commit to stable and predictable budgets that support long-term industry planning.
• Emphasize mission-sufficient designs rather than over-engineering ships to the point of infeasibility.
• Invest in the repair and modernization sector to ensure the longevity and readiness of the fleet.

“The men and women of the American shipbuilding industry are ready to meet the challenges ahead,” Paxton said. “What we need is a commitment from our government partners to provide the stability and support necessary to ensure the future of American shipbuilding.”

The Nimitz-class aircraft carrier USS John C. Stennis (CVN 74) flies the national ensign in Newport News, Virginia, July 19, 2024. John C. Stennis is in Newport News Shipyard conducting Refueling and Complex Overhaul to prepare the ship for the second half of its 50-year service life. (U.S. Navy photo by Mass Communication Specialist 2nd Class Max Biesecker)