Anduril to spend $3.7B on Maryland shipyard after Navy award

The Navy deal is not a fixed check. Anduril says payments are tied to demonstrated production results, so the full $2.9 billion only arrives if the company actually delivers parts.

Those parts are components and, later, large hull sections called blocks for Virginia-class boats. Anduril will not build whole submarines. Finished sections will go to the two yards that already assemble them, General Dynamics Electric Boat and HII’s Newport News Shipbuilding. Company president Christian Brose said the goal is to become a much larger part of the supply chain for those lead builders over time.

Anduril plans to run the yard with ArsenalOS, its own factory software. It links fabrication, material movement, inspections and paperwork in one system so managers can see in real time where each job stands. Welders, pipefitters and electricians still do the physical work.

The new yard, called Arsenal-2, will sit on 187 acres at Tradepoint Atlantic in Baltimore County. That is the redeveloped Sparrows Point site, once home to Bethlehem Steel’s steelmaking and shipbuilding operations, which built military vessels for both world wars. New ship construction there stopped in 1986, and the old yard shut for good in 2003.

When finished, the complex will cover more than 2 million square feet. Plans include high-bay assembly halls, fabrication areas, production lines that can be reconfigured, and a 1,200-foot graving dock (a dry dock dug into the shore where large structures are built). Road, rail and sea links will move the huge assemblies out.

Maryland officials call it the largest private investment in the state in more than a decade. The state and Baltimore County have agreed to match up to 13% of Anduril’s planned investment through incentive programs, including money for a workforce training center near the site.

Congress has generally paid for two Virginia-class submarines a year. Actual output has been far lower, roughly 1.1 to 1.4 boats a year recently, held back by worker shortages and supply problems. Some deliveries are running years late.

The Navy wants to reach two a year and then about 2.33, partly to meet commitments to Australia under AUKUS, the submarine pact between the US, the UK and Australia. Components such as torpedo tubes have been named as a bottleneck slowing boats already under construction.

A senior administration official said Arsenal-2 could add about 9 million production labor hours each year at full capacity. That is roughly a 15% boost for the Virginia-class program, because more work could happen in parallel instead of queuing at the two main yards.

For people in the Baltimore area, the headline is work. Anduril says Arsenal-2 will create more than 3,100 direct jobs and support over 11,000 indirect ones once it is fully running. Those are skilled trades: welders, electricians, shipfitters and inspectors.

For taxpayers across the US, the deal is a test of a different way to buy weapons. Instead of the Navy paying upfront for a new yard, a private company is putting its own billions at risk and only collecting the full contract if it produces. If it works, expect more defense tech firms to pitch the same model. If Anduril struggles to hire, find suppliers or meet the Navy’s tough quality standards, the money and the extra capacity could arrive later than hoped.

There is one catch. Arsenal-2 does not open until 2030, so it will not fix today’s delivery backlog. Its value is in the years after that, when the Navy will be trying to sustain higher output while also preparing to transfer submarines to Australia.

The award landed days after Anduril co-founder Palmer Luckey joined Project Meridian, a Pentagon group studying technologies for future warfare. The group also includes Elon Musk and former House Speaker Newt Gingrich, and its work overlaps with products Anduril sells to the government.

The Pentagon rejected any suggestion of a conflict. Its chief technology officer, Emil Michael, said there was “nothing to see here” and argued that Meridian’s mix of academics, military staff and industry leaders brings the expertise it needs.

President Trump visited the planned Maryland site and spoke about autonomous submarines as a possible future for naval warfare, an area that plays to Anduril’s strengths in unmanned systems.

Anduril says site preparation starts right away while it seeks permits and approvals. Before Maryland opens, it will start making parts, including torpedo tubes, at a new 160,000-square-foot plant in Orange County, California. The company says that gives it about a two-year head start on proving its manufacturing processes.