defense tech•Wed, October 7, 2026•5 min read

Anduril’s $6.6B ‘Arsenal-2’ Shipyard: A Massive Move to Fix the US Navy’s Submarine Shortage

Anduril Industries is launching a $6.6 billion investment to build a state-of-the-art shipyard in Baltimore, aimed at solving the US Navy's chronic submarine production delays. The project, known as 'Arsenal-2,' seeks to modernize defense manufacturing using software-defined processes and create over 3,000 permanent jobs. This initiative represents a critical effort to bolster the domestic industrial base and meet global security commitments.

A New Chapter for Naval Manufacturing

The US Navy’s quest to produce two Virginia-class attack submarines per year has been hampered by significant delays and an aging industrial base. In a major development, defense tech powerhouse Anduril Industries has announced a $3.7 billion private investment in a new manufacturing complex at Tradepoint Atlantic in Baltimore County. Supplemented by a $2.9 billion Navy contract, the $6.6 billion project, dubbed 'Arsenal-2,' is designed to inject much-needed capacity and efficiency into the submarine program.

The site at Tradepoint Atlantic in Sparrows Point, Maryland, will host the new Arsenal-2 shipyard.

What is Arsenal-2?

Arsenal-2 is not your traditional shipyard. Spanning 187 acres and over 2 million square feet, the facility aims to redefine defense manufacturing through digital integration. At its core is 'ArsenalOS,' a software-defined industrial system that connects fabrication, assembly, and quality control. This digital backbone is expected to eliminate many of the bottlenecks that have slowed submarine production in recent years.

Infrastructure: 2 million square-foot complex with high-bay assembly halls and a 1,200-foot graving dock.
Production Focus: Components and large-scale assemblies for Virginia-class submarines.
Economic Impact: Creation of 3,100 direct jobs and over 11,000 indirect roles, generating $2 billion in annual economic output.
Operational Timeline: Initial operations are slated for 2030, with a California-based facility acting as a testbed for manufacturing methods until then.

Why This Matters Now

The US Navy has struggled to meet its annual production goals, with actual delivery rates falling to nearly one boat per year by mid-2025. This shortfall has created a massive backlog, impacting both domestic defense readiness and international obligations, such as the AUKUS security partnership with Australia. By adding a new, parallel production source, the Navy hopes to stabilize the supply chain and reclaim its maritime edge.

Adding another source of this work will allow more submarine construction to happen in parallel across the industrial base and increase the overall capacity available to the Virginia-class program.
— Anduril Industries Statement

Key Takeaways

Anduril Industries is investing $3.7B into the 'Arsenal-2' shipyard, with a $2.9B contract from the US Navy.
The facility will specialize in manufacturing components for Virginia-class attack submarines.
The project is expected to create over 3,100 direct, high-skilled manufacturing jobs in Baltimore County.
Operations will rely on 'ArsenalOS,' a software-defined platform designed to increase production efficiency.
The move addresses a critical shortfall in submarine production, which has hovered around one boat per year since 2025.

FAQ

What is the Arsenal-2 facility?

Arsenal-2 is a 2 million square-foot, software-defined shipyard located in Baltimore County, Maryland, designed to manufacture components and assemblies for Virginia-class submarines.

How much is being invested in the project?

The project represents a combined $6.6 billion investment: $3.7 billion from Anduril Industries and a $2.9 billion contract from the US Navy.

When will the facility begin operations?

Initial operations are expected to begin in 2030, with scaling of production following thereafter.

How many jobs will this create?

The facility is expected to create approximately 3,100 direct jobs and more than 11,000 indirect jobs in the surrounding region.

Why is this facility necessary?

The US Navy has faced significant production delays and a submarine backlog, struggling to meet its target of producing two Virginia-class submarines annually.