The Navy has awarded Anduril Industries a contract worth up to $2.9 billion to make parts for Virginia-class attack submarines, and the company is putting $3.7 billion of its own money into a new shipyard at Sparrows Point, outside Baltimore. The White House and Anduril announced the project on Tuesday, hours before President Trump was due at Tradepoint Atlantic, the site where the yard will be built.
Anna Kelly, the White House's principal deputy press secretary, said the Navy and Anduril together will invest $6.6 billion and that the project "delivers on President Trump's promise to bolster America's defense industrial base while revitalizing our manufacturing industry." Kelly said it would create more than 13,000 direct and indirect jobs and drive $2 billion a year in economic output. Trump and Defense Secretary Pete Hegseth were expected in the area Tuesday afternoon to promote the new yard.
Anduril calls the yard Arsenal-2, and it will rise on the former Bethlehem Steel site at Sparrows Point. Plans call for more than 2 million square feet on 187 acres, including a 1,200-foot graving dock. The company intends to start with torpedo tubes and other smaller parts, then work up to bows, sterns and other large sections, but it will not build whole submarines. Its output will go to General Dynamics Electric Boat and Newport News Shipbuilding for final assembly. Those two builders, the second owned by HII, jointly produce the Virginia class.
The Navy wants two Virginia-class boats a year, but a Government Accountability Office report found that shipbuilders were turning out about one a year as of June 2025, slowed by late deliveries from suppliers and a shortage of experienced workers. Adm. Daryl Caudle, the chief of naval operations, told House appropriators in May that he expected industry to reach two a year by around 2032. The Navy is also trying to build up an undersea force that could play a key role in a potential conflict with China in the Pacific.
A senior administration official, briefing reporters on condition of anonymity, said Arsenal-2 could add about 9 million labor hours a year, the equivalent of roughly a 15 percent increase. The official called torpedo tubes a "gating component" for Virginia-class boats already under construction and said getting them sooner would speed that work.
The yard fits a broader administration push to expand American shipbuilding. Trump signed an executive order in April 2025 aimed at rebuilding the maritime industrial base and has since issued a presidential memorandum directing further steps to strengthen Navy shipbuilding capacity and competition. Chris Brose, Anduril's president and chief strategy officer, said the company had been discussing the need for more shipyard production capacity with the administration and the Navy for nearly two years.
Anduril says payments under the Navy contract are tied to what the yard produces and that the company, not the taxpayer, carries most of the execution risk. "It's really the government buying the results of what we're able to produce from the facility that we've invested in," Brose said. He presented the yard as extra capacity for the traditional shipbuilders rather than a rival to them. "This is not about taking food off the plate of anybody," he said.
Permitting and site preparation are to start immediately, with construction to follow once the necessary approvals are in place, and Anduril expects initial operations in 2030. In the meantime, the company is opening a 160,000-square-foot plant in Orange County, California, to make torpedo tubes and Virginia-class test assets, which it says will give it a two-year head start. Before taking on more complex assemblies, the senior official said, Anduril will have to prove that its parts meet quality standards, hold the pressure boundary and are safe to submerge with crews aboard.
The project marks Anduril's first entry into the supply chain of a major legacy defense program. Founded in 2017 by Palmer Luckey, the company is best known for drones and other autonomous systems, and its $1 billion Arsenal-1 plant in Ohio began producing combat drones this year. The contract also came days after the Pentagon named Luckey to Project Meridian, a new initiative to identify capabilities for future conflicts. Some observers have described that appointment as a conflict of interest because Anduril regularly contracts with the military, The Baltimore Banner reported.
Anduril says the yard will employ 3,100 people directly, which The Baltimore Banner said would eventually put it among Baltimore County's five largest private employers. Gov. Wes Moore said the project would "deliver the largest private investment and create the most jobs in Maryland in well over a decade." Brian Schimpf, Anduril's chief executive, said Sparrows Point "helped build the fleet that won World War II."
Moore said Maryland and Baltimore County have committed to match up to 13 percent of the company's anticipated private investment. The Banner put the public subsidies at about $500 million, pending action by the General Assembly and the Baltimore County Council. The county's share is a personal property tax break of up to $210 million over 30 years. The public will get two chances to weigh in, on Oct. 13 and Oct. 27, before an expected council vote on Nov. 2.