The U.S. Navy is in urgent need of more submarines. This demand opens the door for Baltimore to benefit significantly, potentially creating thousands of jobs. However, the decision to make the primary customer, the government, a 40 percent owner of the new facility presents challenges. This decision might affect the market dynamics negatively.
Recently, the USS Billings and an Anduril submarine were displayed at an event at Sparrows Point Shipyard near Baltimore, highlighting the importance of submarine production. The new facility by Anduril is set to invigorate the defense industrial base, which is currently slowed down. The focus is on increasing the production of Virginia-class attack submarines.
Despite the need for speed in production, the U.S. government’s move to take an equity stake in the project raises questions. The government will be the primary customer for these submarines. Holding a significant ownership stake might undermine the principles of market discipline and competition that are crucial in defense contracting.
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