SECNAV Phelan to Navy, Shipbuilders: ‘Change is Coming’

USNI News

By: Sam LaGrone

April 9, 2025


NATIONAL HARBOR, Md. — Newly minted Navy Secretary John Phelan pledged a shakeup of the Department of the Navy with a focus on growing shipbuilding and challenging parts of the Navy’s culture that have led to delays in deliveries of new capabilities and gaps in overall readiness.

Phelan told an audience at the Sea Air and Space 2025 symposium that “change is coming.” The financier with a long business pedigree reiterated that growing the maritime industrial base was the top priority for him and the White House.

“Rising costs, shifting requirements and years of underinvestment in shipbuilding have left us vulnerable,” he said.

“Under investment in workforce and manufacturing capacity, gold-plated requirements, bureaucratic decision making have all led to huge cost overruns, extremely late deliveries and delayed maintenance. This is unacceptable. Fixing this requires a whole-of-government and industry approach and public-private partnerships.”

Expanding domestic naval and commercial shipbuilding capacity has been a White House priority since the start of the Trump administration. Spurred on by the increasing output of Chinese yards, the Trump administration is poised to release a series of executive orders to expand the maritime industrial base centered on a new White House office.

In his confirmation hearing, Phelan told the Senate Armed Services Committee that President Donald Trump’s focus for the Navy Department was “shipbuilding, shipbuilding, shipbuilding.”

The largest barrier is growing a workforce capable of meeting the needs of the Navy. The shipbuilding industrial base has struggled to refresh its workforce as wages for skilled labor in the shipyard have not increased to meet the growth of service industry jobs that are more appealing to an entry-level workforce, Navy and industry officials have told USNI News. Attrition of new workers has led to a pressurized job market for talent that has driven up the cost for labor, with shipyards asking for relief from the service.

Expanding shipbuilding to other parts of the country with existing manufacturing workforces to outsource modules for ships has grown, with more work going to facilities in Alabama and South Carolina, for example.

“I think we need to look at potentially opening up other shipyards and finding places where we can do that. This is a big, big priority for the president, and he is extremely focused on it, and I certainly don’t want to disappoint him. If I do, he’ll probably have another SECNAV here,” Phelan said Wednesday.

Much of the address focused on cultural changes to speed the delivery of new capabilities to the fleet.

“I understand the Navy has its own ways of doing things, steeped in tradition and often inflexible. Those ways, when they are dysfunctional, must be confronted daily and relentlessly in order to change,” he said. “They have to be challenged by senior leadership. Where the inertia of the organization becomes immovable, we will stagnate and fail.”

In parallel, other service officials this week have voiced the potential shifts in long-held constants in shipbuilding programs.

On Tuesday, Fleet Forces Commander Adm. Darryl Caudle suggested the more than 20-year-long teaming arrangement between General Dynamics Electric Boat in Connecticut and HII’s Newport News Shipbuilding in Virginia, in which each yard builds sections of the same Virginia-class submarines, could be broken up.

“We have to challenge things. Is it still a good idea to build every Virginia-class across both yards?” he said. “Is it time to start independently, having each of the yards, HII and EB, build the Virginia-class separately?”

Phelan also started a review of Department of the Navy contracts, a pledge he made during his confirmation hearing. 

“We are currently in the early stages of reviewing all of our contracts and also understanding how the decision process works,” he said. “I’m still trying to understand why things take as long as they do. I’m trying to understand why they cost as much as they do. I see numbers on things that are eye-opening.”

As an example, Phelan said when he developed a high-end hotel in Hawaii, the cost averaged about $800,000 a room. In comparison, he found a contract where a barracks costs about $2.5 million a room.

Overall, Phelan outlined three priorities with shipbuilding at the top, followed by developing “an adaptive, accountable war fighting culture” and the health and welfare of Marines, sailors and their families.

In addressing the room of industry and senior Phelan told the crowd, “change is coming, and my responsibility is to make sure that we have the right people, right seniors, on the right platforms. There’ll be a new level of accountability and performance based on merit.”

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