WATCH: In SASC Hearing, Kelly Warns Against Outsourcing Navy Shipbuilding, Pushes to Rebuild American Maritime Industry

This week, during a Senate Armed Services Committee (SASC) hearing, Arizona Senator and Navy combat veteran Mark Kelly (D-AZ) warned Acting Secretary of the Navy Hung Cao against outsourcing Navy shipbuilding to foreign yards. Kelly argued that, after decades of decline, the United States' commercial maritime industry, including domestic workers and shipyards, need to be prioritized and invested in.

Last year, alongside Senator Todd Young (R-IN) and Representatives John Garamendi (D-CA-08) and Trent Kelly (R-MS-01), Kelly introduced the SHIPS for America Act to revitalize the United States shipbuilding and commercial maritime industries.

Kelly laid out the stakes of the United States' declining maritime industrial base: "The Navy's shipbuilding delays, maintenance backlogs, and workforce shortages are not isolated problems. They're symptoms of a broader decline in U.S. shipbuilding capacity that has developed over decades. Meanwhile, China has built a massive maritime industrial base by linking commercial shipbuilding and naval shipbuilding and naval production together.

"I think it's important that we recognize that no country has ever become a great shipbuilding power on the backs of military shipbuilding alone. The Chinese have learned that lesson."

Secretary Cao agreed with Kelly, saying the United States has "levers we need to pull as a country in order to get our industrial base going," such as incentivizing young people to enter the shipbuilding workforce.

Kelly made the case for his SHIPS for America Act as the solution: "We want to encourage these world class shipbuilders to come here to the United States and invest here in the United States. And that's what the President's Maritime Action Plan and the SHIPS for America Act seeks to do.

"I'm interested in working with you, Mr. Secretary, on this. It's clear to me that it is a national security and economic imperative that we rebuild the maritime industry here in the United States. It's going to help the Navy. It's going to help the Marine Corps. It's also going to create good paying jobs."

Admiral Caudle agreed: "I need ships, I need them now, I need capacity. We have a workforce limitations here. […] Senator Kelly and I, we've talked about this before. There is no question he is right that when you gain the competency and capacity and the expertise and subject matter expertise of actually building ships in our country, that that will translate naturally to a workforce that does that for a living, which will extend, by definition, over to being able to build more combat."

Sen. Kelly questions Acting Secretary Cao during a SASC hearing.

Click here to download a video of Kelly's remarks. See the transcript below:

Senator Kelly:

Thank you, Mr. Chairman. Mr. Secretary, I want to discuss how we revitalize our maritime industrial base. So, the Navy's shipbuilding delays, maintenance backlogs, and workforce shortages are not isolated problems. They're symptoms of a broader decline in U.S. shipbuilding capacity that has developed over decades. Meanwhile, China has built a massive maritime industrial base by linking commercial shipbuilding and naval shipbuilding and naval production together. I want to start out with just some basic questions. Yes or no. Would you agree that the source of many of the Navy's challenges delivering new warships on time and on budget are due to a weakened shipbuilding industrial base?

Acting Secretary Hung Cao:

Yes, sir.

Kelly:

Would you agree that looking at the other great shipbuilding powers in the world today, Korea, Japan, China, even the Europeans, their shipyards benefit from having business from both commercial shipowners and military shipbuilding orders?

Cao:

Yes, sir.

Kelly:

So, would you agree that the U.S. would benefit from having a viable market for U.S. built commercial vessels, especially since that would mean having a resilient supply chain that can support both commercial and military shipbuilding?

Cao:

Yes, sir. As I said earlier, we only have 188 commercial flagged U.S. ships and 105 Military Sealift Command ships, and we need thousands, the way the Chinese have.

Kelly:

Would you agree that in a major conflict, the United States military depends heavily on commercial sealift capacity to move fuel, equipment, ammunition and supplies overseas?

Cao:

Senator, logistics wins wars.

Kelly:

And would you agree that our current sealift fleet is aging in the United States, lacked sufficient domestic shipbuilding capacity to recapitalize that fleet quickly?

Cao:

Yes, sir. It's not just the number of ships. We also need merchant mariners as well. That's why we need to push us. Merchant marine academy. We need to push Maine Maritime Academy, Massachusetts, New York Maritime, all those avenues in order to get more merchant mariners out there.

Kelly:

Thank you for that. As a graduate of the U.S. Merchant Marine Academy, I appreciate that.

Cao:

I wasn't trying to placate you, but I guess I won something.

Kelly:

Would you also agree that in a prolonged conflict in the Indo-Pacific, we can't assume foreign shipyards or foreign controlled shipping networks will remain fully available to the United States?

Cao:

Well, I think I know where you're going with this. We're trying to bring these to United States. When I buy my Toyota or whatever, it's not built in Japan anymore. It's built in the United States.

Kelly:

We want them investing in the United States.

Cao:

We want them investing in us, sir.

Kelly:

I agree. And would you agree that rebuilding American commercial shipbuilding and sealift capacity is not just an economic issue, but a core wartime readiness issue?

Cao:

Yes, senator.

Kelly:

All right. And so, taken together, would you agree then, that as a matter of government policy, we should be working to develop such a commercial industry through regulatory regulation, reforms, tax incentives and more?

Cao:

We need to pull all levers, Senator. It includes, for example, for shipyard workers. There's a lot of young people out there that want to college with the hopes of getting a job. And they can't do anything else. So, why can't we freeze their loans and for every year they work in shipyard, we forgive that that year? These are levers we need to pull as a country in order to get our industrial base going, sir.

Kelly:

Well, that could be a possible addition to my SHIPS for America Act, because we're trying to strengthen this legislation right now, and it tries to do all these things. And I think it's important that we recognize that no country has ever become a great shipbuilding power on the backs of military shipbuilding alone. The Chinese have learned that lesson. So, given all that, I'm concerned by the growing discussion about outsourcing Navy ship building work to foreign shipyards. To me, it risks treating the symptom instead of fixing the underlying problem. The United States maritime industrial base did not decline overnight. It happened over decades. Now, to be clear, we need to work with our allies closely and partners like Japan and South Korea to counter China's shipbuilding advantage. We should also be sharing best practices, deepening repair cooperation and leveraging allies expertise to cut down on our shipbuilding costs and production timelines. But there's a difference between working with allies and partners to strengthen our industrial base here and becoming strategically dependent on foreign shipyards that could themselves become vulnerable to Chinese attacks in a conflict. So, to put a fine point on it, we want to encourage these world class shipbuilders to come here to the United States and invest here in the United States. And that's what the President's Maritime Action Plan and the SHIPS for America Act seeks to do. But for these foreign shipyards, if it's a lot cheaper for them to just get paid by the U.S. Navy to build ships in their existing shipyards, then they're probably not going to seriously consider investing in our maritime shipbuilding capability and capacity here. So, I'm interested in working with you, Mr. Secretary, on this. It's clear to me that it is a national security and economic imperative that we rebuild the maritime industry here in the United States. It's going to help the Navy. It's going to help the Marine Corps. It's also going to create good paying jobs. You referenced young people who could have these great paying careers. Admiral, we can get up to two submarines a year. One of the things that can help is rebuilding the commercial sector. And, Mr. Chairman. I'm sorry. I'm over my time, but this is one of my top priorities, and I look forward to talking to you about this with some of my colleagues, maybe later this month.

Chairman Wicker:

Will there be an objection to asking Admiral Caudle what he thinks of your questions?

Kelly:

No objection.

Wicker:

Sir. Go ahead.

Admiral Caudle:

Well, this is a complex topic. I need ships, I need them now, I need capacity. We have a workforce limitations here. We have an industrial base that can't support the load without being creative or modularity and these new construction techniques. This is an all hands-on-deck thing. But what I will commit to is when we look at this and we've got the money to go look at this hard that the Secretary and my chain of command will get my best military advice on it. This is not a no brainer decision. When you start bringing foreign shipbuilding in and foreign ships into the United States Navy arsenal, I have to look closely at how we fight that ship, man it how we damage control, it, the procedures associated with it and the parts support that supply it. So, it will get a full, hard look for me and my best military advice.

Wicker:

Admiral, but what about the earlier point of utilizing the commercial shipyards in conjunction with building our military?

Caudle:

Well, Senator Kelly and I, we've talked about this before. There is no question he is right that when you gain the competency and capacity and the expertise and subject matter expertise of actually building ships in our country, that that will translate naturally to a workforce that does that for a living, which will extend, by definition, over to being able to build more combat.

Wicker:

You said there's really no question on that, that he's right. And I want to congratulate both of you for your statements today, because I think that is that's an opportunity that somehow, we've been missing in recent decades.