Anduril will build a $3.7bn submarine parts yard in Baltimore, starting with torpedo tubes

Anduril, the US defence company best known for drones and AI software, is to build a shipyard in Baltimore County, Maryland, to make parts for the US Navy's Virginia-class attack submarines. The company announced the yard, called Arsenal-2, with the White House on Tuesday 6 October. It says it will put in $3.7 billion of its own money. The Navy has given it a contract worth up to $2.9 billion, with payments tied to what Anduril actually produces.

Anduril will not build submarines. The boats are built by General Dynamics Electric Boat and HII's Newport News Shipbuilding, which share the work. Arsenal-2 is meant to make components and large assemblies and send them to those two yards for final assembly. It will start with torpedo tubes. An industry official told reporters on Tuesday that the longer-term aim was to build modules and eventually whole hull sections such as bows and sterns, according to USNI News.

Why the Navy wants another source

The Virginia-class programme is behind. The Navy wants two boats a year. In testimony to Congress on 22 April, the Government Accountability Office said the shipbuilders were working at a pace of one a year as of June 2025, and that both Virginia-class boats the Navy accepted in 2025 were more than three years late. A further GAO report in July, as reported by Breaking Defense, put the delays down to late material deliveries from suppliers and a shortage of experienced workers.

Money for the boats is not the problem. On 29 July the Navy awarded Electric Boat and Newport News $42.1 billion for nine Block VI Virginia-class submarines, plus material for a tenth, Breaking Defense reported. A separate $29.5 billion went on five Columbia-class ballistic missile submarines.

Torpedo tubes are one of the parts holding the line up. A senior administration official told reporters on Tuesday that the tubes were "a gating component" for boats already under construction, and that getting them sooner would let that work move faster. The same official said Arsenal-2 would add about 9 million labour hours a year to the submarine industrial base, about a 15% increase in capacity for the Virginia-class programme.

How the contract works

Anduril's release says the Navy contract pays according to "demonstrated production outcomes", and that this puts most of the execution risk on Anduril rather than the taxpayer. Neither Anduril nor the Navy has said how many parts the $2.9 billion covers, over what period, or what triggers each payment. The $6.6 billion figure used by Anduril and the White House is the company's $3.7 billion and the Navy's $2.9 billion added together.

Maryland and Baltimore County have offered to match up to 13% of Anduril's planned investment. On $3.7 billion, that would be up to about $480 million. The support would come through existing incentive schemes and new money, and the new money still needs approval from the Maryland General Assembly and the Baltimore County Council. The package includes capital support for a workforce training centre at or near the site. Its location has not been chosen.

What gets built, and when

The yard will sit at Tradepoint Atlantic, the redeveloped Sparrows Point steelworks site on the Patapsco River south of Baltimore. Anduril says it will cover more than 2 million sq ft on a 187-acre site, with a working 1,200 ft graving dock and road and rail links. Permitting and site preparation start now. Construction begins once approvals are in place. Anduril expects initial operations in 2030, with output rising after that as it builds up the workforce, supplier base and throughput.

The first parts will come from California. Anduril is setting up a 160,000 sq ft site in Orange County to make Virginia-class components, including torpedo tubes, and to qualify its production under SUBSAFE, the Navy's safety programme for the parts that keep a submarine watertight and let it recover from flooding. The company says this gives it a two-year head start on Baltimore. An industry official told USNI News that Anduril had already begun building prototype torpedo tubes in California. Anduril says it took the same approach at Arsenal-1, its plant in the Columbus, Ohio, region.

The yard will run on Anduril's own software, ArsenalOS. The company says it will link fabrication, outfitting, material movement, inspection and documentation in one system, with digital work instructions and built-in quality checks. The industry official told reporters it would keep digital records of work such as precision welding, so that each job can be traced for certification. Chris Brose, Anduril's president and chief strategy officer, described the idea as taking "very complex tasks performed by very skilled workers and breaking them up into a larger number of simpler tasks that a larger workforce can contribute to", according to DefenseScoop.

Where the people come from

Anduril says the yard will create 3,100 direct jobs and support more than 11,000 indirect ones. The industry executive told reporters that hiring would draw on people from commercial aerospace and the car industry, as well as high schools and vocational schools, USNI News reported.

That is the same pool the existing yards and their suppliers recruit from. The GAO's April testimony said Navy shipbuilders struggle to train, recruit and keep trades workers such as welders, pipefitters and machinists, and that wages are a key factor.

What it means for existing suppliers

Brose told reporters the yard was "not about taking food off the plate of anybody", Breaking Defense reported. Kari Wilkinson, president of Newport News Shipbuilding, said her company welcomed Anduril "as a future subcomponent partner".

For companies already making parts for the programme, the news cuts both ways. Anduril's release says it still has to build up its supplier base, which means new orders for qualified makers of the materials and fittings that go into torpedo tubes and, later, modules. But the qualification rules do not change for a new yard. Bryan Clark, a naval analyst at the Hudson Institute and a former submariner, told USNI News that Anduril would not be able to swap in commercial alternatives for SUBSAFE or nuclear parts, because "the supply chains are very tight".

The work matters beyond the US. Anduril says the expansion is also needed to meet AUKUS commitments, under which the US is to sell Virginia-class submarines to Australia in the 2030s.

The first test is the torpedo tubes from California, about two years before Baltimore opens. Under the Navy contract, Anduril's payments depend on what it delivers.

Sources: Anduril Industries, press release, 6 October 2026; Office of the Governor of Maryland, press release, 6 October 2026; Maryland Department of Commerce, press release, 6 October 2026; USNI News, 6 October 2026; Breaking Defense, 6 October 2026 and 29 July 2026; DefenseScoop, 6 October 2026; US Government Accountability Office, GAO-26-109068, testimony, 22 April 2026.

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