Note from the Program Director: Steve Brock is Managing Partner, Del Toro Global Associates and Co-Founder and President of Symbioscape Strategies. In government, he most recently served in a White House appointment as Senior Advisor to the Secretary of the Navy from April 2022 to January 2025. He has served in multiple capacities within the U.S. Navy, the White House, the Pentagon, the U.S. Mission to the United Nations, and the private sector.
Andrew Oros, Senior Fellow and Director, Japan Program
Introduction: Toward a Deeper Alliance Defense Industrial Base
Japan’s shipbuilding industry was once the most competitive in the world. However, over the past three decades, the industry has faced significant structural decline due to intense global price competition and the rapid rise of state-supported shipbuilding industries in China and South Korea. Today, China possesses the world’s largest commercial and naval shipbuilding capacity and is rapidly expanding its naval fleet. Its shipbuilding capability is over 200 times greater than the United States and has a majority share of the world market. This development has fundamentally altered the global maritime balance of power. As a result, shipbuilding is no longer simply an industrial sector. It is a core component of national security infrastructure and national economic prosperity. At the same time, the United States’ lack of an adequate shipbuilding ecosystem has led to increasing challenges in maintaining naval readiness due to insufficient shipyard capacity and maintenance delays. These trends create a strategic opportunity for the United States and Japan – which both countries should seek to capitalize on to promote the interests of each
Seeking to contribute to the political momentum building over the past two years (discussed below) for a renaissance in U.S. maritime industrial power and with Prime Minister Takaichi’s planned visit to Washington, DC in March 2026, the Stimson Center’s twelve-member bi-national Task Force on US-Japan Military Shipbuilding, Maintenance, and Repair Operations (MSMRO) engaged from January to March 2026 in a rich discussion on the opportunities for both short-term and medium-term enhanced collaboration between the two countries. These exchanges culminated in a set of policy recommendations presented at a combined in-person/online public event on March 25, 2026 (link) and summarized below. There was broad agreement among task force members that there is a practical way forward to address recognized challenges to realize this proposed agenda. Some of these ideas are further expanded upon in a related commentary article published by Task Force members on March 20 (link).
Shipbuilding capacity directly affects naval power, maritime logistics, energy infrastructure, and supply chain resilience, among other areas of national power. For the United States and its allies, shipbuilding capacity has increasingly become a strategic constraint. The U.S. Navy faces growing maintenance backlogs and limited shipyard capacity, which directly affect fleet readiness. In this strategic environment, Japan’s remaining shipbuilding capabilities present a critical opportunity for strengthening allied maritime capacity. Japan already possesses world-class shipyards capable of producing sophisticated naval platforms for its navy, the Japan Maritime Self-Defense Force (JMSDF). Expanding this capacity could also support allied fleets operating in the Indo-Pacific.
A Convergence of Interest at the Leaders’ Level
President Trump visited Prime Minister Sanae Takaichi in Tokyo in October 2025 only one week after she took office, visiting the U.S. naval base in Yokosuka together, where they both addressed U.S. troops aboard the aircraft carrier USS George Washington, underscoring the value of the US-Japan alliance to both countries – and especially the value of ships to the security of both of our countries.
Prior to this, U.S. Secretary of Navy John Phelan chose Japan as his first foreign trip destination, where he reiterated his support for Japan assuming a greater role in the in-country maintenance, repair, and overhaul (MRO) for the U.S. Navy. He also expressed strong interest in working with Japan to co-develop and co-produce dual-use ships as a future cooperative initiative and toured a Japan Marine United (JMU) facility, where he strongly encouraged Japan’s shipbuilding industry to invest in the United States to support U.S. efforts to revive its commercial shipbuilding industry that has suffered a steady decline over the years.
In July of 2025, Japan and the United States agreed to trade arrangements that included $550 billion in Japanese government investment in strategic U.S. industries to include shipbuilding. These initiatives over the past year have followed on the 78th Secretary of the Navy’s trip to Japan’s leading shipbuilders in the spring of 2024 with a simple but urgent message: Invest in restoring the Alliance’s maritime power both in Japan and by bringing your world-class shipbuilding expertise to America. Secretary Del Toro reiterated this message with former and current heads of the JMSDF as well as business leaders on a recent trip to Tokyo in April 2026. Thus, further cooperation on shipbuilding (plus maintenance and repair) has crossed both the U.S. political divide as well as aligning with U.S. and Japanese political leadership goals.
Two Key Challenges to Address Together in MSMRO
1. Undercapacity and Labor Shortages. Undercapacity in both countries, despite rising demand challenges, is related to a lack of sufficient skilled and trained labor. In Japan, labor shortages also are emerging due to the country’s rapidly aging and shrinking population size. Japan’s shipbuilding market share has declined from nearly half the global total in the 1980s to just over 10% today. The industry is undergoing consolidation as part of efforts to regain efficiency. With Japan aiming to double shipbuilding output by 2035 under an initiative launched by Prime Minister Takaichi, questions remain regarding both capacity and willingness to build U.S. vessels. Shipbuilding is often perceived as a difficult and physically demanding industry. Combined with wage pressures, this has made it difficult to attract younger workers.
2. The Challenge of Profit-Generation: Japan’s shipbuilding industry faces fundamental structural challenges behind the surface-level problems such as shortages of skilled engineers and aging facilities. The core issue is an industrial structure that makes it difficult to generate sufficient profits. Among ideas to address these structural challenges:
- Position shipbuilding as a national security industry and strengthen government procurement and tax incentives.
- Establish a government-led shipbuilding investment fund and provide long-term contracts for naval and government vessels.
- Introduce automation and robotics, improve working conditions, and establish skills education systems (e.g., shipbuilding academies).
- Reform the supply chain, expand direct contracting, and promote SME clusters and cooperative networks.
Proposed Short-Term and Medium-Term Next Steps Forward
1. We propose a collaborative program linking one or more leading U.S. naval architecture and marine engineering groups with a Japanese partner university and one or more Japanese maritime/shipbuilding industry partners. The partnership would combine (1) hands-on, industry-embedded education and workforce development with (2) an applied research agenda focused on AI for ship design, shipbuilding robotics/automation, and lifecycle digital twins and modeling. The goal is to improve ship performance, quality, cost, safety, and sustainability while strengthening bilateral technical leadership and talent pipelines. Moreover, given Japan’s shrinking population and growing reliance on non-Japanese labor, Japan sees potential long-term contributions in supporting U.S. workforce development. One important aspect of these initiatives should be to engage with young people in efforts to make careers in shipbuilding seem future-looking and attractive uses of their talents. Lessons can be learned from recruiting challenges in other manufacturing industries in Japan.
2. We propose a joint government-supported program to bring AI-enabled robotics and digital tools into shipyards to enhance productivity and address workforce constraints (talent, shortages, etc.). Even by working together, Japan and the United States cannot compete with China purely on the basis of production scale. Instead, we must lead in advanced shipbuilding technology. The United States and Japan have a long history of joint technological collaboration. Smart shipyards could integrate several key technologies:
- AI-assisted ship design
- digital twin simulation
- robotic welding and fabrication
- automated logistics systems
- integrated digital production management
These technologies could dramatically increase productivity while maintaining high quality standards. Smart shipyards would allow our Shipbuilding Alliance to compete through innovation rather than scale.
Such programs should include small and medium-sized and start-up industries to address the limited supply chain presence in shipbuilding in the United States and support struggling SMEs in the Japanese shipbuilding supply chain, including specific programs to introduce and integrate Japanese SMEs into the U.S. market. Partnerships between U.S. and Japanese suppliers should be encouraged through government programs.
3. We propose increased RMI of U.S. military vessels in Japan. Japan has gradually increased its involvement in repairing U.S. Navy vessels operating under the 7th Fleet. While demand for auxiliary vessel repairs remains high, Japan has been unable to accommodate all requests, resulting in some work being redirected to South Korea. Still, integration of repair scheduling of U.S. auxiliary vessels has progressed smoothly and remains essential to maintaining U.S. forward-deployed force readiness.
Japanese shipyards could serve as forward maintenance hubs for U.S. naval vessels operating in the Indo-Pacific. Potential benefits include:
- reduced maintenance backlogs
- improved operational readiness
- stronger alliance interoperability
- stable demand for Japanese shipyards
Such a framework could be described as a US–Japan Shipbuilding Alliance. This alliance would strengthen deterrence while revitalizing maritime industrial capacity.
4. We propose increased RMI of U.S. and Japanese vessels by U.S. and other firms in the region around Japan. Third countries and U.S. territories – as well as U.S. and Japanese corporate presence in these areas – can be a part of the proposed US-Japan Shipbuilding Alliance to contribute to the maintenance and repair of both U.S. and Japanese military vessels. Such operations can extend the number of facilities available to vessels from both countries as well as diverse and secure locations to repair battle damage when needed, recognizing that such capabilities cannot effectively be established after the outbreak of conflict.
In considering potential third-country locations for US-Japan collaboration, including with U.S. and Japanese firms, a calculus of risk, opportunity, and capability should align. Areas that merit first-order consideration include:
- U.S. ally and Japanese security partner the Philippines: Existing facilities owned and operated by a diverse set of U.S. stakeholders at Subic Bay could be further developed with U.S. and Japanese investment in collaboration with SMEs from in-country. The U.S. government’s Development Finance Corporation (DFC) has prioritized strategic investments in shipyard and port infrastructure in the region that would also benefit Japan’s interests, such as repair and maintenance for JMSDF vessels. DFC’s Japanese counterparts should engage the U.S. to optimize planning and seek joint investment opportunities.
- U.S. ally and Japanese security partner Australia: Both the United States and Japan have partnered with Australia on historic and ambitious modernizations of its submarine and surface combatant force and the maritime industrial base infrastructure needed for their future production and maintenance. Japan and the United States should consider areas of mutual interest and share best practices and lessons learned on these important initiatives with our Australin partner.
- Guam’s ship repair capacity is now a matter of regional importance. Congress has directed the Secretary of the Navy to urgently assess ship repair improvements in U.S territories in the Western Pacific. The region lacks dry dock capabilities where allied vessels can undergo major maintenance and drydock repairs, significantly increasing costs, operational downtime, and mission risk. The Japanese Defense Ministry should consult with DoW on prioritizing the importance of forward-deployed maintenance capacities in the Indo-Pacific. The absence of a drydock in Guam represents a clear addressable gap in regional readiness and security posture that Japan and the United States can work together on. New greenfield investment by U.S. and Japanese firms should also be supported by the joint US-Japan Shipbuilding Alliance in the south and central Pacific. American Samoa, for example, possesses a deep-water port, fuel storage, and old shipyard that could benefit from new investment. The Federated States of Micronesia could also be utilized while recognizing their strategic value.
5. The recently released U.S. administration’s Maritime Action Plan directs the U.S. Department of Commerce as the lead on foreign investment in the shipbuilding sector and designates the U.S. Department of the Navy a formal advisory role in that process. Japan should engage the Department of the Navy as it prepares to advocate for maritime investment planning that benefits dual-use naval shipbuilding and repair in the interagency decision-making process. In particular, it will be important to ensure that Japanese investments coming out of that process are optimized to benefit both commercial and naval shipbuilding workforce and infrastructure as well as maritime supply chains.
In Summary
Shipbuilding is not merely an industry. It is a strategic capability that supports national defense, energy infrastructure, and economic security. By redefining shipbuilding as a national security industry and integrating industrial policy with alliance strategy, Japan and the United States can build a stronger maritime partnership capable of sustaining stability in the Indo-Pacific and free and fair maritime commerce globally. Investment in U.S. maritime industry not only strengthens the alliance but also offers Japanese companies diverse, resilient capability and capacity in the secure, strategic sanctuary of North America. In times of crisis or conflict in East Asia, such assets will be invaluable in maintaining Japanese interests in the maritime sphere.
The Time is Ripe for Next Steps on US-Japan Military Shipbuilding Cooperation
By Steve Brock • Andrew Oros
Japan
Note from the Program Director: Steve Brock is Managing Partner, Del Toro Global Associates and Co-Founder and President of Symbioscape Strategies. In government, he most recently served in a White House appointment as Senior Advisor to the Secretary of the Navy from April 2022 to January 2025. He has served in multiple capacities within the U.S. Navy, the White House, the Pentagon, the U.S. Mission to the United Nations, and the private sector.
Andrew Oros, Senior Fellow and Director, Japan Program
Introduction: Toward a Deeper Alliance Defense Industrial Base
Japan’s shipbuilding industry was once the most competitive in the world. However, over the past three decades, the industry has faced significant structural decline due to intense global price competition and the rapid rise of state-supported shipbuilding industries in China and South Korea. Today, China possesses the world’s largest commercial and naval shipbuilding capacity and is rapidly expanding its naval fleet. Its shipbuilding capability is over 200 times greater than the United States and has a majority share of the world market. This development has fundamentally altered the global maritime balance of power. As a result, shipbuilding is no longer simply an industrial sector. It is a core component of national security infrastructure and national economic prosperity. At the same time, the United States’ lack of an adequate shipbuilding ecosystem has led to increasing challenges in maintaining naval readiness due to insufficient shipyard capacity and maintenance delays. These trends create a strategic opportunity for the United States and Japan – which both countries should seek to capitalize on to promote the interests of each
Seeking to contribute to the political momentum building over the past two years (discussed below) for a renaissance in U.S. maritime industrial power and with Prime Minister Takaichi’s planned visit to Washington, DC in March 2026, the Stimson Center’s twelve-member bi-national Task Force on US-Japan Military Shipbuilding, Maintenance, and Repair Operations (MSMRO) engaged from January to March 2026 in a rich discussion on the opportunities for both short-term and medium-term enhanced collaboration between the two countries. These exchanges culminated in a set of policy recommendations presented at a combined in-person/online public event on March 25, 2026 (link) and summarized below. There was broad agreement among task force members that there is a practical way forward to address recognized challenges to realize this proposed agenda. Some of these ideas are further expanded upon in a related commentary article published by Task Force members on March 20 (link).
Shipbuilding capacity directly affects naval power, maritime logistics, energy infrastructure, and supply chain resilience, among other areas of national power. For the United States and its allies, shipbuilding capacity has increasingly become a strategic constraint. The U.S. Navy faces growing maintenance backlogs and limited shipyard capacity, which directly affect fleet readiness. In this strategic environment, Japan’s remaining shipbuilding capabilities present a critical opportunity for strengthening allied maritime capacity. Japan already possesses world-class shipyards capable of producing sophisticated naval platforms for its navy, the Japan Maritime Self-Defense Force (JMSDF). Expanding this capacity could also support allied fleets operating in the Indo-Pacific.
A Convergence of Interest at the Leaders’ Level
President Trump visited Prime Minister Sanae Takaichi in Tokyo in October 2025 only one week after she took office, visiting the U.S. naval base in Yokosuka together, where they both addressed U.S. troops aboard the aircraft carrier USS George Washington, underscoring the value of the US-Japan alliance to both countries – and especially the value of ships to the security of both of our countries.
Prior to this, U.S. Secretary of Navy John Phelan chose Japan as his first foreign trip destination, where he reiterated his support for Japan assuming a greater role in the in-country maintenance, repair, and overhaul (MRO) for the U.S. Navy. He also expressed strong interest in working with Japan to co-develop and co-produce dual-use ships as a future cooperative initiative and toured a Japan Marine United (JMU) facility, where he strongly encouraged Japan’s shipbuilding industry to invest in the United States to support U.S. efforts to revive its commercial shipbuilding industry that has suffered a steady decline over the years.
In July of 2025, Japan and the United States agreed to trade arrangements that included $550 billion in Japanese government investment in strategic U.S. industries to include shipbuilding. These initiatives over the past year have followed on the 78th Secretary of the Navy’s trip to Japan’s leading shipbuilders in the spring of 2024 with a simple but urgent message: Invest in restoring the Alliance’s maritime power both in Japan and by bringing your world-class shipbuilding expertise to America. Secretary Del Toro reiterated this message with former and current heads of the JMSDF as well as business leaders on a recent trip to Tokyo in April 2026. Thus, further cooperation on shipbuilding (plus maintenance and repair) has crossed both the U.S. political divide as well as aligning with U.S. and Japanese political leadership goals.
Two Key Challenges to Address Together in MSMRO
1. Undercapacity and Labor Shortages. Undercapacity in both countries, despite rising demand challenges, is related to a lack of sufficient skilled and trained labor. In Japan, labor shortages also are emerging due to the country’s rapidly aging and shrinking population size. Japan’s shipbuilding market share has declined from nearly half the global total in the 1980s to just over 10% today. The industry is undergoing consolidation as part of efforts to regain efficiency. With Japan aiming to double shipbuilding output by 2035 under an initiative launched by Prime Minister Takaichi, questions remain regarding both capacity and willingness to build U.S. vessels. Shipbuilding is often perceived as a difficult and physically demanding industry. Combined with wage pressures, this has made it difficult to attract younger workers.
2. The Challenge of Profit-Generation: Japan’s shipbuilding industry faces fundamental structural challenges behind the surface-level problems such as shortages of skilled engineers and aging facilities. The core issue is an industrial structure that makes it difficult to generate sufficient profits. Among ideas to address these structural challenges:
Proposed Short-Term and Medium-Term Next Steps Forward
1. We propose a collaborative program linking one or more leading U.S. naval architecture and marine engineering groups with a Japanese partner university and one or more Japanese maritime/shipbuilding industry partners. The partnership would combine (1) hands-on, industry-embedded education and workforce development with (2) an applied research agenda focused on AI for ship design, shipbuilding robotics/automation, and lifecycle digital twins and modeling. The goal is to improve ship performance, quality, cost, safety, and sustainability while strengthening bilateral technical leadership and talent pipelines. Moreover, given Japan’s shrinking population and growing reliance on non-Japanese labor, Japan sees potential long-term contributions in supporting U.S. workforce development. One important aspect of these initiatives should be to engage with young people in efforts to make careers in shipbuilding seem future-looking and attractive uses of their talents. Lessons can be learned from recruiting challenges in other manufacturing industries in Japan.
2. We propose a joint government-supported program to bring AI-enabled robotics and digital tools into shipyards to enhance productivity and address workforce constraints (talent, shortages, etc.). Even by working together, Japan and the United States cannot compete with China purely on the basis of production scale. Instead, we must lead in advanced shipbuilding technology. The United States and Japan have a long history of joint technological collaboration. Smart shipyards could integrate several key technologies:
These technologies could dramatically increase productivity while maintaining high quality standards. Smart shipyards would allow our Shipbuilding Alliance to compete through innovation rather than scale.
Such programs should include small and medium-sized and start-up industries to address the limited supply chain presence in shipbuilding in the United States and support struggling SMEs in the Japanese shipbuilding supply chain, including specific programs to introduce and integrate Japanese SMEs into the U.S. market. Partnerships between U.S. and Japanese suppliers should be encouraged through government programs.
3. We propose increased RMI of U.S. military vessels in Japan. Japan has gradually increased its involvement in repairing U.S. Navy vessels operating under the 7th Fleet. While demand for auxiliary vessel repairs remains high, Japan has been unable to accommodate all requests, resulting in some work being redirected to South Korea. Still, integration of repair scheduling of U.S. auxiliary vessels has progressed smoothly and remains essential to maintaining U.S. forward-deployed force readiness.
Japanese shipyards could serve as forward maintenance hubs for U.S. naval vessels operating in the Indo-Pacific. Potential benefits include:
Such a framework could be described as a US–Japan Shipbuilding Alliance. This alliance would strengthen deterrence while revitalizing maritime industrial capacity.
4. We propose increased RMI of U.S. and Japanese vessels by U.S. and other firms in the region around Japan. Third countries and U.S. territories – as well as U.S. and Japanese corporate presence in these areas – can be a part of the proposed US-Japan Shipbuilding Alliance to contribute to the maintenance and repair of both U.S. and Japanese military vessels. Such operations can extend the number of facilities available to vessels from both countries as well as diverse and secure locations to repair battle damage when needed, recognizing that such capabilities cannot effectively be established after the outbreak of conflict.
In considering potential third-country locations for US-Japan collaboration, including with U.S. and Japanese firms, a calculus of risk, opportunity, and capability should align. Areas that merit first-order consideration include:
5. The recently released U.S. administration’s Maritime Action Plan directs the U.S. Department of Commerce as the lead on foreign investment in the shipbuilding sector and designates the U.S. Department of the Navy a formal advisory role in that process. Japan should engage the Department of the Navy as it prepares to advocate for maritime investment planning that benefits dual-use naval shipbuilding and repair in the interagency decision-making process. In particular, it will be important to ensure that Japanese investments coming out of that process are optimized to benefit both commercial and naval shipbuilding workforce and infrastructure as well as maritime supply chains.
In Summary
Shipbuilding is not merely an industry. It is a strategic capability that supports national defense, energy infrastructure, and economic security. By redefining shipbuilding as a national security industry and integrating industrial policy with alliance strategy, Japan and the United States can build a stronger maritime partnership capable of sustaining stability in the Indo-Pacific and free and fair maritime commerce globally. Investment in U.S. maritime industry not only strengthens the alliance but also offers Japanese companies diverse, resilient capability and capacity in the secure, strategic sanctuary of North America. In times of crisis or conflict in East Asia, such assets will be invaluable in maintaining Japanese interests in the maritime sphere.
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