On October 6, 2026, the US defense technology company Anduril announced plans to invest $3.7 billion in private funds to build "Arsenal-2," a submarine manufacturing site in Maryland. President Trump announced the plan at the site. At its core, the facility will manufacture components and large assemblies for Virginia-class nuclear-powered attack submarines and supply them to existing shipbuilders.
The US Navy has awarded the company a performance-based contract worth up to $2.9 billion, and the site is aiming for initial operations in 2030. What will determine whether submarine output rises is not simply building a huge factory. It is whether the company can then keep manufacturing and inspection running smoothly and consistently supply parts of the required quality.
Not building complete submarines, but spreading out the construction work
Arsenal-2 will make complex components and large assemblies. Final assembly of the submarines will remain with General Dynamics Electric Boat and HII's Newport News Shipbuilding, which currently build the Virginia class together.
Anduril says it will supply parts and assemblies made at Arsenal-2 to both companies, creating more room for construction work to proceed at several sites at once.
The plan does not replace the two existing shipyards with a new factory. If part of a submarine is built at another site, the yards responsible for final assembly can move ahead with other work, easing the burden that has been concentrated on limited facilities and personnel.
The significance of this new entrant lies less in increasing the number of companies that build complete boats than in increasing the number of manufacturing processes that can run in parallel.
The site is Tradepoint Atlantic in Sparrows Point, Baltimore County, an area that once supported steelmaking and shipbuilding. A manufacturing facility of more than 2 million square feet (about 186,000 square meters) will be built on a 187-acre (about 75.7-hectare) site.
An existing dry dock on the property is 1,200 feet (about 366 meters) long and can also be used to handle large structures. All metric conversions are approximations based on the published figures.
Anduril says its design places large assembly buildings and machining facilities close together, reducing transport distances and waiting time when machined parts move to assembly and testing.
The location, which offers access by sea as well as road and rail, is also well suited to a division of labor in which large parts are shipped out to existing shipyards.
Still, being able to produce large volumes of parts does not necessarily speed up submarine construction as a whole. The success of this division of labor depends on delivering parts when they are needed and at a quality that downstream processes can accept.
Hiring is also still ahead. The more than 3,100 direct jobs listed on the company's Arsenal-2 page are a target for 2034.
The floor area and future headcount indicate the scale of the plan, but they do not represent production capacity that is available today.
Up to $6.6 billion: private investment plus Navy payments tied to results
The figure of up to $6.6 billion cited in the announcement combines Anduril's $3.7 billion in private investment with a Navy contract worth up to $2.9 billion.
Not all of the $6.6 billion will go toward building the factory.
In addition, the State of Maryland and Baltimore County have indicated they will provide separate support equivalent to up to 13% of the private investment.
| Funding category | Announced amount / cap | Payment and conditions |
|---|---|---|
| Anduril private investment | $3.7 billion | Investment to build the new site and production system |
| US Navy contract | Up to $2.9 billion | Paid according to production results actually achieved |
| State and county support | Up to 13% of private investment | Uses existing incentive programs and new appropriations; new appropriations require legislative approval |
Sources: Anduril and the Maryland Department of Commerce announcement of October 6, 2026.
Capital investment by a private company, Navy payments for results, and state and county incentives to attract business serve different purposes. The three categories in the table therefore cannot simply be added together and treated as the "construction cost of the factory."
Applying the 13% maximum support indicated by the state and county to $3.7 billion gives a cap of $481 million (calculated as $3.7 billion × 13%).
However, this is not an amount that has actually been spent. The state commerce department states that the new appropriations included in the support package require approval from the state legislature and the county council. Support for a training facility to develop the workforce is also part of this framework.
Regarding the Navy contract, Anduril explains that tying payments to actual production results means the company bears most of the risk of carrying out the work.
That, however, is Anduril's characterization of the contract. The public materials do not reveal details such as which parts will be accepted and when, or what must be achieved to meet the payment conditions.
A large contract ceiling and the amount ultimately paid up to that ceiling need to be considered separately.
In submarine manufacturing, production records matter as much as parts
Anduril says its manufacturing management platform, ArsenalOS, reflects design changes in work instructions on the shop floor and tracks which product was built to which design revision.
According to the June 17 official introduction, it also includes functions to prevent discrepancies such as workers continuing to refer to old drawings after a design change.
At the center of the platform is "Forge," an in-house system for manufacturing execution, maintenance and quality control, which also connects to commercial external systems.
Rather than replacing every process with proprietary software, the idea is to link design information and shop-floor work in a single flow of information.
The company says it will record information such as who welded what and when, and which tests and inspections have been completed, making it searchable by product.
In submarines, such records are themselves an important element of safety.
The US Navy's quality assurance program SUBSAFE is designed to maintain the watertight integrity of the hull and ensure that the boat can safely handle unexpected flooding. According to the explanation from Naval Sea Systems Command (NAVSEA), it involves not only verifying design and materials but also collecting, reviewing and approving records at each stage of manufacturing and testing.
Materials are also tracked from the start of manufacture through installation and final certification, and those records are retained for the operating life of the submarine.
In other words, in addition to making a part with the required shape and performance, manufacturers need records that prove the part was made as specified.
ArsenalOS's mechanism for linking design revision control with work and inspection records could help support such proof.
The idea is not to speed up production by skipping records, but to generate the necessary evidence within the manufacturing process itself and make it easier to review later.
At Arsenal-2, the company plans to manage machining, outfitting and material movement, and to connect inspection and documentation to the same platform. Outfitting refers to the work of installing piping, equipment and other items in the hull.
Anduril says it will use digital work instructions and sensors to support the work of welders, pipefitters and others.
However, simply adopting software does not earn production qualifications or safety certification. The company itself says ArsenalOS is still expanding its functions.
How far processes can be shortened while maintaining quality in making parts for nuclear submarines will have to be confirmed through actual production.
Testing manufacturing and certification at a precursor site before 2030
Anduril will also set up a precursor facility of 160,000 square feet (about 15,000 square meters) in Orange County, California.
There, the company plans to manufacture critical parts such as torpedo tubes and test articles, and to validate its production methods and quality control systems. It will also work toward obtaining SUBSAFE-compliant production qualifications.
The company says it will gain two years of operating experience at this precursor facility before Arsenal-2 in Maryland begins operating.
The sequence is to first recruit and train staff and try out manufacturing and inspection procedures, then deploy that system at Arsenal-2 and scale up production.
This is not an announcement that the production qualifications have already been obtained.
The date a facility is completed differs from the date it can ship parts of consistent quality on a continuing basis.
In submarine manufacturing in particular, where detailed records and approvals are required, production cannot begin just because buildings and equipment are in place. Worker training and qualification of manufacturing processes are also needed.
The precursor site's role is to carry out this preparation in parallel with construction of Arsenal-2.
For Arsenal-2 itself, the company plans to begin permitting and site preparation, and to start construction after obtaining the necessary approvals.
Initial operations are to start in 2030, after which production capacity will be raised in stages as staffing and the supply chain are put in place.
That does not mean that, once 2030 arrives, the site will immediately reach the maximum production capacity in the plan.
Will more parts shorten delivery times for finished submarines?
A report on shipbuilding published by the US Government Accountability Office (GAO) on April 22 illustrates the difficulty of increasing submarine production.
According to information provided by the Navy, the Virginia-class production pace as of June 2025 was equivalent to one boat per year, half of the target of two per year.
Meanwhile, two boats were delivered to the Navy during 2025, but both were more than three years behind schedule.
These figures do not show the production pace as of October 2026.
Because several boats whose construction began in earlier years can be completed in the same year, the number of deliveries in a single year alone cannot establish that a system capable of continuously building two boats a year is in place.
The same holds for the new manufacturing site. Increasing the volume of parts produced and speeding up delivery of finished boats are results of different processes.
If only an upstream process is sped up while bottlenecks remain in later assembly and inspection, parts may simply wait elsewhere.
The GAO points out that, beyond recruiting workers, developing and retaining skilled tradespeople is also a challenge for shipyards.
It also said there are shortcomings in the means of measuring how much individual industrial base investments have contributed to submarine construction outcomes.
The report does not evaluate Arsenal-2 itself, but the same perspective is needed in judging the results of the new site.
Did parts made by Anduril pass receiving inspection and enter final assembly on schedule?
Did waiting time for parts and overall construction schedules shorten at Electric Boat and Newport News Shipbuilding?
If these links can be confirmed, it will also be easier to assess the aim of the Navy contract that pays according to production results.
What will decide the success of Arsenal-2 is not completing a new factory. It is whether Anduril can establish certified manufacturing capability and carry that output through to shorter delivery times for finished submarines.