SPARROWS POINT, MD – October 6, 2026 (STL.News) Defense technology company Anduril Industries is preparing to transform part of the historic Sparrows Point industrial complex outside Baltimore into a massive submarine manufacturing center backed by at least $3.7 billion in private capital and a U.S. Navy contract worth up to $2.9 billion.
Known as Arsenal-2, the planned facility at Tradepoint Atlantic will cover about 187 acres and include more than 2 million square feet of manufacturing space. Anduril describes the project as a “software-defined shipyard” designed to manufacture critical components and eventually larger assemblies for the Navy’s Virginia-class nuclear-powered attack submarines.
The project is significant not because Anduril intends to begin building complete nuclear submarines — it does not — but because the company plans to add manufacturing capacity to an American submarine industrial base struggling to produce boats at the rate sought by the Navy.
Anduril plans to invest more than $3.7 billion of its own capital in Arsenal-2. Separately, the Navy awarded the company a contract valued at up to $2.9 billion to manufacture submarine components, with payments tied to demonstrated production outcomes.
Together, the private investment and potential Navy contract represent commitments of up to $6.6 billion connected to the submarine-production expansion.
Reuters independently confirmed the $3.7 billion investment and $2.9 billion Navy contract Tuesday.
What Arsenal-2 Will Build
Despite its enormous size and the “shipyard” designation, Arsenal-2 should not be confused with a third final-assembly yard for Virginia-class submarines.
General Dynamics Electric Boat and HII’s Newport News Shipbuilding jointly build the Virginia class.
Anduril’s role will be farther upstream in that production system.
The company plans initially to manufacture components such as torpedo tubes, according to Anduril and USNI News. Over time, Anduril wants to progress toward larger submarine modules and potentially entire hull sections.
An Anduril industry official told USNI News that producing complete ship sections such as bows and sterns is an aspirational, longer-term objective.
The same official explicitly said Anduril does not intend to manufacture complete submarines.
Instead, the goal is to become an increasingly important supplier to the Navy’s existing lead submarine builders.
Newport News Shipbuilding President Kari Wilkinson welcomed the additional industrial capacity, telling USNI News that the company welcomes Anduril as a future subcomponent partner as the industry works to accelerate submarine deliveries to the fleet.
That distinction is important.
Arsenal-2 is designed to expand the submarine supply chain rather than replace the shipyards already responsible for assembling America’s nuclear-powered attack submarines.
Why the Navy Wants More Capacity
The project comes as the Pentagon and Navy seek additional industrial capacity for submarine construction.
Virginia-class submarines are among the Navy’s most advanced undersea platforms and are designed for missions including anti-submarine warfare, intelligence collection, surveillance, and land attack.
At the same time, the United States faces additional long-term submarine obligations associated with the AUKUS security partnership with Australia and the United Kingdom.
Under AUKUS, Australia is expected to acquire Virginia-class submarines from the United States during the 2030s as part of a broader transition toward operating nuclear-powered submarines.
That creates additional pressure on an industrial base already tasked with supplying the U.S. fleet.
Arsenal-2 aims to address the problem by adding manufacturing capacity outside the two yards responsible for final Virginia-class construction.
A senior Trump administration official told reporters Tuesday that Arsenal-2 is expected to add approximately 9 million labor hours annually to the submarine industrial base.
The administration estimates that would represent about a 15% increase in production capacity for the Virginia-class program.
Those figures are administration projections, not demonstrated production results, because Arsenal-2 has not yet been built.
The same administration official identified torpedo tubes as one of the components currently capable of constraining production, telling reporters that increasing their availability could help move Virginia-class submarines already under construction through production faster.
A $3.7 Billion Private Investment
Anduril says it will put more than $3.7 billion of private capital into the Maryland project.
The Navy contract is separate.
According to Anduril, the contract is worth up to $2.9 billion, with payments tied to demonstrated production outcomes.
Anduril says the structure puts most of the execution risk on the company rather than taxpayers.
Reuters reported that Anduril received the $2.9 billion Navy contract alongside the $3.7 billion shipyard investment.
President Donald Trump traveled to Sparrows Point Tuesday to promote the project as part of his administration’s effort to expand U.S. defense manufacturing.
During the event, Trump made another potentially significant announcement.
“American taxpayers will receive a 40% stake in the new shipyard,” Trump said.
However, Reuters reported that Trump did not explain how the proposed stake would be structured.
Until contractual or government documentation provides additional details, the precise structure and meaning of that 40% interest remain unclear.
Maryland and Baltimore County Offer Incentives
The $3.7 billion investment is private capital, but state and local governments are also offering substantial support.
The State of Maryland and Baltimore County said they have committed to match up to 13% of Anduril’s anticipated private investment through existing economic-development incentive programs and new appropriations.
Reuters calculated that amount at approximately $481 million.
Those commitments are not all final.
Maryland officials said new appropriations associated with the package will require approval from the Maryland General Assembly and Baltimore County Council.
The state incentive package also includes capital support to build a Center of Excellence for workforce training at a location still to be determined at or near Tradepoint Atlantic.
Maryland additionally plans to pursue a federal Maritime Prosperity Zone designation for the region.
The distinctions between the various commitments are therefore important.
Anduril is planning more than $3.7 billion in private capital investment.
The Navy has awarded Anduril a contract worth up to $2.9 billion.
Maryland and Baltimore County have separately committed incentives potentially worth up to 13% of the anticipated private investment, with portions subject to legislative approval.
They are related to the same project but should not be treated as a single pool of government spending.
More Than 2 Million Square Feet
Arsenal-2 is planned for Tradepoint Atlantic at Sparrows Point, a major industrial and maritime site near the Port of Baltimore.
According to Anduril, the complex will occupy about 187 acres and provide more than 2 million square feet of manufacturing space.
The location also includes an existing 1,200-foot graving dock.
Anduril says the site offers road, rail, and maritime connections needed to move large submarine components and assemblies.
The facility’s scale is one reason Anduril uses the term “shipyard,” even though the initial mission centers on submarine components rather than complete submarines.
The company calls Arsenal-2 a software-defined shipyard, with its ArsenalOS manufacturing software intended to serve as the production operation’s digital backbone.
Anduril says the system is designed to connect the production process as the company attempts to apply modern manufacturing techniques to large-scale naval production.
The effectiveness of that approach will ultimately depend on what the company can produce after the facility becomes operational.
California Plant Comes First
Anduril will not wait until Arsenal-2 opens to begin working on submarine components.
The company is establishing another manufacturing operation in Costa Mesa, California, that is expected to begin production before the Maryland facility.
USNI News reported that Anduril has already started building torpedo-tube prototypes in California.
An Anduril spokesperson also confirmed to USNI that the California facility is SUBSAFE certified, an important qualification for work involving submarine systems where flooding could threaten a submarine’s ability to surface.
Anduril says the California operation will let it begin production about two years before the Sparrows Point facility is ready.
The company expects Arsenal-2 to be ready for production in 2030.
That timetable also underscores an important limitation of Tuesday’s announcement.
Arsenal-2 is not an immediate solution to current submarine-production constraints.
The Maryland facility still has to be developed, equipped and staffed before it can begin contributing at scale.
More Than 3,100 Permanent Jobs
Maryland officials expect the project to create more than 3,100 permanent direct jobs.
The state says Arsenal-2 is expected to support more than 14,000 jobs, directly or indirectly.
Anduril projects more than $2 billion in annual economic output associated with the project, including an estimated $312 million in wages each year.
Maryland describes Arsenal-2 as the state’s largest single private investment and its largest job-creation project in more than a decade.
Anduril will need workers across a range of manufacturing disciplines.
Its Arsenal-2 recruiting materials list positions in manufacturing engineering, quality and compliance, manufacturing operations, production testing, materials and support, and technician and operator roles.
An industry executive told USNI News that the company expects to recruit workers from industries including commercial aerospace and automotive manufacturing while also developing workers from high schools and vocational programs.
Sparrows Point Returns to Defense Manufacturing
The location gives Arsenal-2 significance beyond its size.
Sparrows Point once hosted one of the world’s largest steelmaking operations.
Bethlehem Steel operated the sprawling industrial complex, where it produced steel and ships during both world wars.
Maryland officials said Arsenal-2 will return large-scale shipbuilding-related manufacturing to a site deeply connected to America’s maritime and industrial history.
The old steel operation ultimately declined and closed after bankruptcy in 2012.
Tradepoint Atlantic has since been redeveloping the site as a logistics, manufacturing and maritime center.
Reuters noted the historical contrast Tuesday: a property once dominated by one of America’s largest steel mills is now being positioned for a new generation of defense manufacturing.
Anduril Expands Beyond Drones and Autonomous Systems
Arsenal-2 also represents a significant expansion of Anduril’s role in the U.S. defense industry.
Founded in 2017, Anduril became known primarily for autonomous systems, drones, artificial intelligence and military software.
The company has since pushed aggressively into large-scale manufacturing.
Reuters reported that Anduril’s $1 billion Arsenal-1 facility in Ohio began producing autonomous combat drones this year.
Arsenal-2 takes that manufacturing strategy into an entirely different industrial environment.
Instead of producing relatively small autonomous aircraft or electronic systems, Anduril is preparing to manufacture components and potentially major structural sections for nuclear-powered attack submarines.
That requires integration into one of the most demanding defense manufacturing supply chains in the United States.
Whether Anduril can successfully transfer its software-centered manufacturing philosophy into submarine construction will be one of the most important questions surrounding Arsenal-2.
A Major Test for American Naval Manufacturing
The scale of Arsenal-2 makes the project significant even before the first submarine component leaves the facility.
Anduril is committing more than $3.7 billion.
The Navy contract could reach $2.9 billion.
The facility is expected to exceed 2 million square feet.
More than 3,100 permanent direct jobs are projected.
Maryland says more than 14,000 jobs could ultimately be supported directly and indirectly.
The Trump administration also projects that the facility could add about 9 million annual labor hours to the Virginia-class industrial base once operating at scale.
But Arsenal-2 should also be viewed for what it currently is: an enormous industrial commitment whose most ambitious production goals remain several years away.
The facility must be built. Thousands of workers must be hired and trained. Production processes must meet the demanding requirements of submarine manufacturing. And Anduril must demonstrate that its approach can deliver components reliably enough to remove bottlenecks rather than create new ones.
The project’s importance therefore extends beyond a single factory.
Arsenal-2 tests whether a newer defense technology company can inject private capital, additional workers, and new manufacturing methods into a submarine industrial base dominated by established shipbuilders and an extensive network of specialized suppliers.
If Anduril succeeds, it could create a substantial new source of production capacity for the Virginia-class program.
And at Sparrows Point — where American workers once produced the steel and ships that helped build U.S. industrial power — a new chapter in American naval manufacturing could be beginning.
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