SPARROWS POINT, MD – October 6, 2026 (STL.News) President Donald Trump on Tuesday promoted a major expansion of the U.S. submarine industrial base as defense technology company Anduril Industries unveiled plans to invest $3.7 billion in a new Maryland manufacturing facility and secured a U.S. Navy contract valued at up to $2.9 billion.
The two commitments have a combined potential value of $6.6 billion, but they are separate pieces of the project: $3.7 billion is Anduril’s planned private investment, while the Navy portion is a contract worth up to $2.9 billion for submarine production.
The new facility, called Arsenal-2, is planned for Tradepoint Atlantic at Sparrows Point in Baltimore County, near the Port of Baltimore. Anduril and Maryland officials describe it as a more than 2 million-square-foot “software-defined shipyard” that will manufacture components and large assemblies for the Navy’s Virginia-class nuclear-powered attack submarine program.
Trump traveled to Sparrows Point on Tuesday to highlight the project as part of his administration’s effort to increase American shipbuilding and defense manufacturing capacity.
“The workers of Baltimore and the shipyard here at Sparrows Point have been a vital part of the American industrial strength for literally over a hundred years,” Trump said during the event.
The president said the work performed there would become an important component of future U.S. military capability.
Anduril Plans $3.7 Billion Investment
Anduril’s planned investment represents the private-sector portion of the announcement.
The company said it intends to invest at least $3.7 billion of its own capital in Arsenal-2. Maryland officials independently confirmed the $3.7 billion private-capital figure.
According to Anduril President and Chief Strategy Officer Chris Brose, the investment will cover establishing the facility, developing its workforce, and installing the technology and other capabilities required to perform the Navy work.
The planned operation is substantial.
Maryland says Arsenal-2 will encompass approximately 2 million square feet at the Sparrows Point complex. The state describes the project as Maryland’s largest single private investment in more than a decade.
Anduril says the facility is intended to add manufacturing capacity to the submarine industrial base rather than replace the Navy’s existing submarine shipbuilders.
Navy Contract Worth Up to $2.9 Billion
The federal portion is separate.
Reuters reported that Anduril was awarded a $2.9 billion U.S. Navy contract, while AP reported that administration officials described the government’s commitment as purchasing what the Baltimore County operation produces.
That distinction is critical when describing the overall $6.6 billion figure.
The announcement consists of:
- $3.7 billion in planned private investment by Anduril
- Up to $2.9 billion through the U.S. Navy contract
Together, the investment and associated contract are valued at up to $6.6 billion. Reuters independently reported the same breakdown.
It would therefore be inaccurate to describe Tuesday’s announcement simply as a “$6.6 billion Pentagon contract” or “$6.6 billion taxpayer investment.”
Arsenal-2 Will Make Virginia-Class Components
Arsenal-2’s primary military purpose is to expand production capacity supporting the Virginia-class submarine program.
Virginia-class boats are nuclear-powered attack submarines designed for missions including anti-submarine warfare, surveillance and land-attack operations.
General Dynamics Electric Boat and Huntington Ingalls Industries’ Newport News Shipbuilding jointly construct Virginia-class submarines. Anduril’s Maryland operation is intended to join the broader industrial network supplying the program rather than replace those two prime shipbuilders.
Trump said Tuesday that Arsenal-2 would produce torpedo tubes and other critical Virginia-class components.
Anduril also says Arsenal-2 will eventually manufacture larger assemblies supporting submarine construction. Reuters reported that the company plans to move into larger submarine modules and hull sections after the Maryland operation becomes operational.
That distinction is also important.
Arsenal-2 is being called a shipyard, but its confirmed initial mission is to manufacture components and large assemblies that support submarine production, rather than independently constructing complete Virginia-class submarines.
Project Targets a Major Navy Production Problem
The project comes as the United States seeks to increase the capacity of its naval industrial base.
Nuclear-powered submarines are among the most complicated military systems the United States manufactures, requiring extensive networks of specialized suppliers, skilled labor, and highly regulated manufacturing processes.
Adding another major component producer is intended to increase the amount of work that can be done across that industrial network.
The Virginia-class program is particularly important because the Navy is seeking to increase production while maintaining and expanding the existing attack-submarine fleet.
Reuters reported Tuesday that the Navy’s existing Virginia-class submarines are jointly built by Electric Boat and Newport News Shipbuilding.
Anduril’s role will be different: producing parts and eventually larger structures that can feed into that broader construction process.
More Than 3,100 Permanent Jobs
The project also carries a major economic-development component for Maryland.
The state says Arsenal-2 is expected to create more than 3,100 permanent jobs and directly or indirectly support more than 14,000 jobs overall.
Maryland also projects that the completed operation could generate more than $2 billion in annual economic output, including an estimated $312 million in wages each year. Those projections apply to the future facility rather than current economic activity.
Gov. Wes Moore’s administration described Arsenal-2 as Maryland’s largest single private investment and largest job creator in more than a decade.
The project has therefore attracted support from officials who differ sharply with Trump politically.
Moore did not attend Trump’s event Tuesday following a disagreement between his office and the White House over his participation, but the governor continued to support the underlying Anduril project.
AP reported that Moore’s spokesman said the governor had been blocked from speaking. White House spokesperson Anna Kelly disputed the characterization, saying Moore had been invited to attend as a guest.
Whatever the dispute surrounding Tuesday’s event, Moore’s administration is directly supporting the economic-development project.
Maryland and Baltimore County Offer Incentives
The State of Maryland and Baltimore County have committed economic-development support equivalent to up to 13% of Anduril’s anticipated private investment.
The support will include existing incentive programs and proposed new appropriations. The new funding will require approval from the Maryland General Assembly and Baltimore County Council, according to the governor’s office.
Reuters calculated 13% of the anticipated Anduril investment at approximately $481 million.
Maryland says the incentive package also includes capital support for a workforce-training Center of Excellence planned at or near Tradepoint Atlantic.
Those state and local incentives are separate from the $2.9 billion Navy contract.
Trump Announces 40% Taxpayer Stake
Trump made another significant announcement Tuesday that remains less clearly defined.
The president said American taxpayers would receive a 40% stake in the new shipyard. Both AP and Reuters reported the statement.
However, Reuters reported that Trump did not explain how the government would own that stake.
The claim therefore requires careful wording.
Trump announced that taxpayers would receive a 40% stake in the shipyard. The publicly available reporting reviewed Tuesday does not establish that the federal government has acquired 40% of Anduril Industries, nor does it provide enough detail to characterize precisely how the shipyard interest will be structured.
Until contractual documentation or additional government details become available, the 40% figure is best reported as Trump’s announced taxpayer stake, rather than as a fully documented conventional equity transaction.
Sparrows Point Returns to Defense Manufacturing
The choice of Sparrows Point carries historical significance.
The property once hosted the enormous Bethlehem Steel complex, which played a major role in American industrial production before decades of decline. The steel operation ultimately closed in 2012.
The former industrial property has since been redeveloped as Tradepoint Atlantic.
Maryland officials point to the site’s deep-water port, rail access, interstate connections and available workforce as major reasons for locating Arsenal-2 there.
Trump emphasized that history during Tuesday’s appearance, saying the Sparrows Point workforce had contributed to American industrial strength for more than a century.
Anduril CEO Brian Schimpf similarly connected the project to the area’s maritime history, saying the company intends to return large-scale shipbuilding activity to the site and make Baltimore County an important part of the submarine industrial base.
Arsenal-2 Expected by End of Decade
Arsenal-2 will not begin producing submarine components immediately.
Reuters reported that the new Maryland operation is expected to become operational by the end of the decade.
Anduril is also developing another facility in California to manufacture Virginia-class components before the Maryland site comes online.
Once Arsenal-2 is operating, Anduril plans to expand production into larger submarine modules and hull sections.
That means Tuesday’s announcement represents a long-term industrial expansion rather than an immediate increase in submarine deliveries.
The ultimate effect will depend on construction of the Maryland facility, workforce development, qualification of its manufacturing processes, and Anduril’s ability to meet Navy production requirements.
A Major Bet on American Naval Manufacturing
Tuesday’s announcement brings together three separate objectives: expanding the submarine supply chain, returning heavy defense manufacturing to Sparrows Point and bringing a technology-focused defense contractor deeper into traditional naval production.
Anduril, founded in 2017 by Palmer Luckey and others, is best known for autonomous military systems, drones and defense software. Reuters noted that the company has already moved into large-scale manufacturing through its Arsenal-1 facility in Ohio, which began producing autonomous combat drones this year.
Arsenal-2 represents another significant expansion of that manufacturing strategy.
For the Navy, however, the central question is less about Anduril’s technology background than whether the new facility can produce submarine components at the required quality and volume.
For Maryland, the project represents a promised $3.7 billion private investment and more than 3,100 permanent jobs.
And for taxpayers, one major question remains unresolved: exactly how the 40% stake Trump announced will work.
What the available documentation makes clear is narrower and more specific.
Anduril plans to invest $3.7 billion in Arsenal-2 at Sparrows Point. The Navy has awarded the company a contract worth up to $2.9 billion. The facility will manufacture components and larger assemblies supporting Virginia-class submarine production. Maryland expects more than 3,100 permanent jobs. And Trump says taxpayers will receive a 40% stake in the shipyard, although the mechanism for that stake has not yet been publicly explained.
Those are the verified parameters of the deal announced Tuesday.
