The military’s largest shipbuilder is bracing for a potential “headwind” should the Navy push the next block buy of Virginia-class fast-attack submarines to next year, as lawmakers look to protect naval shipyard jobs from the Trump administration’s workforce cuts.
Negotiated agreements for the Navy’s Virginia-class Block VI attack boats and Build II of the Columbia-class ballistic nuclear missile submarines are expected to wrap up later this year, HII’s CEO Chris Kastner said last week during the company’s second quarterly earnings call.
“The good news is that we had a construct that was put together under Block V that we can follow as we move into Block VI. Now it’s going to take some time…But it could slip into Q4 and we’ll do them incrementally,” he said.
That slip could become more of a challenge should the award move into 2026, Tom Stiehle, the company’s chief financial officer and executive vice president said on the call.
“However,” he said, “we believe we have accounted for a range of timing considerations within our guidance.”
The comments come as domestic shipbuilding gets a surge of support from the White House, Congress, and the Pentagon. The Trump administration plans to funnel about $47.4 billion into the shipbuilding, split between the proposed base budget and one-time funds from reconciliation. Part of that cash infusion is slated for the industrial base, which has struggled to keep up with increased production demands, contributing to ballooning costs and schedule delays across the Navy’s shipbuilding portfolio.
The reconciliation funding, which is expected to be dispersed over time, could help keep production lines running and ultimately increase output, said Bryan Clark, senior fellow and director of the Hudson Institute’s Center for Defense Concepts and Technology.
“They moved a lot of procurement to reconciliation. This will create a big backlog that the companies can work off,” Clark said, “and make the investments in the supply chain.”
HII reported $3.1 billion in revenue for Q2, with a $56.9 billion backlog and $11.9 billion in contract awards for Arleigh Burke-class guided missile destroyers, a San Antonio-class amphibious transport dock ship, and two Block V submarines, which includes a weapons module upgrade.
The company is aiming for a 20 percent increase in throughput this year as it increases wages and sends work to its Charleston Operations, which starts up later this year, Kastner said.
“I think labor is being addressed through an increase in salary and positioning towards more experienced people and attracting more people into the industry,” he said. “I’m still comfortable with the 4% growth revenue outlook, and I’m very comfortable that this shipbuilding industrial base is getting rebuilt.”
General Dynamics has a $53 billion backlog—or future revenue—in its marine systems business, including $18 billion in Virginia-class awards, according to its second quarter earnings report. That’s up from $2 billion in awards from 2025’s first quarter.
Backlogs aside, the naval shipbuilding industry has struggled with workforce challenges resulting in threatened strikes and wage increases to bring on more experienced workforce.
“In Newport News, there’s been a very good trend for the first few weeks from an attrition standpoint,” Kastner said of recent wage increases. “Now, we’re not going to claim victory yet, because it’s just a few data points, but our initial assumptions seem to be proving out positively, and we think that’s a really good, really good sign for the future.”
This comes as Congress is looking to bolster those efforts with a new bipartisan bill to exempt certain public shipyard roles that are important for national security from workforce reductions.
Sens. Jeanne Shaheen, D-New Hampshire, Maggie Hassan, D-New Hampshire, Susan Collins, R-Maine, and Angus King, I-Maine, introduced a bill Tuesday that aims to keep shipyard jobs—such as welding, pipefitting, and nuclear maintenance and refueling positions—from being cut as part of the Trump administration’s workforce reduction efforts.
“This bipartisan bill would protect the men and women at [Portsmouth Naval Shipyard], and at all four of our nation’s public shipyards, helping sustain the critical contributions these shipyards make to our national defense, the readiness of our Navy, and the economies of their surrounding regions,” Collins said in a statement.
The bill would also make permanent exemptions to hiring freezes that were put in place earlier this year.
“The Portsmouth Naval Shipyard workforce is supposed to be exempt from the hiring freeze, but there continues to be issues with implementation. Our bipartisan bill enshrines that exemption in federal law,” Shaheen said in a statement.
Rising tides with emerging tech
Meanwhile, Congress and the Trump administration are trying to steer spending into new technologies for 2026—and shipbuilders are looking for their investments to pay off.
“They’re making those big investments in production, scaling,” in the 2026 budget, Clark said. “They made some pretty good investments in developing non-kinetic capabilities…to improve electronic warfare and cyber tools for the operators in the field. And they’re investing in not only the tools, but also the infrastructure, like the digital, virtual modeling kind of infrastructure you would need to build software tools for cyber attacks or build electronic warfare techniques to put on the jammers.”
HII’s Mission Technologies has seen steady growth for the first half of the year, with $791 million in revenue for Q2—aligning with the Pentagon’s investments in drones, electronic warfare, cybersecurity, and laser technologies.
“Key wins included a contract to provide live training solutions to the U.S. Army’s Program Executive Office for Simulation, Training, and Instrumentation,” Kastner said. “We also announced a commercial sale of Remus 300 UUVs to Hitachi.”
The company also inked a deal with C3 AI to improve shipbuilding scheduling and hopefully achieve faster deliveries.
General Dynamics Mission Systems also saw increased revenue for the second quarter and reported seeing more opportunities across the portfolio, including a 15 percent backlog increase—which represents awarded contracts and future revenue—compared to last year, and a 23 percent higher total potential contract value, executives reported on the July 23 earnings call.
HII delivered the first uncrewed undersea vehicles to the Navy earlier this year, and is also looking at opportunities in uncrewed surface vessels.
“We have the premier uncrewed underwater vehicle program up in our Boston organization within Mission Technologies, and then some very interesting programs we’re evaluating participating in from a surface standpoint,” Kastner said. “[Those] could be some tail winds, if we’re successful in that regard.”
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