US Navy Partners with Private Fund to Boost Submarine Production Capacity in Alabama
The U.S. Navy announced a groundbreaking public-private partnership with a private investment fund to develop a major submarine supplier yard in Mobile, Alabama, aimed at expanding the country’s submarine production capacity. The collaboration involves the acquisition and redevelopment of the 355-acre Alabama Shipyard to support the Navy’s Virginia- and Columbia-class submarine programs, as the military seeks to enhance its maritime capabilities.
The Navy partnered with the United Submarine Alliance Qualified Opportunity Fund LP (USA Fund), a private investment fund managed by Connecticut-based CapZone Impact Investments LLC, to purchase the Alabama Shipyard in Mobile. The site, now named Mobile Naval Yard, will be developed into a key supplier hub for the Navy, with plans to expand operations and utilize up to 75% of the 355-acre facility for submarine module production, workforce training, and industrial activities.
The investment is expected to create around 3,000 jobs in the region and will play a crucial role in supporting the construction of Virginia-class and Columbia-class submarines. The Navy’s Executive Director of the Program Executive Office for Submarines, Matt Sermon, emphasized the importance of this project in rebuilding a manufacturing sector that has diminished to just one-third of its capacity over the past three decades.
As part of Navy Secretary Carlos Del Toro’s “Maritime Statecraft” initiative, the Navy is working to double submarine production to meet increasing requirements. The Navy’s goal is to ensure that its submarine shipbuilders can handle an additional 3.5 to 4.5 million hours of submarine module production and outfitting each year. The collaboration with the USA Fund and the development of the Mobile Naval Yard are key components in achieving this goal.
Shipbuilder Austal USA, which is investing in the fund, received a $152 million Pentagon contract to support the expansion of the submarine industrial base. This funding, from the fiscal year 2024 National Sea-Based Deterrence funds, will help the facility support submarine module manufacturing, training, and additive manufacturing.
The project’s funding mechanism involves the use of the federal opportunity zone program, which encourages investment in economically distressed areas by offering tax incentives. The USA Fund’s acquisition of the shipyard falls under this initiative, making it eligible for tax benefits as an incentive to drive investment and job creation in the Mobile region.
