Anduril is committing $3.7 billion in private capital, while the US Navy awarded a contract of up to $2.9 billion with payments tied to delivery milestones.
The 2 million square foot facility at Sparrows Point in Baltimore County is projected to create 3,100 direct jobs and over 11,000 indirect jobs before production begins in 2030.
The shipyard will build components for Virginia-class submarines as the US Navy seeks to increase production from roughly one boat per year to more than two.
Maryland Governor Wes Moore and state lawmakers declined to attend the Baltimore event with President Donald Trump after being excluded from the speaking roster.
Defense technology firm Anduril Industries announced on Tuesday, October 6, 2026, plans to construct a 2 million square foot manufacturing facility at Sparrows Point in Baltimore County, Maryland. The project, named Arsenal-2, involves $3.7 billion in private capital investment from Anduril. The US Navy awarded the company an associated contract worth up to $2.9 billion to produce components for Virginia-class nuclear attack submarines. Payments under the naval contract are structured around specific production outcomes, with Anduril assuming the bulk of the project execution risk. The combined commitments total up to $6.6 billion.
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The facility will occupy a site that formerly housed a Bethlehem Steel mill. Arsenal-2 is scheduled to begin production in 2030, with plans to manufacture larger submarine modules and hull sections. The US Navy currently aims to build Virginia-class submarines at a rate exceeding two boats annually to satisfy domestic fleet requirements and meet Aukus security pact obligations with Australia. The industrial base has averaged little over one boat per year due to labor shortages and a narrow supplier network. General Dynamics Electric Boat and Huntington Ingalls Industries remain the prime contractors assembling the submarines. Christian Brose, chief strategy officer and president of Anduril, described the strategic need behind expanding factory capacity.
“The core insight the administration had and the navy had is we just need new production capacity. We need to grow the maritime industrial base, the submarine industrial base.”
Founded in 2017 by Palmer Luckey, Anduril built its initial portfolio around autonomous systems, software, and military drones. The Maryland facility expands its hardware manufacturing base into naval warfare systems. Earlier in 2026, the company began manufacturing autonomous combat drones at its $1 billion Arsenal-1 facility in Ohio. In addition, Anduril is constructing a site in California dedicated to producing Virginia-class torpedo tubes and specialized mechanical parts. White House deputy press secretary Anna Kelly stated that the Baltimore County plant will support over 13,000 direct and indirect jobs while generating $2 billion in annual economic output. Defense Secretary Pete Hegseth recently appointed Luckey to a Pentagon task force examining warfare technology alongside Elon Musk and Newt Gingrich.
President Donald Trump traveled to Baltimore on Tuesday afternoon to participate in the announcement. Maryland Governor Wes Moore and members of the state congressional delegation did not attend the event after being informed they would not have speaking roles. Governor Moore's office stated that the governor will work with anyone to deliver for Marylanders but bow to no one when standing up for them. White House officials disputed claims that Moore was barred from the event, stating he had been invited to attend as an audience guest. State officials issued an independent statement noting that the project represents the largest single private investment in Maryland in over a decade, omitting references to the federal administration.
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Defense startup Anduril Industries will invest $3.7 billion alongside a $2.9 billion US Navy contract to construct the Arsenal-2 facility at Sparrows Point for Virginia-class nuclear submarines.
AI text based on reports by Washington Post, Financial Times News, Reuters and other publishers. Published .