There were some raised eyebrows in southeast Connecticut recently when President Trump declared that “the next generation of American submarines” will be built at a shuttered steel plant on the Baltimore waterfront.

“Today we’re officially launching the construction of the largest new shipyard in the United States,” the president said. “This is since World War II; there’s been nothing like what we are doing today.”

Trump’s pronouncement, although characteristically bombastic, sounded like grim news for a corner of the state enjoying unprecedented economic growth as a result of a decades-long sub construction boom driven by the Electric Boat Division of General Dynamics in Groton, the U.S. Navy’s principal sub builder.

But, as the fine print on the Baltimore shipyard emerged, it appeared that EB’s position will be unchallenged. The Baltimore shipyard, to be built and established as a subsidiary of the west coast defense tech company Anduril Industries, will be an EB subcontractor, building submarine missile tubes and ballast tanks. Anduril hopes to have the shipyard operational by 2030 and aspires eventually to built more substantial submarine components.

Trump flew to Baltimore to announce that the federal government is taking a stake of as much as 40 percent in what Anduril said will be the state-of-the art shipyard it plans to build on the site of an old Bethlehem Steel plant on Sparrow Point.

Anduril builds high tech surveillance and unmanned weapon systems – including unmanned submersibles, one of which was recently captured by Iran in the Strait of Hormuz. The company said it is investing $3.7 billion in the shipyard and and Trump said the federal government is adding up to $2.9 billion more.

Trump mentioned  Anduril co-founder Palmer Luckey in his remarks in Baltimore last week, calling him a “friend” and “very brilliant.” Last month, the Pentagon appointed Luckey to Project Meridian, an initiative announced last month to study the role of emerging technologies in future conflict.

The public stake in a private defense contractor is the latest in a series of direct government investment in areas the administration considers critical to national security interest. Examples include investment in chipmaker Intel and rare earths producer MP Materials. There is political opposition to such public investment, particularly in shipbuilding, where there is fear it could create the impression of favoritism in Naval contracting.

An official with knowledge of the investment said the government is taking a position in the Baltimore shipyard, which will operate as an Anduril subsidiary separate from the larger company, which operates in various locations, building artificial intelligence-powered autonomous systems and software for the U.S. and allies.

Trump’s public embrace of Anduril is said to have surprised the shipbuilders at Electric Boat, which has invested tens of billions of dollars on labor and manufacturing technology and, as its approaches a peak operational pace, is closing in on the Navy’s delivery schedules for the nuclear-powered attack and missile subs for which it is the Pentagon’s prime contractor.

Virginia class attack submarines are a key element of U.S. defense strategy, particularly as it concerns containing Chinese expansion in the Indo-Pacific. The administration and Anduril argue the new shipyard is needed to speed delivery of the ships to the Navy by expanding the number of companies involved in their construction.

The Navy wants to build as many as 66 Virginia class submarines. But construction has yet to hit the Navy’s aggressive delivery pace of 2.3 ships a year because of a shortage of skilled shipyard labor and supply chain disruptions that are symptoms of a general decline in U.S. manufacturing capacity. In addition to building the Virginia class, EB is building the new Columbia class ballistic missile submarines.

Decades of flat, post-cold war spending not only shrunk the U.S. Naval fleet by half, but depleted the ranks of welders, shipfitters and riggers, as well as the companies that supply materials and components. The manufacturing segment of the U.S. workforce slipped from 35 to 12 percent after the 1980’s when Electric Boat, even then the Navy’s main sub builder, was buzzing with work on the Los Angeles and Trident class submarines now scheduled for replacement.

The labor and supply chain dysfunction was aggravated by inconsistent federal contracting policy that left thousands of subcontractors without the confidence to make long term investment in plants and labor.

The government’s Anduril investment is a sliver of the billions of dollars that Congress, the Navy and Electric Boat are spending to jumpstart the submarine workforce and supply chain.

EB said late last week that it has invested nearly $4 billion in manufacturing improvements over the last 10 years and will invest another $4 billion over the next three. It is spending $100 million a year on training new shipbuilders and plans to hire 8,000 this year, exceeding the 3,000 to 5,000 it added in recent years at its yards in Groton and Quonset Point, RI.

Through hiring and infrastructure investment, the company has been moving closer to the Navy’s 2.3 delivery cadence.

Touring the Groton shipyard late last week after Trump’s announcement, U.S. Rep. Joe Courtney, the second district Democrat and ranking member of the House Armed Services Committee’s influential Seapower Subcommittee, said EB is on track to deliver three Virginia class submarines this year, while continuing work on the massive Columbia class  submarines that the Pentagon calls the top national defense program.

In addition, Courtney said that as of last week, EB had filled 6,122 of the 8,000 positions it intends to add this year.

Last summer, the Pentagon awarded Electric Boat $76.6 billion in new submarine contracts in the biggest naval shipbuilding award in modern history. More than half of that is for the new Virginia class submarines.

In a long videotaped question and answer exchange with the Wall Street Journal, Anduril’s president and chief strategy officer, Christian Broce, sounded as if the company has its sights set on bigger things in sub construction than building torpedo tubes for a general contractor — such as building larger components like bow and stern sections.

Broce’s background is in politics and defense policy. From 2014 to 18, he worked for former U.S. Sen. John McCain, an Arizona Republican, as staff director of the Senate Armed Services Committee, a position that involved him in Pentagon spending and policy.

Brose said that, for years, the Pentagon has been pushing money at shipbuilders in the mistaken belief that more “resources” would speed production. The solution, he said, is incorporating to technologies into the manufacturing process in ways that allow companies to build faster, better and cheaper.

“What we are going to be building in Baltimore is a shipyard that is laid out and enabled by technology in a way that you would imagine it being possible to do in 2026,” he said.

But some have suggested high tech manufacturing could bump against the Navy’s over arching safety certifications. The certifications, known as SUBSAFE, were created after the sinking of the atomic submarine USS Thresher and the loss of 129 crew and support personnel east of Cape Cod in 1963. The loss continues to be commemorated by friends and family at the U.S. Naval Submarine base in Groton.

SUBSAFE is the work of Adm. Hyman Rickover, developer of the nuclear navy, after investigation revealed the loss of Thresher could have been caused by faulty welds resulting from a rushed construction schedule at the government-owned U.S. Naval Shipyard at Portsmouth, N.H.

Broce anticipated questions about safety standards and said safety certification can be incorporated in high tech manufacturing.

“This is not about compromising on safety,” he said. “This is not about lowering the bar to improve on cost and scheduling. This is about keeping the safety bar where it needs to be, but demonstrating that with new approaches to production, utilization and incorporation of new technologies we can deliver on those safety requirements in different ways that generate on a faster pace of production and rescued cost.”