What is the Finland Model?

The Finland Model allows partner foreign shipbuilders to build the first two vessels of a class overseas to speed fleet entry. To build vessel 3 and beyond, the shipbuilder must establish a U.S. production presence and meet domestic investment, workforce, technology transfer, and supply chain requirements.

How did the Finland Model begin?

The concept was established through an October 2025 Memorandum of Understanding between the United States and Finland. The agreement authorized Finland to construct up to four Arctic Security Cutter icebreakers for the U.S. Coast Guard, beginning with a medium icebreaker.

What conditions must foreign shipbuilders meet for U.S. production?

Under the model, foreign shipbuilders can use overseas capacity for the initial vessels, but later production must support the U.S. industrial base. Four core conditions apply:

• Domestic investment: Build a new shipyard in the United States or acquire a majority equity stake in an existing U.S. yard.
• American workforce: Hire and train American citizen workers.
• Technology transfer: License proprietary, advanced shipbuilding techniques to U.S. shipyards.
• Supply chain localization: Source materials and components from the domestic U.S. supply chain.

How did the Finland Model expand in August 2026?

On August 13, 2026, President Donald Trump signed a Presidential Memorandum titled "Rebuilding the United States Navy and America's Shipbuilding Industrial Base." The directive expanded the Finland Model from a limited icebreaker program into a broader procurement approach intended to address capacity constraints, program backlogs, and cost overruns in the U.S. shipbuilding industrial base.

The expanded approach focuses on three major categories of strategic and tactical vessels:

• Light surface combatants: International competitions for multi-mission warships optimized for anti-submarine warfare, anti-surface warfare, and convoy escort duties.
• Strategic sealift: Accelerated acquisition of Roll-on/Roll-off (Ro-Ro) vessels to update aging transport fleets.
• Fleet logistics: Fast-tracked Consolidated Cargo Replenishments at Sea (CONSOL) tankers.

Which foreign shipbuilders could compete for new light surface combatants?

Shipbuilders from Japan and South Korea are positioning themselves for the U.S. Navy's planned light surface combatant competition. The program is expected to emphasize mature, proven parent designs for anti-submarine warfare, anti-surface warfare, and convoy escort missions.

What is Japan proposing?

Mitsubishi Heavy Industries (MHI) is developing a U.S. market entry strategy around Japan's Mogami-class frigate. The platform is presented in the supplied materials as a mature, sea-proven design that aligns with the Navy's interest in an established parent platform.

What is South Korea proposing?

HD Hyundai Heavy Industries (HD HHI) is also pursuing potential U.S. market entry opportunities. South Korea's proposed platform is the ROK Navy's Chungnam-class frigate, another existing design positioned as an alternative to lengthy domestic development timelines.

What would a successful foreign bid require under the Finland Model?

A winning foreign shipbuilder would need to make a long-term commitment to the U.S. industrial base, not simply deliver ships from an overseas yard.

• Initial hulls overseas: The first two frigates could be built in Japan or South Korea to speed delivery to the U.S. fleet.
• U.S. production investment: For vessel 3 and beyond, the winning shipbuilder would need to build a new U.S. shipyard or acquire a majority equity stake in an existing yard.
• Domestic capability development: The shipbuilder would also need to transfer proprietary technologies, hire and train American workers, and localize its supply chain.
• Design stability: The directive limits iterative custom design changes to the parent platform without explicit approval from the Secretary of War, an approach intended to reduce design creep and schedule disruption.

How is the U.S. defense industrial base responding?

The reaction is mixed. Some industry groups and lawmakers view the model as a risk to domestic jobs and capacity, while others see potential for investment, partnerships, technology transfer, and supply chain growth.

What concerns have critics raised?

Trade associations, including the Shipbuilders Council of America, and several lawmakers have raised concerns about building initial hulls in foreign yards. Critics argue that the approach could divert high-paying jobs and industrial capacity away from U.S. shipyards.

Opponents have also questioned the use of national security waiver authority under Title 10 of the U.S. Code to bypass traditional domestic shipbuilding restrictions.

What opportunities and competitive pressures could domestic shipyards face?

The model could bring foreign capital, technology transfers, and joint-venture opportunities to U.S. shipyards because later production requires a domestic investment.

At the same time, established U.S. yards could face stronger international competition and may need to reassess how they position themselves for future contracts.

How could defense contractors and suppliers be affected?

The emphasis on mature, sea-proven parent designs may favor contractors with stable existing platforms over clean-sheet designs that can introduce added cost and schedule risk.

The approach could also reshape subcontractor and supplier relationships. Domestic manufacturers of ship components, submarine parts, and maritime systems may see increased demand because later U.S. builds require domestic supply chain localization.

What is planned for a fifth public Navy shipyard?

The August 13, 2026 memorandum directs development of a plan for a fifth public Navy shipyard, which would be the first new public yard in more than 80 years. The facility is intended to address maintenance backlogs and capacity shortfalls affecting fleet readiness.

• Timeline: A comprehensive plan is due within 120 days of the memorandum, approximately December 11, 2026.
• Primary mission: The facility would focus on depot-level maintenance for nuclear submarines and aircraft carriers.
• Location: The shipyard would be located near the Pacific Fleet, with potential locations including the continental United States, Alaska, Hawaii, and U.S. territories.
• Infrastructure: The plan calls for up to three new drydocks capable of servicing current and future classes of U.S. submarines.
• Financing: Officials are directed to explore public-private partnership financing, creating potential opportunities for private infrastructure investors, engineering firms, and maritime construction companies.

What could the Finland Model mean for government contractors?

If implemented as outlined, the Finland Model could change how naval shipbuilding opportunities are competed, financed, and performed. Government contractors may see more international teaming, U.S. facility investment, technology transfer requirements, domestic sourcing obligations, and new demand across shipbuilding, maintenance, engineering, and maritime supply chains.

For contractors and suppliers, the key issue will be how the Navy and other agencies translate the memorandum into acquisition plans, competitions, contract requirements, and domestic production expectations over the coming months.