Austal USA Delivers First Steel-Hull LCU to U.S. Navy

First Steel Vessel Delivered by Austal USA

According to a report by The Maritime Executive, defense shipbuilder Austal USA has handed over LCU 1710 to the U.S. Navy — the company’s first-ever steel-hulled vessel to be completed and delivered to its main customer. Gene Miller, President of Austal USA, called the delivery a major milestone for the shipbuilder, noting that it proves the company’s capacity to design, construct, and deliver technically demanding steel vessels while still meeting the Navy’s changing operational needs.

LCU 1710 is part of a new generation of landing craft utility vessels built to move Marines and equipment ashore during amphibious operations, and to serve secondary roles such as humanitarian relief delivery.

A Costly Transition to Steel

Austal’s move into steel construction is still a young and financially strained venture. The company’s steel shipbuilding segment is projected to post a loss of roughly $175 million for fiscal year 2026, with the LCU program itself running at a loss alongside two other contracts — the Towing, Salvage & Rescue Ship (T-ATS) and the Auxiliary Floating Dry Dock Medium (AFDM).

Part of the problem traces back to early bidding: Austal reportedly underpriced the cost of building its first steel-hulled vessels, and the Navy has not yet agreed to revise contract terms to offset the shortfall. Austal has stated it will keep pushing for contract modifications, arguing that added costs stem from shifting customer requirements and shortcomings in the design specifications it was given — a challenge widely recognized across Navy shipbuilding programs and one the Pentagon is reportedly working to resolve more broadly.

Why Austal Is Building in Steel at All

The shift toward steel reflects lessons the Navy has learned about the operational drawbacks of aluminum hulls in military service. As the Department of Defense stepped away from aluminum-hull procurement, it backed Austal’s transition with a $50 million matching grant to help fund a new steel production line and expand steel shipbuilding capacity at its Mobile, Alabama facility.

The company’s first steel vessel to actually take shape was the salvage tug USNS Billy Frank Jr., launched in June 2025 as something of a proving ground for Austal’s new automated steel panel line and broader steel-fabrication know-how. That vessel has since been relocated to a berth at the affiliated Alabama Shipyard but has not yet been delivered. By contrast, the smaller and structurally simpler LCU 1710 — despite launching two months after the tug — reached delivery first.

What It Means for Owners and Operators

For commercial ship owners and managers, Austal’s experience is a useful case study in the risks that come with any yard transitioning to a new hull material or construction method. Early-stage steel programs — even at an established shipbuilder — can carry significant hidden costs tied to design specification gaps, underestimated labor and material needs, and unfamiliar production workflows. These are exactly the kinds of issues that thorough pre-contract technical review and ongoing condition monitoring during construction are meant to catch before they escalate into costly disputes.

While Austal’s situation involves a naval customer and government contracting dynamics that differ from commercial newbuild deals, the underlying lesson holds broadly: when a shipyard is scaling up new capabilities, owners and charterers relying on that yard’s output should factor in extra scrutiny around build quality, schedule risk, and contract clarity. Independent condition and pre-delivery surveys become especially valuable in these circumstances, helping buyers verify that new construction techniques have translated into a vessel that meets both design intent and operational reliability standards — regardless of whether the yard itself is still working out the economics of the process.

Austal’s continued push for contract adjustments also underscores how disputes over design specifications and change orders can linger well past delivery, a dynamic that commercial owners and managers should keep in mind when negotiating newbuild or conversion contracts with any yard undergoing a similar shift in construction methods.

Reviewed by Ibrahim Halil Ceylan, Marine Surveyor at Apeks Marine.