The shipbuilding industry in Texas assumed a measure of significance only in the twentieth century. Before World War I the combination of unfavorable geography and late frontier development limited coastal marine activity to fishing, trade, and boat building. Geographically, the Texas coastline forms part of a gently sloping continental shelf into the Gulf of Mexico. As a result, the Texas coast has no natural deepwater harbors, and river runoff along with coastal wave action results in a continuous buildup of marine sediment across the river mouths. Through 1914 shipbuilding in Texas consisted of the construction of various types of small boats for fishing and river navigation and was conducted sporadically on a small scale. Although steamboats plied the Texas coast and rivers, they were constructed elsewhere. The Kate Ward, built specifically for trade on the Colorado River, was launched at Matagorda in 1845. The legislature granted a charter to a company to build and repair ships in Harris County in 1856. In the period between 1909 and 1925, largely as a result of World War I, shipbuilding grew twenty-fold. The American entry into World War I produced a demand for merchant shipping of such magnitude that a wooden shipbuilding program emerged; it enabled Texas to open several shipbuilding and ship-repair yards in the Beaumont-Orange, Houston, Galveston Bay, and Corpus Christi areas. The abundance of yellow pine, a suitable construction material, and sawmills capable of producing ship's timbers resulted in the production of a fleet of fourteen wooden barkentines and schooners before the war's end. Subsequently, shipbuilding nationwide suffered because of inefficiency, naval arms limitations, and the Great Depression.
World War II revived the industry. Between 1937 and 1940 the number of Texas shipbuilding companies grew from seven to ten. In the spring of 1941 the Houston Shipbuilding Corporation initiated construction of a plant on Irish Island, and the Weaver Shipyards at Orange expanded to allow for the increased production of wooden minesweepers. In August Orange had three shipyards constructing amphibious landing boats, destroyers, and minesweepers. The Neches River ship channel at Beaumont was deepened and extended to the Pennsylvania Shipyards on Island Park. "Industrial Island" was a natural shipyard location; the yard constructed standardized cargo ships for the United States Maritime Commission beginning in October 1939. The shipyards in the Orange-Port Arthur-Beaumont area and Houston began two ten-hour daily shifts early in 1942. A 10,000-ton Liberty ship, the first vessel out of Texas shipyards, was christened in April 1942. Throughout World War II shipyard expansion continued rapidly and brought jobs and many small complementary businesses. In addition to the $100 million in contracts previously awarded to the Todd-Galveston Shipbuilding Corporation and the Brown Shipbuilding Corporation of Houston for building large escort vessels, in August 1942 these companies received supplemental contracts for $200 million. Supplemental contracts totaling $50 million were awarded to the Pennsylvania Shipyard, Beaumont, in September. By July 1943 sixty-six ships had been launched at Houston, and production time on Victory ships had been reduced from 300 days to thirty-nine.
After World War II the Texas shipbuilding industry converted its yards to peacetime production, a change that sharply lowered employment and output. In 1943 two major shipyards employed 35,000 people; in 1963 all twenty-three yards in the state employed only 4,500. The value of output in 1963 totaled about $70 million in nonpropelled ships (oil and chemical barges), ship-repair projects, and oil-drilling platforms. Some yards diversified into sheet-metal fabrication and industrial heating equipment as the demand for ships decreased. About ten shipyards operated in Texas in 1980, most of them in the Beaumont-Port Arthur-Orange area and the remainder in the Houston-Galveston area. The bulk of their work was in building offshore drilling platforms and other equipment for the petroleum industry. The rest of their work was in ship repair and occasional ship conversion contracts.