Electric Boat ‘poised to support’ US Navy demand for submarines, General Dynamics CEO says
By STEPHEN SINGER | Hartford Courant | Published: January 28, 2021
(Tribune News Service) — The chief executive officer of General Dynamics Electric Boat’s parent company has assured investors the submarine manufacturer is prepared to take on a dramatic increase in production.
Electric Boat will concurrently build the Virginia class and Columbia class submarines at its Groton and Quonset Point, R.I., shipyards. Columbia, which military leaders see as a top priority of the Navy’s, will replace the aging Ohio class of ballistic missile submarines.
“In response to significant increased demand from our Navy customer that you can see in these results, we continue to invest in each of our yards, particularly at Electric Boat,” Phebe N. Novakovic, CEO of General Dynamics Corp., told industry analysts on a conference call Wednesday as the defense giant released its fourth-quarter financial results.
“So suffice it to say that we’re poised to support our Navy customer as they increase the size of their fleet and deliver value to our shareholders as we work through this very large backlog and improve our return on invested capital,” she said.
General Dynamics’ Marine Systems group, which includes Electric Boat, posted $2.9 billion in revenue for the quarter ended Dec. 31, an 11.4% increase from the fourth quarter of 2019. For the year, the Marine Systems Group posted revenue of nearly $10 billion, an 8.7% increase over 2019. General Dynamics expects revenue to climb $400 million to $500 million a year, Novakovic said.
Profit of $854 million for the Marine Systems group last year was up 8.8%, the highest ever and exceeded the company’s expectations, she said.
The U.S. Navy awarded Electric Boat a $9.5 billion contract for the first step in construction of the Columbia. It also awarded in December a $22.2 billion contract to build nine Virginia-class submarines with the option for a 10th ship.
Electric Boat is building a 200,000-square-foot assembly building at its Groton shipyard as part of an $850 million expansion. EB will expand and update other manufacturing spaces and build a floating dry dock to launch Columbia submarines.
At the same time, a federal report released two weeks ago warned that Electric Boat’s supply chain has declined to about 5,000 from 17,000, a drop of about 70% since the 1970s and 1980s when the Navy last took on two submarines at the same time.