General Dynamic Electric Boat To Invest $852M to Expand Groton Shipyard

May 7, 2018 2:01 PM
The Virginia-class attack submarine North Dakota (SSN-784) is rolled out of an indoor shipyard facility at General Dynamics Electric Boat in Groton, Conn. US Navy Photo

General Dynamics Electric Boat is spending about half of its previously announced $1.7 billion multi-year capital expenditure plan on upgrading its Groton, Conn. manufacturing facility to accommodate building the new Columbia-class nuclear powered ballistic missile submarine.

Last week, Electric Boat officials and Connecticut’s governor announced an economic development plan including $852 million on upgrades to the Groton facility, and corporate spending in-state potentially worth billions more during the life of the program.

New machinery is being purchased and the company plans to build a third dry dock and manufacturing superstructure to house construction of the new Columbia-class. Electric Boat is also pledging to increase annual spending to more than $500 million on parts and material from some 700 Connecticut-based suppliers, said Connecticut Gov. Dannel Malloy, in a statement released last week.

“Our state’s partnership with General Dynamics Electric Boat will ensure that thousands of good-paying manufacturing jobs continue to grow for years to come. This isn’t just a good deal for southeastern Connecticut, it’s a good deal for residents across the state, where over 700 supply chain companies with locations in over 100 towns will see increased demand from the best submarine maker in the world,” said Malloy in a statement.

The Columbia-class will replace the aging Ohio-class nuclear ballistic missile submarines. The Navy plans to buy 12 Columbia-class subs, currently estimated to cost $7.3 billion each, according to statements made previously by Navy officials.

Encouraging such large capital investments made by the defense industrial base is something Pentagon officials frequently cite as part of their pitches to Congress when requesting a steady, predictable flow of money during budget requests.

“Filling up a parts bin does not happen in one fiscal-year cycle. We need to send a signal to industry that we need the parts on a consistent basis, so they make the investments to make the parts,” said Secretary of the Navy Richard V. Spencer while discussing the Fiscal Year 2019 budget request during a media briefing at the Pentagon last week.

An undated artist’s rendering of the planned Columbia-class submarine. Naval Sea Systems Command Image

In return for the commitment from Electric Boat, the state is offering $20 million worth of tax breaks, and loans of up to $35 million to purchase new machinery, which are also eligible for a state loan forgiveness program is Electric Boat meets new employment targets. Electric Boat is eligible for an $8 million state grant to help pay for training new employees hired by subcontractors. To accommodate the new dry dock, Connecticut also plans to spend $20 million on dredging the Thames River in Groton.

“This investment provides crucial support for the workforce development and facility expansion that will help Electric Boat grow, increase its economic contribution to the region, and continue to deliver the world’s most capable submarines to the U.S. Navy,” said Jeffrey S. Geiger, Electric Boat’s president, in a release. “It will also improve our competitive position, help us to secure additional work in the future, and solidify the region’s title of Submarine Capital of the World.”

The large investment in Electric Boat had been talked about by General Dynamics top executives for months. During a January conference call with Wall Street analysts, Chief Executive Phebe Novakovic said the company planned to reinvest $1.7 billion in capital expenditures at Electric Boat during the next several years.

“We are deep into the final engineering phase on the Columbia ballistic-missile submarine. We began material purchases early this year to support construction on the first ship for Columbia, forecast to begin full construction in 2020,” Novakovic said more recently, during a call with analysts discussing first-quarter results.

Ben Werner

Ben Werner

Ben Werner is a staff writer for USNI News. He has worked as a freelance writer in Busan, South Korea, and as a staff writer covering education and publicly traded companies for The Virginian-Pilot in Norfolk, Va., The State newspaper in Columbia, S.C., Savannah Morning News in Savannah, Ga., and Baltimore Business Journal. He earned a bachelor’s degree from the University of Maryland and a master’s degree from New York University.

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