Geiger continues to predict positive outlook for Electric Boat
Groton — In his third update as Electric Boat president on Monday, Jeffrey Geiger continued to project a positive outlook for the submarine builder, which hit more than $5 billion in sales and revenue in 2015, "one of the biggest years, if not the biggest year, in EB history."
At EB's annual legislative breakfast, Geiger spoke to a smaller crowd than in years past, but his message was similar: EB is in a "very enviable position" with more than $21 billion in contracted work not yet executed.
Currently, 16 Virginia-class attack submarines are under contract and have yet to be delivered. Ten of those are under construction.
To get a sense of what that number of submarines under construction looks like, Geiger called up a picture from early last summer of three modules representing three different submarines (the Illinois, the Colorado and the South Dakota) sitting along the pier at EB's Groton facility.
"It's a sight we have not seen on our waterfront since 1997," Geiger said.
Growth at the company, which has about 14,000 employees, continues to be led by construction of two Virginia-class submarines a year; development of the Ohio-class program to replace the aging fleet of "boomers" — ballistic missile submarines — built in the 1980s and 1990s; and the Virginia Payload Module, a 80- to 85-foot-long module intended to provide additional payload capacity to future Virginia-class submarines.
The number of EB employees is up 1,300 since Geiger's address last January. About 10,000 of the total of 14,000 employees work in Connecticut.
In 2016, 1,800 new hires are expected, about half of whom will replace those who retire or otherwise leave. Of those, 600 are expected to be hired in Groton.
The company expects to have a total workforce of 18,000 by 2030 and is working with officials from local government and business and education leaders to develop a pipeline to train the workers it will need. EB is also working to "retool" in-house training programs, Geiger said.
EB's growth is also being felt by the company's 471 suppliers in the state, who were awarded $579 million over the past five years. That total is up 30 percent from last year, according to Geiger.
A dip in employment numbers to a total of 12,000 is expected between 2018 and 2020. The company will look to secure more maintenance and modernization work such as the $46 million contract awarded to EB in May 2015 to overhaul the USS Montpelier. The contract is the "major driver" behind hiring in 2016, according to Geiger.
"At its peak, we'll have more than 700 people working on this ship," he said. "It's a significant job for us that spans a couple of years."
Despite the positive outlook, EB operates in an uncertain environment contingent on congressional support, which has been strong in recent years. For the 2016 fiscal year, Congress appropriated $7.2 billion for submarine programs. In fiscal year 2017, that number will grow to more than $8 billion, Geiger said.
In a question afterward, Stonington First Selectman Rob Simmons pressed Geiger on the uncertainty EB faces, specifically asking about the possibility of another Base Realignment and Closure round. Simmons and many others in the room, he pointed out, helped to save the base about 10 years ago when the Pentagon threatened to close it.
"As fiscal constraints play themselves out, there's no doubt there will be talk about that in the future," Geiger said. "I'm really not equipped to opine about whether or not that's going to go through. It certainly doesn't look like it's going to occur."
Geiger's overall message Monday was "music to Connecticut's ears, not just our region," said U.S. Rep. Joe Courtney, D-2nd District.
"There's lots of reasons in terms of strategic considerations with Asia Pacific and other parts of the world right now where, again, the submarine fleet, I think, is really at the absolute highest priority," Courtney said.
With EB "well into the design process" on the Virginia Payload Module, about 580 engineers and designers at the company's New London facility are engaged on the design work.
"That'll peak at about 700 people later this year," Geiger said.
Following that, the company will perform some "treatment work" on the historic ship Nautilus, based at the Submarine Force Library and Museum.
The Ohio Replacement Program will be the "principal driver behind our growth in the out years," Geiger said.
More than 3,000 designers and engineers are working on the development side of the program, which the Navy has identified as its top shipbuilding priority.
Current plans call for 12 ORP boats to be built with construction scheduled to begin in 2021. But Geiger said "initial construction activities" will begin later this year.
"The work content involved in each one of these vessels is about two and a half times that (involved in) a Virginia class submarine," Geiger said. "This is like 30 additional Virginia class submarines in terms of added workload..."
To ensure concurrent building of the Virginia class and the Ohio replacement boats by employees in Connecticut and Rhode Island, EB's parent corporation, General Dynamics, is expected to make a large investment in the two states. Over the next 10 years, General Dynamics "is aligning itself to make a more than $1.5 billion investment" in facilities between the two states to make this happen, Geiger said.
At least twice in the past, EB has taken advantage of the state's Economic and Manufacturing Assistance Act.
Department of Economic and Community Development Commissioner Catherine Smith, who attended Geiger's address, said by phone Monday that EB had used the program when it built a new dock on its premises in Groton and for upgrades and the purchase of the old Caldor building at 9 Kings Highway that now houses about 600 of its employees.
Smith said it's against policy for state officials to discuss any ongoing negotiations with any company, but she said "those are the kinds of things that we do for companies with an emphasis on when they're growing and making investments to grow and expand their bottom line."
Editor's note: this version corrects the amount Congress appropriated for submarine programs in fiscal year 2016 and fiscal year 2017. Congress appropriated $7.2 billion and $8 billion, respectively. This version also corrects the spelling of the name of the commissioner of the Connecticut Department of Economic and Community Catherine Smith.