The U.S. Navy announced Wednesday that it has awarded another $12.4 billion to General Dynamics Electric Boat as payment for two previously authorized Virginia-class submarines, as well as salary increases for shipyard workers.
The Navy’s agreement to boost pay comes as Electric Boat hires at unprecedented levels in an effort to meet aggressive Pentagon goals for modernization of the U.S. nuclear submarine fleet in the face of China’s rapid naval expansion and its aggressive moves in the Indo-Pacific.
U.S. Rep. Joe Courtney, ranking member of the Seapower Subcommittee of the U.S. House Armed Services Committee, called the money for wages “a welcomed development for our effort to hire and retain a highly-skilled shipyard workforce in southern New England.”
“From the standpoint of the U.S. House Seapower Subcommittee, the ability of the submarine industrial base to successfully execute production of Congress’ submarine building plans depends on growing a new generation of shipbuilders,” said Courtney, a Democrat whose eastern Connecticut district includes Groton and Electric Boat.
In addition to the salary money, the contract award includes billions of dollars more for completion and modification of two submarines approved in last year’s budget.
“It provides Electric Boat with the funding to build two more Virginia class submarines and builds on a record backlog of work already in the queue at the Electric Boat shipyard to respond to the contested environment across the maritime domain,” Courtney said.
The shipyard has been hiring at a furious pace – 5,300 in 2023, 4,100 in 2024, and another 3,000 projected this year – to meet the Navy’s production schedule. In addition to the nuclear-powered Virginia class attack submarines, EB is building the massive nuclear-powered Columbia-class ballistic missile submarines, which the Pentagon has made its priority project.
The Navy wants more than 60 Virginia submarines at more than $4 million each and a dozen Columbias, which cost more than $9 million a ship. The U.S. has also agreed to sell at least three Virginia class submarines to Australia under a security agreement intended to contain China.
In a letter to Courtney Wednesday, Secretary of the Navy John C. Phelen underscored the Pentagon’s commitment to hire and retain the workforce needed to sustain submarine production.
“I appreciate the continued congressional support to fund the highest priority and near-term needs of our nuclear shipbuilders to improve productivity across our submarine and carrier production lines,” Phelen wrote “These investments you made, which are included in the contract, will increase capacity, enhance capabilities, and help grow the skilled workforce needed to support new construction nuclear shipbuilding efforts and our maritime industrial base.”
The salary money sent to Electric Boat amounts to a recognition that the Navy needs to rejuvenate a moribund national manufacturing base if it is to be successful in harnessing the supply chain necessary to meet production goals.
While Electric Boat has been a leader in the hiring and retention of shipyard workers, it has reached a contract impasse with its marine draftsman’s union, which is threatening to strike. The Navy salary money is likely to become a factor in those talks.
Courtney has been pushing the Navy to adopt measures to expand what has become known as the submarine industrial base.
In the short term, Courtney said $500 million approved in a short term defense spending measure late last year should be directed to salaries at EB and Huntington Ingalls Newport News Shipbuilding in Virginia, a secondary contractor on the Virginia and Columbia sub programs..
Looking farther ahead, Courtney has advocated a budgeting reform that would allow shipyards to cover salary overruns on submarines under construction by accessing contract money awarded in advance for construction of future ships.
As a measure of the importance it places on expanding the submarine industrial base, the Navy said that in the decade ending in 2027, it plans to have invested $3.5 billion in areas such as supplier and workforce development. While submarine construction has increased drastically, the number of suppliers to the industrial base has dropped to about 5,000 from the 17,000 companies in business during the last submarine construction surge in the 1980s, the Navy said.
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