Submarine Builder Forecasts Hirings, Stability
By Jennifer McDermott
January 15, 2013
Electric Boat president tells local lawmakers company in good stead despite looming cuts
Groton — Even with the potential for drastic cuts to the federal budget this year, Electric Boat President Kevin J. Poitras told local legislators Tuesday morning that the company is hiring and its workforce would be stable through 2020.
EB plans to hire 300 people in Groton during the early part of this year to help repair the USS Miami, which was severely damaged in a fire in May, and to perform maintenance work on other submarines, Poitras said. EB also is planning to hire about 500 people per year through 2020, mainly to replace workers who leave or retire, and to maintain a workforce of about 12,000, he added.
One of his top goals for the year, he told lawmakers at the annual legislative breakfast at the Mystic Marriott, is to sign a contract with the Navy to build the next group of Virginia-class submarines, about $18 billion worth of work through 2023.
EB had planned to hire 550 people in 2012 and then, later, to furlough or lay off 250 as projects finished. Instead the company ended up hiring 1,260 people and avoiding layoffs, Poitras said.
It was the first time in four years that jobs were added in all areas of the business, from engineering and design to trades work in Groton and at the Quonset Point facility. Poitras said staffing would peak at about 16,000 in the 2020s, while construction of the new class of 12 ballistic-missile submarines is under way.
But, he said, he doesn't know what impact the ongoing discussions about the federal budget will have on submarine building. Automatic across-the-board spending cuts, known as sequestration, are set to occur March 1 unless Congress acts to prevent the so-called "fiscal cliff." Half the cuts would come from the defense budget.
The effect on EB would be somewhat mitigated by the fact that the shipyard has a host of contracts in place that would be costly to cancel.
The shipyard purchases parts for submarines years in advance. In an interview, Poitras compared canceling a submarine order to buying the materials for a house and then deciding not to build it. While the defense budget is trending downward, he said, spending on submarine programs is expected to increase.
The Navy orders Virginia-class submarines in groups, or blocks, and EB is under contract to build the 11th ship of the class, the North Dakota, through the 18th ship, the Delaware, with its shipbuilding colleague, Newport News Shipbuilding in Virginia.
EB submitted a proposal last month for the next block, which would include nine or 10 submarines. Congress has supported ordering 10 ships. Last month, the Navy awarded EB nearly $2 billion to continue work on a class of 12 ballistic-missile submarines to replace the current Ohio class.
More than 1,700 employees are working on the design of the new ballistic-missile submarines, which would start patrols in 2030 and carry 70 percent of the nation's deployed nuclear weapons, Poitras said. Building each one, in terms of labor hours, would be akin to building nearly three attack submarines.
At times, EB supports work on 20 submarines in locations worldwide, Poitras said. Restoring the Miami is a $450 million job that will require 1.5 million labor hours, he said.
Poitras said he likes the balance at EB, and the company is performing what the Navy has asked.
"They haven't indicated to make any contingency plans so we're going to proceed ahead," he said after the legislative update. "Keep in mind, that could change. But we'll react."
EB could choose not to replace workers who leave, or to cut back on overtime, he said.
The legislators in attendance, who perhaps were surprised by the optimistic outlook given the uncertainties surrounding the federal budget, applauded at the end of the talk and didn't ask any questions.
State Sen. Andrew Maynard, D-Stonington, said afterward, "You hold your breath on these battles in Washington that can send shock waves." But Maynard said he was less worried that EB programs would be "on the chopping block" because its submarines are delivered on schedule and under budget.
"Sequestration could throw a curve ball at us, but I think the congressional delegation has done a very good job defending the value of the program," he said.
U.S. Rep. Joe Courtney, D-2nd District, praised the steadily improving employment situation at EB. Courtney, who was in Washington to vote on the emergency relief package for the states affected by Superstorm Sandy, said in a statement that the shipyard is now "poised to take on the new challenges of Virginia and Ohio growth."
New London Mayor Daryl Justin Finizio said he hopes the city can encourage new Electric Boat employees to get involved in New London and perhaps live in the city. John Beauregard, executive director of the Eastern Connecticut Workforce Investment Board, said every job at EB has a multiplying effect, since one job in advanced manufacturing creates one-and-a-half jobs in other sectors.
"This is great news for Electric Boat," Beauregard said, "but even better news for the eastern Connecticut community."
Snapshot: Electric Boat
• $4 billion in sales in 2012, mostly from the Virginia-class program.
• Delivered the USS Mississippi in May, a year ahead of schedule and $64 million under budget.
• 2012 was the safest year in terms of workplace injuries, and employees contributed $2.6 million to regional charities, up $75,000 over last year.
• Last month, acquired Applied Physical Sciences Corp., a Groton-based research, development, engineering and consulting firm.
• Looking to increase maximum staffing at the New London site it bought from Pfizer Inc. in 2010, from 3,000 to 3,300; about 2,850 people work there now.
• Will christen the North Dakota this year; goal is to deliver the submarine in spring 2014, in a record construction time of 60 months.
• The Groton waterfront, where the final assembly and testing of submarines is done, will have a steady workload starting in 2015.
• Helping to convert the USS La Jolla and USS San Francisco into training platforms, designing a module that can be inserted into Virginia-class submarines to boost firepower, and working on other advanced technologies for future submarines.