The CEO of General Dynamics, the parent company of Electric Boat, said this week that the Groton shipyard has the capacity to undertake building Virginia class submarines in competition with other yards if the Navy decides to make that change. Currently, EB constructs the Virginia class in a teambuilding arrangement with Huntington Ingalls’ (HII) Newport […]
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The CEO of General Dynamics, the parent company of Electric Boat, said this week that the Groton shipyard has the capacity to undertake building Virginia class submarines in competition with other yards if the Navy decides to make that change.
Currently, EB constructs the Virginia class in a teambuilding arrangement with Huntington Ingalls’ (HII) Newport News shipyard in Virginia. EB is the prime contractor on the program.
Last month, Navy Secretary John Phelan told a congressional hearing that because the program has experienced delays and cost overruns, he’d like to see the two yards compete.
“I think in the next Virginia class, we have to really consider having HII build and EB build, versus the two of them co-building. I think we need to introduce some competition back into the system,” Phelan said during a Senate Armed Services Committee hearing about the FY 2026 budget request.
During a conference call on GD’s second quarter results, CEO Phebe Novakovic was asked if the yard has access to enough labor to support building the entire submarine, and whether it would need additional capital.
“Skilled labor has not been an issue for Electric Boat for some time now, and I do not see a capacity problem,” Novakovic said. “We can support additional growth. We would need some additional capital if in fact the Navy opts on that strategy, but not an enormous amount. But I’ll defer to the Navy on any future discussions about that.”
The company announced second-quarter revenues of $13.04 billion, with 8.9% growth across all of its sectors.
GD's Marine Systems division, which includes Electric Boat, recorded $4.2 billion in revenues in the quarter, a 22% year-over-year increase. The division's operating profit stood at $541 million.
Novakovic noted that this marks a recent high point for marine systems.
“We’ve been growing on average at about 9% year-over-year for the last couple of years,” she said. “Some quarters, we’ve hit high teens, but I’d say the 22% growth in this quarter is really just a question of largely both timing, but also continued increasing performance at the shipyard.”
Electric Boat recently received contract modifications valued at $12.4 billion to build two new Virginia-class subs, with potential options that could increase the value to $17.2 billion.
“The contract also includes important investment funds to support shipyard productivity, wage increases and additional training programs,” Novakovic noted.
This is in addition to ramped-up federal spending in recent years to improve the submarine industrial base.
But the picture isn’t all positive. Supply chain issues have dogged Electric Boat’s productivity since the COVID lockdowns, and Novakovic told the call those problems aren’t over yet.
“We continue to experience delays and quality problems in the supply chain,” she said. “Material and parts are late and sometimes exhibit quality escapes. This obviously disrupts workflow, but we are developing good workarounds. We have more work to do here, but we are making progress.”
