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National Defense > Blog > Posts > At Submarine Shipyard, Lots of 'Excess Capacity' (UPDATED)
At Submarine Shipyard, Lots of 'Excess Capacity' (UPDATED)

NORTH KINGSTOWN, R.I. — There are empty spaces and unused workstations inside the bays here at General Dynamics Electric Boat, where many of the U.S. Navy's nuclear-powered submarines have been designed and built.

The company built its Quonset Point facility to handle up to three ships per year. But the Navy has decided to delay the purchase of one Virginia-class attack submarine, straying from a schedule of building two per year.

“There is excess capacity in every shop we have,” said Bruce Hart, site manager at the Quonset Point facility, located on a peninsula that was once home to a Navy air station. The area now is a business park managed by the Rhode Island Economic Development Corporation, which recently hosted reporters on a tour of maritime industry sites around the state.

A portion of the Electric Boat land deal represented a $10 million acquisition back in the 1970s. The company has more than paid that back to the state, joked John Riendeau, the economic development corporation’s director of defense and manufacturing business sector. He noted that Electric Boat’s payroll alone is more than $3 billion. (See correction below.)

But officials here in Rhode Island are pushing for that second submarine to be put back into the budget for 2014, knowing that the loss of just one ship would send ripples through the local economy.

Electric Boat executives last week attended a submarine industrial base meeting in Washington, D.C. They said that the event attracted more members of Congress than ever before who seemed determined to get both ships back in the budget.

The Rhode Island business community is confident that the submarine money will be put back in the budget. While officials at Electric Boat say they are not overconfident, there is even talk of adding another submarine to the Block III ships to make it an even 10 over the 2014 to 2018 timeframe.

Navy leadership also recognizes the importance of putting the second submarine back into the budget, said Robert Hamilton, director of communications for Electric Boat. “It’s just a matter of where the money’s going to come from.”

That’s what a lot of companies in Rhode Island are wondering too.

The nation’s smallest state has a bustling defense industry made up of more than 100 companies that generate about $2 billion in revenue. These include arms of large contractors such as Lockheed Martin and Raytheon, as well as smaller niche businesses such as Applied Science Associates, which was recently purchased by consulting giant RPS Group and now goes by the brand of RPS ASA.

ASA develops software for a variety of clients, including the Defense Department and Department of Homeland Security. The company develops software and tactical decision aids for expeditionary, special and marine warfare — users of the products may be in a carrier group or forward deployed on a beach.

ASA produces interactive maps that can tell commanders in time of a crisis which travel lanes are still open to their ships. Other software predicts the path of harmful material pouring into waterways, such as during an oil spill or when hazardous chemicals are released during collisions or fires. If someone falls overboard anywhere in the Coast Guard’s domain, ASA’s search and rescue system is used to help find that person. The goal of all of these software programs is to smooth out the process of collecting data, often times doing it automatically, so that users can spend more time analyzing the information. Company officials said that they are now working on making their applications 2-D and 3-D.

ASA splits its business between the defense and commercial sectors. But that may change, said director of defense programs Matthew Ward.

“We’ll probably shift back to more commercial with the budgets I’ve seen,” he said.

The amount of defense dollars coming to Rhode Island is inextricably tied to the number of jobs here. A chart displaying the projected on-roll workforce at Electric Boat contains a significant dip in the 2014 timeframe that accounts for the loss of the second Virginia-class submarine that year. The workforce numbers drop by nearly 1,000 before stabilizing again in the following years when production ramps back up to two ships per year.

Plans call for 30 Virginia-class submarines to be built through 2020. Electric Boat builds sections of the ships, as does Newport News Shipbuilding in Virginia. The companies alternate deliveries of the ships. So far, eight have been delivered to the Navy.

Officials say that the budget and Navy’s plans are out of their hands, but they are doing what they can to build these submarines more efficiently. One ship used to require 14.7 million workforce hours. That has been shaved to 10.5 million hours.

A peek inside the bays on site here provides a glimpse of the company’s approach to building submarines. Much of the process is becoming automated. Pipes and light metal are housed in giant storage racks. Workers punch in what they need on computers and the pieces come down and across the floor to them on tracks. A laser labels the pieces and cuts them.

All around, there are sections of submarines. On the ground, there are components being assembled little by little on wooden platforms. Up higher, hull fragments weighing hundreds of tons are supported by giant apparatuses. Workers piece together as much as they can before their sections go on the submarine.

“We work on it as long as we can out here before adding it to the ship,” said Hart, standing in front of a series of cranes and metal rolling machines. “It just keeps getting bigger and bigger.”

A lot of work is farmed out to suppliers. For Block III Virginia-class submarines, the company bought $5 billion worth of material from other entities. For instance, Electric Boat used to cut all of its own cable; now a vendor takes care of that. But the company also has had to make investments to take care of some processes on its own. Officials searched for but never could find a vender to provide the appropriate kind of metal bonding technology needed for the submarines, so Electric Boat has embarked on a multi-million dollar effort to do it in-house.

A focus on labor efficiencies has brought the cost of a submarine from $2.4 billion down to about $2 billion, said Vice President John Holmander, who manages the Virginia-class program. (See correction below.)

But changes to the routine add dollars back into the equation, he said.

The interruption in the two-per-year schedule for Virginia-class ships will increase the cost of that program by more than $600 million, Holmander said.

The price tag for all 30 ships comes to about $90 billion.

CORRECTION: Riendeau was referring to the financial impact of Electric Boat's payroll on the local economy since the 1970s, not the company's current payroll.

The $2.4 billion and $2 billion figures are in inflation-adjusted 2005 dollars.


Re: At Submarine Shipyard, Lots of 'Excess Capacity'

If, as Mr. Holmander says, the cost of a Virginia-class submarine is just $2 billion, then why would 30 cost $90 billion? That's $3 billion each. Is there some assumption of inflation in the overall figure?
James Hasík at 3/15/2012 11:01 PM

Re: At Submarine Shipyard, Lots of 'Excess Capacity' (UPDATED)

They ought to have the right skill set and a lot of the facilities for building piping and machinery modules for civilian nuclear power plants.  Thus could USA save coal and gas and use it to lessen the dependency on imported oil.
Magnus Redin at 3/18/2012 9:54 AM

Re: At Submarine Shipyard, Lots of 'Excess Capacity' (UPDATED)

The problems in RI are no different than other parts of the country.  Congress led the way for base closures through the 80's.  Certainly did nothing to help the economy on the west coast with closures such as Oakland Army base, Alameda NAS, Treasure Island Navy Base, Mare Island Ship Yard, and Presido of SF.  The SF Bay Area is still relling from the impact.

The tree huggers won't allow the construction of nuclear power plants.
Jim Friends at 3/19/2012 11:25 AM

Re: At Submarine Shipyard, Lots of 'Excess Capacity' (UPDATED)

Electric Boat should be put to work designing and building a diesel-electric submarine for the Taiwanese Navy.
Jay at 9/13/2012 8:21 AM

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