America Desperately Needs More Submarines. And That Is Good News for General Dynamics.

May 6, 2018 Topic: Security Region: Americas Blog Brand: The Buzz Tags: MilitaryWarTechnologySubmarinesWeapons

America Desperately Needs More Submarines. And That Is Good News for General Dynamics.

As in many more attack and missile subs.

General Dynamics’ shipbuilding units—including submarine-builder Electric Boat—are performing well and the company expects business to grow in the coming years.

“The company is off to a very good start to the year, somewhat ahead of our expectations,” Phebe Novakovic, chairman and chief executive officer of General Dynamics Corporation, told investors. “The first quarter should be received as a constructive building block to a good year. We do not as a practice change guidance of the end of the first quarter. It is our practice to give you a full review of our expectations at the midpoint of the year. Suffice it to say that we are a bit ahead of the operating plan upon which our guidance was based.”

One of the company’s highlights is its strong order book—which is growing. “The backlog story here is very strong,” Novakovic said. “Total backlog at $23.8 billion is down $451 million sequentially, but funded backlog is up over $2.4 billion. This is on the strength of $1.6 billion in orders in the quarter.”

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Meanwhile, General Dynamics is executing its program well. The company’s submarine division is not only continuing to build the Virginia-class attack boat but is also about to start building the Columbia-class ballistic missile submarines. “Electric Boat is continuing to work on its 27th Virginia-class submarine, and we are deep into the final engineering phase on the Columbia ballistic-missile submarine,” Novakovic said. “We began material purchases early this year to support construction on the first ship for Columbia, forecast to begin full construction in 2020.”

Meanwhile, General Dynamics surface ship construction yards are also performing well. “Bath is working down its learning curve on the restart DDG-51s and delivered the second DDG-1000 yesterday,” Novakovic said. “The last of the three DDG-1000s delivers in 2020. NASSCO continues its strong performance on each of its class of Navy and commercial ships.”

The yard has been improving on its performance with every new ship it builds. “So the margin performance on the DDG-1000 program has been quite nice, with excellent ship-over-ship learning,” Novakovic said. ”Our performance on the restart, starting with the DDG-116, has proceeded according to our plan, and we are continuing to see learning and improvements on hull-over-hull. And we have a number of Flight IIAs still in the queue.”

Those improvements should carry onto the new Flight III Arleigh Burke-class destroyer. “Our work on the Flight III, which we got appropriated and contracted with us late last year, continues to go very well, “Novakovic said. “We're in detailed design and the early stages of the manufacturing work papers. And again, our learning on the hull continues nicely apace. So that shipyard has had some issues, which we've talked about in the past. But we are comfortable that is largely behind us, and we're going to continue to do well as we go forward on what are really legacy platforms for us after we got that line restarted from a dead stop.”

Dave Majumdar is the defense editor for the National Interest. You can follow him on Twitter: @davemajumdar.

Image: This conceptual drawing shows the new Virginia-class attack submarine now under construction at General Dynamics Electric Boat in Groton, Conn., and Northrop Grumman Newport News Shipbuilding in Newport News, Va. The first ship of this class, USS Virginia (SSN 774) is scheduled to be delivered to the U.S. Navy in 2004.​ Wikimedia Commons