While the news coming from Electric Boat recently has not been uplifting, it seems that there finally may be some rays of sunshine on the horizon.
Just days after the company announced a wave of layoffs and soon after the company lost a contract for submarine maintenance, the Pentagon released its Quadrennial Defense Review (QDR). In it, the Navy made a call to increase yearly production of its Virginia class submarines from the current one submarine to two no later than fiscal year 2012.
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Despite the seeming good news, the company is proceeding with planned layoffs at its Groton, Conn., facility and is planning for layoffs at its Quonset Point site. Late last month, notices were distributed to 222 employees – 51 of them Rhode Islanders – in Groton, telling them that their jobs will be eliminated effective March 31. The notification was the first stemming from the company’s December restructuring announcement that ultimately could cost 2,400 people, including 500 to 600 in Rhode Island, their jobs by the end of the year.
There is no timetable set for when the layoffs will begin at the Quonset Point facility, which currently employs about 2,000. The eventual elimination of the company’s overhaul and repair business, as well as a decrease in the company’s design work, are driving the downsizing in the long term, but recent events are not helping stave off the inevitable.
Earlier this month the Navy announced a $34.7 million contract for maintenance work on the USS Toledo was awarded to a Northrop Grumman shipyard in Virginia. At the height of the restoration, which was expected to come next year, approximately 800 people could have worked on the project, said Robert Hamilton, director of communications at EB.
“We made no secret of the fact we were hoping to win [the contract],” he said.
The company is now focusing on a bid for repair work on the USS Miami to be completed this summer, a job that could involve 200 to 300 people, said Hamilton.
Over the last few years, the overhaul repair division has supported nearly as many employees as new construction activities, he said. However, after the contract for the USS Miami is awarded, the Navy will no longer send major repair jobs to private shipyards like EB.
The cause for optimism is the Navy’s call to increase the production run of the Virginia submarines, something that Electric Boat has been calling on the government to do as a way to decrease the costs associated with the project.
The economies of scale that could be realized from doubling yearly production would drive the price per submarine from the current $2.4 billion to $2 billion, said Hamilton. In addition, the company’s work force could be stabilized and its learning curve improved, which would increase production capabilities while driving down costs.
Still, the long-term prognosis for Electric Boat is guarded at best. John Worobey, president of the Marine Draftsmen’s Association UAW Local 571 in Connecticut, represents 169 of the 222 employees laid off. He expects that between 400 and 500 of the about 1,800 members will be eliminated by the end of the year.
At the same time, new design jobs are starting to dry up, said Worobey. For the first time in more than 50 years, the Navy does not have a new submarine design program planned, which is affecting the number of employees needed for engineering and design work.
Rhode Island U.S. Senator Jack Reed and Connecticut’s congressional delegation have voiced their support to hasten implementation of the new manufacturing cycle.
