Observing Momentum in the Submarine Industry

One of the themes during the hearing last Friday in the House Armed Services Seapower Subcommittee was the constant drumbeat of praise and good news for the submarine community. It isn't just expected, but accepted now in the Navy, Congress, and Industry that the Virginia class submarine has become the banner success program, and when the topic is discussed you can hear the speaker smiling through the audio while discussing the program. It isn't just about the cost decreases and the capability increases taking place for the platforms themselves, rather there is momentum in the submarine industry, and the good news keeps getting better.

EB - a division of General Dynamics - was scheduled to wrap up construction work on the USS New Hampshire, the latest Virginia-class attack sub, by this fall. It also was supposed to complete design work on a next-generation aircraft carrier, a collaborative effort with Northrop Grumman Shipbuilding, in Newport News, Va.

But EB is finding that there is lots more design work to be done and is looking to hire 200 engineers and 200 designers for upcoming projects and redesign work. It’s the most significant block of hiring for the defense contractor since 2001, according to EB officials.

The best part.

The hiring will make up for attrition - and then some.

This is fantastic news, and what the article doesn't mention are some of the other aspects being discussed. In the House hearing Congress openly discussed wanting to put the folks over at Newport News to work on a reactor for the CG(X), roughly a half reactor of what is intended for the Ford class CVN. All of this together presents the real possibility that the submarine community design and construction industry base will remain very healthy and robust in the future, and good timing too, many of these workers are approaching retirement.

The industry worker concerns was only one issue related to the submarine community discussed at the hearing though, there are two other topics in play regarding submarines. The first is directly related to the cost of the Virginia class. Congress is looking for ways to start buying lead items for future Virginia class submarines today in hopes to 1) save money on overall cost of Virginia class construction in the future and 2) decrease the assembly time of Virginia class submarines by 12 months to get them to sea faster.

Basically what Joe Courtney is looking to do is identify if materials or items can be purchased in FY09 and FY10 for submarines so the benefits can be gained when the Navy begins building two per year in FY11. It is actually a clever idea. In this way the budget shows the Navy is paying about the same per year, but because costs get spread out in different fiscal years the price is actually cheaper per boat, and the submarines can be delivered faster. It is unclear if it is feasible, but it highlights that when a program is mature in design and Congress is an engaged partner, there are ways to further savings for shipbuilding construction.

The other topic related to submarines discussed at the House hearing last Friday was a bit of questioning regarding the Navy's decision to buy the extra Virginia funded last year in FY11 instead of FY10, when Congress was expecting it to be purchased. There is some lingo on Capital Hill with this discussion. Congress was hoping for 1 - 2 - 1 - 2 - 2 which represents buying 1 SSN in FY09, 2 SSNs in FY10, 1 SSN in FY11, and then work back up to 2 per year beginning in FY12 moving forward. The Navy instead went with 1 - 1 - 2 - 2 - 2.

The Navy's reasoning is they didn't want to go 2 - 1 - 2 (lingo "two-one-two") in build cycles. Sounds reasonable, right? I sent out a number of emails today to get the gist of this, and most in the industry were hoping for two-one-two, not one-one-two and the reasoning makes a lot of sense.

Basically right now the Navy is building a submarine every 12 months. The plan the Navy decided to go with means the Navy will buy 1 every 12 months until FY11, when it will buy one every 6 months. This is the one-one-two model. The two-one-two model would be 1 SSN every 12 months until FY10, when the Navy would begin buy three submarines in a row 8 months apart, then switch to 6 months apart starting in FY12.

For example the 2-1-2 plan means that starting in FY10, the Navy would buy 2 submarines, one on month 1 and the next on month 8, then in FY11 the Navy would buy 1 submarine on month 4, then buy the next submarine 8 months later which would be month 1 of FY12, with the next submarine 6 months later in FY12 and forward every 6 months for several years.

This 2-1-2 plan would allow industry to transition from 12 month buys to 6 month buys with 3 submarines bought over a 2 year period at 8 months apart. As the 2-1-2 profile appears to be optimal for industry, it will be interesting to see if indeed the Navy does change the plan and build 2 SSNs in FY10 instead of FY11. At the end of the day, one can bet the best decision for all parties involved will happen, its just unclear at this time which approach is best.

Ronald O'Roarke covered more details of the 2-1-2 discussion (and other aspects of the Virginia class submarine program) in his prepared statement. (PDF)

Finally, for those who want some idea of just how good things are going for the Virginia class submarine program, in testimony it was mentioned the New Hampshire is 8 months ahead of schedule and under budget.