(Tribune News Service) — Submarine builder Electric Boat continues to hire at a record-breaking pace, but the company said it expects another challenging year as it works to meet Pentagon production targets during the most aggressive U.S. Naval expansion in decades.

President Kevin Graney said the Groton company hired and trained 5,300 new employees last year — more than 100 a week across all shipyard trades and professions — and will recruit at the same furious pace well into the next decade. He said new shipbuilders who a year ago were fitness coaches and grocery clerks are now doing complex welds on equipment associated with nuclear reactors.

Equally challenging will be production targets associated with the naval expansion, which the U.S. jump-started in an effort to catch up with Chinese naval construction and contain Chinese expansion in the Western Pacific.

And not only is EB the lead contractor in what will effectively be a $100 billion plus redesign of the U.S. submarine fleet, it is building subs for Australia under the terms of what’s known as AUKUS, a new treaty signed a year ago by Australia, the United Kingdom and the U.S. as a collaborative effort to resist Chinese military pressure.

“The challenges this year are incredible,” Graney said at a briefing for military and political leaders, “Believe me.”

“The last time we saw production ramp up like this was back in the 1980s under President Reagan,” he said. “We are not the same nation today that we were back then. Our manufacturing capability as a nation has shrunk. That fact alone makes it hard to find suppliers who know how to build to submarine quality standards. It also makes it hard to find and train people to join the trades. Our young people today, I think, simply lack the exposure to work in a manufacturing trade like we had two decades ago.”

Australian shipbuilders soon will study nuclear submarine construction at Electric Boat. A mile up the Thames River, officers of the Royal Australian Navy are training at the U.S. Naval Submarine Base in Groton. Regional civic leaders are exploring housing options for thousands of new shipyard workers, looking at transportation options to get them to work and trying to find ways to provide daycare for their children.

‘All eyes on southeastern Connecticut’

The combined effort has put Groton, which calls itself the submarine capital of the world, at the center of a global, strategic initiative, according to U.S. Rep. Joe Courtney, D-2, an AUKUS architect and powerful voice in naval affairs as ranking member of the Seapower subcommittee of the House Armed Services Committee.

“This really underscores ‘All eyes on southeastern Connecticut,’ ” Courtney said at the briefing. “Many people view AUKUS as the most significant security agreement that the U.S. has entered in decades and decades. A lot of it is happening right here, whether it is construction, skilled training or navy collaboration that is essential to making it happen.”

The challenge for EB and the Navy is ramping up to peak production from decades of flat, post-cold war spending that shrunk the U.S. fleet by half while idling and, eventually, depleting the ranks of welders, shipfitters and riggers who build ships, not to mention the companies that supply materials and components. America had not built submarines since 1995 after the Soviet Union had collapsed and China was not yet a concern.

Layoffs, retirements, industrial outsourcing and the trend away from trade schools and toward college also contributed to labor and supply chain shrinkage. Between the 1980s, when EB was booming with work, and today, the U.S. industrial base, the manufacturing segment of the workforce dedicated to building things like submarines, slipped from 35% to 12%.

Against that backdrop, Congress and the Navy have now committed to a program to build dozens of submarines of two classes, Columbia and Virginia, that will be the most sophisticated, stealthy and possibly most expensive weapons platforms ever designed. And the Navy wants the ships as quickly as possible.

At 560-feet, the Columbia, which will fire ballistic missiles, will be the largest ever submarine, and is the Pentagon’s top priority. Each ship is now estimated to cost more than $9 billion and take 84 months to build. The Navy wants 12, but may commit to an additional four. When complete, the class will carry 70% of the country’s nuclear arsenal.

The Navy wants at least 60 of the smaller Virginia class boats, hunter-killers designed to destroy enemy submarines and surface ships, deliver missiles to land targets, deploy special operations teams, support naval battle groups and carry out intelligence gathering missions. The latest version costs about $3.5 billion and takes about 60 months to build.

Under the trilateral AUKUS agreement, Australia will buy at least three and as many as five Virginia submarines. The U.S agreement to transfer some of its most sophisticated technology is a measure of the Biden administration’s commitment to AUKUS.

Part of the pressure on EB to build subs quickly comes from concern in parts of Congress and the Pentagon that, given the diminished state of U.S. manufacturing capacity, it will be a challenge to produce enough ships to meet U.S. defense needs, even without providing ships to the Australian Navy.

President Biden, prime ministers of Australia and United Kingdom release plans to develop submarine fleets to contain China

To mollify the concern, Australia has made what Courtney has called extraordinary commitments to the joint effort to contain China and to the U.S. The nation of 28 million has committed to a $320 billion modernization of its Navy, while investing another $3 billion in the United States to strengthen the U.S. submarine industrial base.

“That has never happened before,” Courtney said.

In order to build enough submarines to fill both U.S. and Australian defense needs, the Navy estimates EB, a division of General Dynamics, and its partner on the sub contracts, the Newport News Shipbuilding division of Huntington Ingalls Industries, will need to produce 2.33 Virginia boats a year by 2028. At the same time, once the production pipeline is engaged, EB will be expected to deliver one Columbia to the Navy each year.

Battered by the COVID pandemic, the Virginia build rate was at 1.2 boats a year at the start of 2023 and is approaching 1.5 a year at EB, according to an official with knowledge of the matter.

“It is absolutely going up,” Graney said in an interview. “I would say some of that is because we are adding people. More hands to lift the load. But we are also seeing a level of efficiency and proficiency for some of the folks we’ve hired back in early 2023. As people develop and gain that proficiency, the metrics all indicate we are moving faster. If I am worried about anything right now it is our supply chain’s ability to keep up.”

‘Not the time to insert instability’

The Navy may not be convinced. There have been signals that it may reduce its funding request in the fiscal 2025 defense budget to one Virginia class submarine from what has been a steady request over recent years for two. Last month, Courtney and the armed services committee leadership warned President Biden by letter that deviating from two subs a year not only threatens to slow what has been promising growth in U.S. shipbuilding capacity, but threatens the AUKUS agreement.

“Simply put, now is not the time to insert instability in the supply chair with uncertainty in procurement rates,” the Congressmen wrote. “The FY2025 budget will come at a pivotal time for the Virginia-class submarine program and sustaining our unmatched edge in the undersea domain. Any deviation from the planned cadence of the construction and procurement of two submarines per year will reverberate both at home and abroad, with our allies and competitors alike.”

Courtney said last week that the 2025 defense budget remains a work in progress and predicted a fight if the Navy persists in cutting a Virginia submarine, a fight the Obama administration lost in 2013 and the Trump administration lost in 2020.

“The supply chain has got to get more robust, yes,” Courtney said in an interview. “But the supply chain also follows the Navy’s procurement decisions. These guys are watching, asking themselves about spending on new equipment and hiring more people. When they see the procurement rate fluctuate, how are they going to be able to trust that they are going to have a program to sell to?”

Reported reduction in Virginia funding has also created alarm among the political and military leadership in Australia, which relied on the U.S. promises of commitment to AUKUS and support for the country’s massive naval modernization to push treaty approval past domestic opposition.

Graney said, “From my perspective, we’ve got to get back to two Virginia’s a year before we can entertain more submarines for Australia.”

The Columbia and Virginia programs account for billions of dollars in payments that reach beyond southeastern Connecticut to thousands of small businesses around the country that sell goods and services to the shipbuilders. Graney said that over the last five years he spent $32 billion on suppliers in 49 states. In Connecticut, he said 351 small businesses sold $2 billion in goods and services to EB over the same period.

The U.S. Bureau of Labor Statistics reported last week that EB’s furious recruitment drive pushed job growth in the Norwich- New London market up 3.2% in 2023, the second highest rate in New England and one of the highest rates in the country. By comparison, the increase was 0.3% and 0.1%, respectively, in the Hartford and Danbury markets.

Graney said the shipyard is continuing to recruit and hopes to hire more than 5,000 again next year. To keep skilled workers, he said EB recently signed five-year contracts with two trade unions that include 5% first-year raises and annual raises thereafter. He said the company is offering retention bonuses that reach $10,000.

He said EB now has its eye on second graders who can enter the workforce in 2033.

“My message today is, ‘Electric Boat is still hiring,’ ” Graney said.

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