NEW LONDON, CT — General Dynamics Electric Boat is expanding and the state of Connecticut plans to help it with $83 million in economic incentives.
The submarine builder is expected to expand its workforce and invest more than $800 million in Connecticut over the next 17 years.
Over the course of the agreement, EB said it will: grow its workforce by 1,881, bringing its total to more than 13,000; make capital investments of $852 million, and; more than double their $250 million annual spending on over 700 Connecticut suppliers as a result of increased demand for submarines from the U.S. Navy.
The Connecticut Department of Economic and Community Development (DECD) will provide incentives over the course of the agreement. They include a $35 million loan for machinery and equipment through Gov. Dannel P. Malloy’s First Five Plus Program with loan forgiveness based on supply chain spend and employment, and up to $20 million from Connecticut Innovations in sales and use tax exemptions for capital and new construction on the Electric Boat campus.
As part of the agreement, DECD will also provide EB with an $8 million grant, which may only be spent on third-party workforce development initiatives through community colleges, technical high schools, and organizations in Connecticut, such as the Eastern Workforce Investment Board, to benefit the company and its manufacturing supply chain.
In addition, the state will provide $20 million for dredging, allowing submarines to be launched from a new dry dock and manufacturing superstructure being built to support new submarine construction.
“From helicopters, to fighter jets and submarines, Connecticut is a worldwide leader in aerospace and defense manufacturing,” Malloy, who was in New London to make the announcement, said. “Our state’s partnership with General Dynamics Electric Boat will ensure that thousands of good-paying manufacturing jobs continue to grow for years to come.”
He said “it’s a good deal for residents across the state.” There’s over 700 suppliers in over 100 towns who will see increased demand for their products.
General Dynamics Electric Boat designs, constructs, and repairs submarines for the U.S. Navy. Currently, the company is working toward producing two submarines a year. If federal funding continues to grow the Navy may contract for a slightly faster pace than two per year, with the possibility that we’ll see the occasional year in which three submarines are completed.
EB just won a contract to build the Columbia Class of submarine, which is much larger than the Virginia Class and will require a new building and more workers.
The U.S. Navy ordered 12 of the ballistic missile submarines to be built between 2021 and 2035. Advanced construction will begin this year.
Electric Boat plans on hiring between 15,000 and 20,000 new employees by 2030. The company plans to spend $1.7 billion on capital improvements to the boat yards in both Groton and Quonset Point, according to fourth quarter earnings reports.
In addition, Electric Boat has 446 active suppliers in Connecticut and its spending with them will double over the next few years. It already spent $514 million over five years with those suppliers.
According to the Eastern Workforce Investment Board, the increased employment will have a significant $52 million impact on the region at a time when it is losing gaming industry jobs.
Electric Boat already has hired 3,200 more employees in 2017. Its Groton shipyard will grow to 6,000 employees during construction of the Columbia class boats.
The company is expanding its Groton facility through the construction of a new dry dock and manufacturing superstructure for the new Columbia-class nuclear powered ballistic missile submarines, which will replace the aging Ohio-class.
“This investment provides crucial support for the workforce development and facility expansion that will help Electric Boat grow, increase its economic contribution to the region, and continue to deliver the world’s most capable submarines to the U.S. Navy,” EB President Jeffrey S. Geiger said. “It will also improve our competitive position, help us to secure additional work in the future, and solidify the region’s title of Submarine Capital of the World.”
“Today’s commitment from Electric Boat — bolstered by important state aid — is a major win for Connecticut jobs and our national security,” U.S. Sen. Richard Blumenthal said. “Electric Boat’s Connecticut workforce produces the best submarines in the world, bar none, vital to our nation’s undersea capabilities abroad.”
House Speaker Joe Aresimowicz, D-Berlin, said he hadn’t seen the details of the financing deal so he couldn’t offer an opinion on it, but he added that EB has “been a great employer that is consistently adding jobs.”
The deal means that in the past four years, Malloy has worked out arrangements with all three major defense contractors to keep them operating in the Connecticut.
In 2016, Malloy and the legislature worked out a $220-million deal to ensure Lockheed Martin keeps Sikorsky headquarters in Connecticut past 2026.
That deal required the company to increase its full-time employment in Connecticut by more than 8,000 by 2032. It will also, as part of the proposed deal, nearly double its spending of $350 million per year with local Connecticut suppliers and increase its capital spending for machinery and equipment by 22 percent.
In exchange, the state agreed to give Lockheed up to $8.6 million annually over the 14-year agreement if they meet certain benchmarks in job growth, payroll spending, and use of in-state suppliers. It also exempted sales and use tax up to $5.7 million a year, and if the company exceeds its target of creating 100 to 550 jobs in any given year, it is eligible for a performance incentive grant of up to $1.9 million, for a total of $20 million.
In 2014, Malloy and the legislature worked out a deal that ensures Pratt & Whitney will stay in Connecticut through 2029.
Pratt & Whitney is committed to $500 million in capital improvements and the tax offsets from the state of Connecticut will be extended over 14 years to 2028. The total income tax credits for the various entities cannot exceed $400 million.
“Today’s announcement is fantastic news for Connecticut’s future role in the historic growth of America’s undersea fleet,” U.S. Rep. Joe Courtney said. “Strengthening Connecticut’s workforce will ensure our state’s tradition of excellence will continue to make us the submarine capital of the world.”
“Just like we did for Sikorsky, just like we did for UTC, today Connecticut is stepping up to secure jobs and an economic future for Connecticut residents, this time right here in southeastern Connecticut,” Sen. Cathy Osten, D-Sprague, said.
“Electric Boat and its subcontractors and hundreds of associated small businesses in this region are going to benefit from our investment today, as are thousands and thousands of Connecticut citizens who will get the training they need to secure a job that will allow them to buy a home, start a family, and live and succeed right here in Connecticut,” Osten added.
Before Malloy’s announcement, Osten had proposed legislation to award manufacturing bonds to Electric Boat for site improvements and to help with planning costs for the new Columbia Class submarine.