General Dynamics executives this week reported a profitable third quarter that was largely unimpeded by supply chain challenges and shipyard labor shortages.
At $2.8 billion, the company’s marine systems revenue is up 5% year over year and is distributed evenly between the company’s submarine and shipbuilding wings -- General Dynamics Electric Boat and NASSCO.
During the company’s quarterly earnings call on Wednesday, CEO Phebe Novakovic told investors that the first Columbia-class submarine, the Navy’s top acquisition priority, is 25% complete and remains “on cost and on contract schedule.”
In addition to continued Columbia-class construction, Electric Boat received a large maintenance and modernization order for the Los Angeles-class submarine Hartford (SSN-768), while NASSCO received orders for a new Expeditionary Sea Base (ESB-8) and two John Lewis-class fleet oilers (T-AO 211 and T-AO 212).
Novakovic said the company has a “solid backlog” of new construction and repair work, and that company programs are “well-supported” in the fiscal year 2023 budget. General Dynamics marine systems revenue has increased for 20 consecutive quarters, she added.
She also addressed the possibility of the company performing future submarine work for the Australian Navy, saying that General Dynamics is consulting with the U.S. Navy to “determine what the focus should be going forward.”
Despite a generally positive performance, executives said the company continues to face labor shortages and supply chain challenges that are impacting shipbuilding, aerospace, combat systems and other business areas.
Novakovic said shipbuilding has been delayed by a dearth of engineers and specialty field workers. Gaps in the manufacturing workforce have also exacerbated supply chain challenges, and the company has struggled to procure chips and other “high-value complex products."
Earlier this month, the Navy announced that delivery of the future John L. Canley (ESB-6), built by NASSCO, will be delayed from September to January due to workforce shortages.
Navy officials have indicated that industrial workforce challenges, especially shortages of skilled laborers, is the key challenge to Columbia construction and other shipbuilding efforts.
Despite these concerns, Novakovic said labor shortages will not constrain General Dynamics’ revenue growth, and that labor challenges are beginning to resolve.
Overall, General Dynamics reported a strong Q3 performance with revenue of $10 billion, up 4.3% year over year.