As the Navy explores the possibility of increased competition in submarine construction, shipbuilder HII's CEO expressed optimism today in the current arrangement between HII and General Dynamics Electric Boat but added that alternatives could be explored.
In a June Navy budget hearing, service Secretary John Phelan told lawmakers that to improve rates of ship procurement, he would be interested in seeing HII and Electric Boat build future Virginia-class submarines separately from each other.
The companies currently collaborate on the Columbia and Virginia submarine programs and transport components of the boats between their Newport News, VA yard and Groton, CT.
“I think in the next Virginia class, we have to really consider having HII build, and [Electric Boat] build, versus the two of them co-building. I think we need to introduce some competition back into the system,” Phelan said.
Today, during HII’s second quarter earnings call, Kastner said that although the company is happy with its current arrangement, “it’s always important to evaluate alternatives.”
However, Kastner added HII would need a significant amount of capital to accomplish this work on its own, echoing similar comments from General Dynamics executives.
“And we've communicated that to the Navy,” Kastner said. “We would have enough skilled labor to execute on any job like that, and we're talking about a time horizon that's pretty far out in front of us.”
Earlier this month, details on the status of carrier construction rates emerged in budget documents, which stated that John F. Kennedy (CVN-79) will now deliver in March 2027, a two-year delay. This setback is due to completion of Advanced Arresting Gear certification and continued Advanced Elevator work, the documents added.
The carrier is scheduled to go to sea for its first trials toward the end of the year, Kastner told investors today.
Enterprise (CVN-80) is also slated to be delayed by a year, according to these documents, and will deliver in July 2030 due to material availability delays and supply chain issues. The carrier has received several late engine room components, Kastner said today, with the remaining equipment scheduled to be delivered over the next few months.
HII’s revenues were up 3.5% this financial quarter compared to the second quarter of 2024 and reached over $3 billion, according to today’s call. Through 2025 and 2026, HII expects over $50 billion in contract awards, while it continues to work through pre-COVID pandemic contracts.
Outsourced work should reach two million hours this year, a one million hour increase from the year before, Kastner said. This uptick coincides with HII’s takeover of a 480,000 square foot metal fabrication facility in South Carolina, now called Newport News Shipbuilding-Charleston Operations. These efforts should lead to a 20% improvement on throughput through the rest of this year, he added.
About 2,400 experienced workers were hired by HII in the last quarter, Kastner told investors, with the company also seeing improvement in attrition.
“Now we're not going to claim victory yet, because it's just a few data points, but our initial assumptions seem to be proving out positively, and we think that's a really good sign for the future,” he said.