The Afterguard

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GD Electric Boat doing commercial work?

I couldn't help reading the article "Sub builder to explore commercial options" with just a little bit of cynicism and a whole lot of skepticism. I have to say that I think it is highly unlikely that EB will be doing "commercial" work.

First, EB doesn't have the commercial work culture. Building nuclear submarines is a bureaucratic, risk averse, conservative process. This is deeply entrenched in the EB culture that evolved to meet the requirements of their customer, the submariner folks in the Navy. This legacy of Admiral Rickover was intended to make US submarines safe and reliable. This is a good thing for nuclear submarines, and the US Navy has not lost a submarine since the Scorpion. That said, one could also argue that Navy submariner and EB cultures have stifled innovation. A culture that is good for building submarines may not be the best for competing in a commercial market.

For example, while the US has been building nuclear submarines at $1B - $2B each, other countries like Germany have been building boats with air-independent propulsion (AIP) systems (see "Air-independent Propulsion"), selling them for about $300M. These quiet boats operate in littoral waters, the US Navy's current strategic and tactical focus. They are relatively inexpensive, quiet, faster to produce, and — when armed with newer, high technology undersea weapons — pose a threat to US surface and submarine operations in those littoral waters. (So this should tell you where to start spending some time and money: shallow water detection and undersea weapon countermeasures.)

Looking at these AIP boats, one can also see the commercial potential in production of electric power: fuel cells come to mind. Nuclear propulsion gave us the US (ahem) nuclear industry. There was once a US commercial fuel cell power industry, but that was generally shelved in favor of "clean" coal fired power generation. Lou Chirillo probably remembers a paper at the 1991 NSRP Ship Production Symposium where the topic of shipyards diversifying into other industries such as fuel cells was presented.

So will GD EB be able to play in the commercial world? An earlier foray in the 60's was to build LNG tanker submarines to serve the gas fields in Alaska and the east coast via the then iced-over Northwest Passage. But global warming seems to have solved that problem, and, besides, the Navy was unhappy with GD thinking commercial. I'm also not too sure that the market for tourist submarines is all that large.

Maybe EB isn't too late to the AIP party. Howaldtswerke-Deutsche Werft AG (HDW) which builds the Class 212, an AIP submarine, is owned by Chicago-based One Equity Partners, a Bank One Corp investment firm. Northrop Grumman, which at one time was in the nuclear submarine business before it bought Newport News, was interested in buying a 70% interest in HDW (see GlobalSecurity.org's story on HDW). This would give them access to AIP technologies which in turn would have a commercialization potential. Oh, and it would position NG to compete with EB in the unlikely event the Navy decided to buy those smaller submarines (a littoral class submarine to go with the LCS?). Could GD EB beat them to it?

Posted at 14:53:40 on 02/01/05 by Tom Swift

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