General Dynamics 2010 Annual Report Download - page 27

open-ocean and littoral missions. These stealthy ships are well-suited for a
variety of global assignments, including intelligence gathering, special-
operations missions and sea-based missile launch.The Virginia-class program
includes 30 submarines, which the customer is procuring in multi-ship
blocks. The group has delivered the first seven of 18 boats under contract in
conjunction with an industry partner that shares in the construction of these
vessels. In 2010, Marine Systems delivered the seventh boat in a record 65
months, five months faster than any of the previous boats in the program.
The remaining 11 boats under contract extend deliveries through 2018. As
a result of U.S. combatant-commander requirements for the versatile capa-
bilities of the Virginia-class submarine, strong customer and congressional
support, innovative cost-saving design and production efforts, and
successful program performance, the group is scheduled to start construction
of two submarines per year beginning in 2011. The group has been working
toward this increased submarine production workload for several years.
Marine Systems also is the lead designer and producer of Arleigh
Burke destroyers, the only active destroyer in the Navy’s global surface
fleet. In 2010, we delivered USS Jason Dunham, the 32nd of 34 DDG-51
ships the Navy has contracted with us to build. The two remaining ships
are scheduled for delivery in 2011 and 2012, respectively. DDG-51s are
multi-mission combatants that offer excellent defense against a wide
range of threats, including ballistic missile defense. The Navy plans to
continue the DDG-51 program given the proven capabilities of this
destroyer. The group expects to receive an award in 2011 for an addi-
tional DDG-51 ship associated with the continuation of this program.
Marine Systems remains the lead DDG-51 design and planning shipyard,
managing the design, modernization and lifecycle support of these ships.
The group’s T-AKE combat-logistics ship supports multiple missions
for the Navy, including replenishment at sea for U.S. and NATO operating
forces around the world. T-AKE is the first Navy ship to incorporate
proven commercial marine technologies such as integrated electric-drive
propulsion. These technologies are designed to minimize T-AKE operations
and maintenance costs over an expected 40-year life. In 2010, we
received construction contracts for the final two ships under the 14-ship
program. The group has delivered the first 10 of these ships, including
two in 2010. Work is underway on the remaining four ships, with two
deliveries scheduled in 2011 and two in 2012.
The group is also developing technologies and naval platforms for the
future. These design and engineering efforts include initial concept stud-
ies for the development of the next-generation ballistic-missile submarine
(SSBN), which is expected to replace the current Ohio Class of ballistic
missile submarines. The group is also participating in the design of the
SSBN Common Missile Compartment under development for the U.S.
Navy and the Royal Navy of the United Kingdom.
Marine Systems participates in a number of programs in support of
the Navy’s efforts to renew its surface fleet. The group has completed the
detailed design of the next-generation guided-missile destroyer, the
DDG-1000 Zumwalt Class, and is currently building the first ship at its Bath,
Maine, shipyard. In 2010, the group was awarded a contract for continued
engineering and support services for the program, and long-lead construction
and material for the second and third ships. We expect to be awarded
construction contracts for the second and third ships in 2011.
In 2010, the group was awarded a contract for long-lead material and
advanced design efforts for the first ship of the Mobile Landing Platform
(MLP) program. The MLP is an auxiliary support ship intended to serve as
a floating transfer station, improving the Navy’s ability to deliver equipment
and cargo to areas without adequate port access in support of a variety of
missions. The Navy plans to build three MLP ships, and the contract for
construction of the first ship is scheduled to be awarded in 2011.
In addition to these design and construction programs, Marine
Systems provides comprehensive ship and submarine overhaul, repair
and lifecycle support services to extend the service life of these vessels
and maximize the value of these ships to the customer. The group operates
the only full-service maintenance and repair shipyard on the West Coast,
positioning us to support the Navy’s rebalancing of its surface force
toward the Pacific Fleet. The group also provides international allies with
program management, planning, engineering and design support for
submarine and surface-ship construction programs.
Beyond its Navy programs, Marine Systems designs and produces ships
for commercial customers to meet the Jones Act requirement that ships
carrying cargo between U.S. ports be built in U.S. shipyards. In 2010, the
group completed a contract to build five product-carrier ships. Given the
group’s proven success on this program, the age of the fleet of Jones Act
ships and environmental regulations that require double-hull tankers and
impose emission control limits, we anticipate additional commercial ship-
building opportunities to materialize as the economy recovers.
To further the group’s goals of efficiency, affordability for the customer
and continuous improvement, we make strategic investments in our
business, often in cooperation with the Navy and local governments. In
addition, Marine Systems leverages its design and engineering expertise
across its business to improve program execution and generate cost
savings. This knowledge sharing enables the group to use resources
more efficiently and drive process improvements. The group is well-
positioned to effectively fulfill the ship-construction and support require-
ments of its Navy and commercial customers.
Revenues for the Marine Systems group were 19 percent of our
consolidated revenues in 2008, 20 percent in 2009 and 21 percent in
2010. Revenues by major products and services were as follows:
Year Ended December 31 2008 2009 2010
Nuclear-powered submarines $ 2,579 $ 3,173 $ 3,587
Surface combatants 1,195 1,278 1,360
Auxiliary and commercial ships 1,192 1,179 961
Repair and other services 590 733 769
Total Marine Systems $ 5,556 $ 6,363 $ 6,677
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