Connecticut will give an $83 million incentive package to General Dynamics Electric Boat in exchange for a commitment from the submarine maker to invest in its Groton-based plant, the company and state officials said on Tuesday.
Electric Boat, which manufactures two naval submarines annually, is gearing up to construct three per year. The company said Tuesday it will make $852 million in capital investments and plans to spend more than $500 million annually buying parts from in-state suppliers.
The Groton, Conn.-based unit of General Dynamics Corp. said last year it plans to hire up to 18,000 workers in Connecticut by 2030 to meet its expansion demands and to replace much of its current workforce that is approaching retirement age. It hired nearly 2,000 Connecticut workers in 2017.
This Connecticut investment “provides crucial support for the workforce development and facility expansion that will help Electric Boat grow, increase its economic contribution to the region,” said Electric Boat President Jeffrey Geiger.
The defense industry has been one of the strongest sectors for Connecticut’s struggling job market. The transportation-equipment manufacturing field, which includes Electric Boat, employs 45,500 people in the state, up 14% since July 2014, according to the Federal Reserve Bank of St. Louis. Total job growth for the state over that same time frame is only about 2%.
Other defense companies based in Connecticut—including United Technologies Corp.’s Pratt & Whitney and Lockheed Martin Corp.’s Sikorsky—are also planning to hire thousands of employees in coming years.
Much of Electric Boat’s employment growth has been driven by an increase in demand for Naval submarines. In addition, the company is expanding its Groton facility to prepare for the construction of a new type of nuclear-powered ballistic missile submarines for the U.S. Navy.
At a national level, new orders for defense capital goods from January through March jumped by 12% compared with the same period last year, the Commerce Department reported Thursday. Meanwhile, new orders for nondefense capital goods excluding aircraft—a gauge of business investment—rose 7% during that same time frame, according to the Commerce Department.
As part of Connecticut’s package, the state is lending Electric Boat $35 million. But if the company hits certain employment and spending goals, it doesn’t have to pay the state back. The state also offered $20 million in sales-tax exemptions and an $8 million grant for workforce development programs through community colleges and other organizations. Connecticut will pay $20 million for a dredging project that will allow subs to launch from a new dry dock in Groton.
Gov. Dannel Malloy, a Democrat, said the agreement with Electric Boat is a boon for Connecticut’s supply-chain companies.
“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,” Mr. Malloy said.