U.S. Submarines Are Dying -- Will These 2 Companies Build Our New Nuclear Attack Subs?

The Virginia-class attack submarine Minnesota (SSN 783) is under construction at Huntington Ingalls' Newport News Shipbuilding. Photo credit: U.S. Navy 

The U.S. fleet of nuclear-powered attack submarines is dying. The good news is the U.S. Navy has a plan to address this problem, and it would directly benefit sub makers General Dynamics (NYSE: GD  ) and Huntington Ingalls Industries (NYSE: HII  ) . Here's what you need to know.

Los Angeles-class submarines

The Los Angeles-class submarine USS Albuquerque (SSN 706) surfaces in the Atlantic Ocean. Photo credit: Wikimedia Commons.

There are three types of Navy subs: nuclear-powered cruise missile and special operations forces subs (SSGNs), nuclear-powered ballistic missile subs (SSBNs), and nuclear-powered attack subs (SSNs). Of these three types of vessels, it's the SSNs that make up the backbone of the Navy's submarine force, conducting a range of missions, including reconnaissance, surveillance, covert insertion, and covert strikes.

More importantly, at the end of fiscal 2013, there were 54 SSNs in service: 10 Virginia-class subs, three Seawolf-class subs, and 41 Los Angeles-class subs. The problem is the Los Angeles-class subs entered service between 1976 and 1996, which means they are getting old.  In fact, the Navy originally had 62 Los Angeles-class subs, but 22 have been retired, the latest being the USS Miami (SSN 755), which was retired earlier this year due to extensive damage caused by a shipyard fire. Moreover, this retirement brings the total of Los Angles-class subs down to 40.  

Virginia-class submarines

The Virginia-class attack submarine USS New Mexico (SSN 779). Photo credit: Wikimedia Commons.

Because it has to phase out the Los Angeles due to age, the Navy has been acquiring between one and two new and improved Virginia-class attack subs each year, with the total planned procurement being 30 Virginia-class subs by fiscal 2019The reason? In order to meet its mission goals, the Navy says it needs a force of 48 SSNs.  

The problem
Unfortunately for the Navy, a Congressional Research Service, or CRS, report issued in June points out one big problem with the above plan. While the existing Virginia-class submarine procurement plan allows the Navy to maintain its goal of 48 SSNs through fiscal 2024, starting in fiscal 2025 the service would see its force fall below 48 SSNs due to older subs being taken out of commission. In fact, by fiscal 2030 the Navy would only have 41 SSNs, and it wouldn't return to its stated goal of 48 vessels until fiscal 2035. Furthermore, the CRS report doesn't take into account the retirement of the USS Miami. 

The above is an issue because the Navy states that, on average, day-to-day operations require the deployment of 10 SSNs, and during a peak time of war, an estimated 35 SSNs could be required for deployment within a certain amount of time. While that requirement might appear to be below the anticipated available SSNs in fiscal 2030, each sub can only be deployed for a certain period of time before it must be relieved. That necessitates having a larger force of available submarines. 

The Navy weights its options

Virginia-class attack submarine. Photo credit: Wikimedia Commons.

According to the CRS report, the options the Navy considered for mitigating the projected SSN shortfall include: lengthening the service lives of 16 existing SSNs, lengthening sub deployments from six months to seven months, reducing Virginia-class construction time from 72 to 60 months (something the Navy is already trying to do), and procuring an additional four SSNs beyond what is planned.

However, of all the options considered (or combinations of options), the only one that allows the Navy to meet its 35-boat figure during a war is the additional procurement of SSNs. That's possibly great news for General Dynamics and Huntington Ingalls Industries, as the CRS report states that each Virginia-class sub has a current estimated procurement cost of $2.8 billion. Considering that each company is responsible for building different components of these vessels, the result is a roughly even split of Virginia-class-sub profits.  

What to watch
So far, the Navy hasn't increased its procurement of Virginia-class subs. However, considering the Congressional Research Service's report was only released on June 25, that's understandable. Of course, what the Navy ultimately decides to do will have to be approved through Congress, and taking into account that defense spending is still constrained, increasing Virginia-class procurement by four subs might be an uphill battle. Still, stranger things have happened. Consequently, this is something to watch.

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Read/Post Comments (24) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 16, 2014, at 4:23 PM, rodgerolsen wrote:

    For what? Who are they going to protect us against? No one but the US and NATO has any interest in playing war. The rest of the world grew up, went home, and got jobs. No one wants to play cold war any more.

    And, by they way, if you haven't already noticed, you might look at the fact that we are broke. In fact we are 17.5 billion dollars worse than broke. We would have to borrow every dollar spent on these expensive toys.

    Hopefully the congressmen will learn math from their secretaries and realize that buying more things we can't afford and don't need is a bad idea.

  • Report this Comment On August 16, 2014, at 4:50 PM, SD13SHO wrote:

    What cave are you living in? Apparently, you haven't heard about the friendly Russians vacationing in the Ukraine. Did I mention Putin is putting $500 Billion dollars into the Russian military. No cold war, of course not.

    And, of course we have the peace loving Chinese, who claim the South China Sea, and several island chains are theirs and everyone else can stay home...problem, it's International Waters, and the islands belong to other countries.

    Then we have ISIS, in Iraq and Syria, as well as problems in Egypt, and Libya. HAMAS in the Gaza strip, no problems there, they are just building 50-60 tunnels into Israel so they can come visit the tourist sites. The 2400 rockets they fired into Israel, since Jan 2014, are simply misdirected fireworks from weddings. Did I mention Afghanistan? No war there. Wonderful place, you should visit.

    You really need to get out more. The world is in flames, and we will be seeing these problems for many, many years. The Chamberlin method of diplomacy did not work in the 1930's and it isn'r working now.

  • Report this Comment On August 16, 2014, at 6:27 PM, Ken65 wrote:

    Well, getting peace is so simple. Chamberlin just needed to groveled more, beg more and say please more often.

    I bet it would have worked, and then Hitler would have put away all of his toys, and played nice.:)

    I'm sure the Chinese will play nice also if we just politely ask them to.

    Oh, and get their signature on a piece of paper. The Chinese will surely honor that.

  • Report this Comment On August 16, 2014, at 6:38 PM, 67alfa wrote:

    54 nuclear submarines is absurd. Twenty would be more than enough. What to the Russians have operational? Five? How about the Chinese? About the same? We've got to sober up and realize that the US is going BROKE!

  • Report this Comment On August 16, 2014, at 6:39 PM, 67alfa wrote:

    Roger, good comment but, of course, that's TRILLION not BILLION.

  • Report this Comment On August 16, 2014, at 6:42 PM, redmanrt wrote:

    We have too many conventional carriers.

    The future lies with attack submarines carrying drones.

  • Report this Comment On August 16, 2014, at 8:08 PM, bobdurino wrote:

    Your brief or foreshortened narrative respected a reader's time and mitigated their pain; My pain in-particular. I took away the following points: A William Randolph Hearst sensational exclusive: dying submarines. Who sank them?

    Operational submarines of the United States Navy are classified as new, not so new and old. Another classification method is by vessel class: Virginia, Sea Wolf and Los Angeles. Not mentioned is a boat under development either as a replacement to older noisier boats or an add-on to Virginia class boats.

    The role of a SSN according to your article is tactical. Did you cancel strategic and did you tell the Navy? Did you consider strategic nuclear doctrine as part of the cancellation process?

    I saw your nostrils flair when by implication, RFP's are restricted to two defense contractors. The other less politically connected died off long ago leaving the two survivors a pot of green, stock appreciation and dividend collecting.

    In summary: What, torpedoes? Full speed ahead

  • Report this Comment On August 16, 2014, at 8:43 PM, Mystery47 wrote:

    I'm just curious why it is ALWAYS America and ONLY America that is involved in such war-mongering efforts. Where is China, Russia, Japan, Britain, France, Germany, Spain or ANY other country?

    We're going on $ 19 TRILLION in debt, we stopped COLA's for Social Security recipients and veteran's pensions yet we can find $ 550 million to send to train troops in Africa and can send HUNDREDS of BILLIONS to Israel, Egypt, Afghanistan and many other nations.

    If you saw the TRILLIONS of DOLLARS we spend on fighter jets, stealth destroyers, these submarines and the Pentagon budget then you can understand why our debt is rising so fast and our economy is crumbling.

    Whatever happened to America FIRST? There will ALWAYS be conflicts and border changes around the world. We are WE the only ones getting involved in all these disputes?


    Let all the other nations of the world solve their own problems. THIS MADNESS HAS TO STOP.

  • Report this Comment On August 16, 2014, at 9:12 PM, rlv1 wrote:

    What about other aspects, like supersonic torpedoes, ultra-quiet boats and other technological advances. I have been reading that the diesel-electrics are very quiet (one reportedly was able to sneak into a demonstration undetected) and am wondering how we are advancing to offset what other countries have accomplished with their sub fleet.

  • Report this Comment On August 16, 2014, at 9:25 PM, Woot wrote:

    why not refuel the ones you can and d comission

    the others and sale for scrap the turbin and generator could power more than a few homes or plants the reactor would need to be stored in a cave or under ground vault due to the amount of radition it cold release we have several old command bunkers that are weld shut we could use for storage we need a good high rad waste site in this country there is alloy in those subs when sold as scrap the scrap could bring in enough money to pay half the cost of a new unit

  • Report this Comment On August 16, 2014, at 9:58 PM, ChunkyRunner wrote:

    The most interesting thing about this is the idea it's possible to predict strategic and tactical requirements that far in advance. I know submarines can be important in almost any situation that requires naval action but the world changes quickly

  • Report this Comment On August 16, 2014, at 10:20 PM, danbhart wrote:

    Dear Rodger: you are living in a left wing dream and I hope the polar bears don't drink all the coca cola before the dancing world citizens finish their circle dance. What world IS that you live in? Russian and other nations subs prowl the seas; many carry nuclear missiles and others stalk our carrier groups. You live on planet DEEnial for sure and it's that same dangerous ostrich-like perspective that led to two world wars. Those nations who have neglected their defense and spent their futures on creating temporarily pretty cradle to grave socialist pillow lands for NOW, were shown to be pretty weak when it came to telling off Russia, weren't they? This is the Rick Steves answer to reality: pretend we're all good friends and the barbarians will go away or ask for a coke. It never worked that way; it doesn't today. America needs to upgrade it's nuclear submarine forces and it's going to happen. I suggest if you can't stand the concept of standing up for your own freedom, you move to Europe where they sit down and watch it fritter away as they get closer to dying. Already their birth rate is close to nonexistent and soon they will be too. Demographics states clearly that by 2050 the majority population of Germany will be Arab/Muslim. Europe and those other socialist states who refused to defend themselves and now hide behind the American umbrella are fading away. Soon, they will be gone. Perhaps THEN, we won't have to have so many attack submarines to defend cowardly peoples no longer amongst the living. Or, perhaps, we can sit back and watch Russia consume them. Which would you prefer? Let me have a coke while you're deciding. In the interim, we WILL build new submarine forces and you'll just have to get your teeth fixed with the NHS of Great Britain and all the rest of that "quality" socialist care, that is IF you can convince them you're one of their leeches, not ours.

  • Report this Comment On August 16, 2014, at 10:22 PM, Mustafa08 wrote:

    Who wrote this article?? - We have the most advanced submarines on this planet. -

    Sounds like the Defense Contractors are again offering gifts to our Congressmen gifts so they go along with this, and spend our money on more unnecessary weapons.

    Since Obama started bringing our boys back from the middle east, Halliburton and the Defense contractors have been pulling strings to get us involved into another war.

    They are the only ones who win if we go to war.

    The losers are thousands of American boys who are sent to die just so the Defense industry continue to make Billions.

  • Report this Comment On August 17, 2014, at 12:36 AM, buffrat wrote:

    67alpha & Mystery 47

    I am always amazed when I read posts like yours. Jane's Fighting Ship, the authority on the world's navies lists a total of 67 subs for the Chinese and 70 for the Russians currently. As for your preposterous assertion that a robust Navy Submarine Fleet is no longer needed, may I point to the current situation in the South China Sea. China asserting itself over natural resources and using its Navy to back it up. As a seagoing economic nation and one that is bereft of many natural resources within our borders, we would rue the day when freedom to engage in commerce all over the world is threatened. As for mystery's assertion of the trillions we spend on ships, planes, etc, may I point out that defense spending is at its lowest % of GDP in approximately 60 years, the DOD provides direct and indirect approximately 4 million jobs in our economy, if my government is going to spend money I would rather it be on new subs, planes or ships then an Obama-phone or some study on the lovemaking habits of S. Dakota Crickets!

  • Report this Comment On August 17, 2014, at 7:22 AM, fingerlakes54 wrote:

    The German U-212 class of subs are the way to go. Non nuclear--run on hydrogen. Israel has 6--Germany as many and Russia may build there own design. No heat--no pumps-carbon fiber. Almost impossible to detect.

  • Report this Comment On August 17, 2014, at 2:40 PM, MoreBS wrote:

    BAE Systems in England

  • Report this Comment On August 17, 2014, at 2:47 PM, MoreBS wrote:

    The Japanese are working with Australia to build a who new type of diesel sub (Read it as cheaper) without the disadvantages of nuclear. It sounds like it should be quite satisfactory for an attack submarine that doesn't need to spend months under water. Given the Japan's superiority in design and construction they should also be considered.

  • Report this Comment On August 17, 2014, at 2:50 PM, MoreBS wrote:

    One more thing, DOD jobs are very very expensive compared to jobs in infrastructure for example. For the same amount of money invested infrastructure produces many more good paying jobs. Defense contractors typically have a lot of overhead!!!!!!

  • Report this Comment On August 17, 2014, at 4:25 PM, rmiers1 wrote:

    China is building diesel nuclear capable subs like sausages (for guess who?). You only have to look at what your adversaries are doing to plan for adverse actions with folks who do not share the same value system. They want what we have

    Most all of China's huge military buildup is focused on the United States. Russia has a new monster missile that can evade our defensive missiles.

    It is possible to say "to expect another pearl harbor type event" (maybe by proxy) and the demand for surrender to our less than stellar political and military management.

    Each American Submarine is an independent island of retribution. Keep it that way!!!

    Pray and Vote

  • Report this Comment On August 17, 2014, at 7:50 PM, stockingshorts wrote:

    I don't like the idea of shortening the build time (asking for trouble there) which can cause costly mistakes. And I don't like the idea of falling behind in the total number of subs, PERIOD. This isn't so much about costs now, it's about CHINA and Russia by 2035 or well before.

    We NEED every sub. They are "Our Ace in the Hole."

  • Report this Comment On August 17, 2014, at 8:00 PM, stockingshorts wrote:

    From a strictly Historical standpoint; if that sawed off runt of a has-been President, Harry Truman, hadn't fired our last best hope to rid the planet of the Communist Chinese, Doug MacArthur, maybe we wouldn't need as much military hardware to ready ourselves to do battle with the "Yellow Horde."

    Consequently, Truman fired the 'Exterminator." Now we have to live with his mistake...............

    I say build and man as many subs as we can including more SSBN's.............................

  • Report this Comment On August 17, 2014, at 9:57 PM, Gwallick wrote:

    Newport News Naval Shipyard is not mentioned, but is involved with building the Virginia class along with General Dynamics. As a submarine veteran, who served on a sub built at NNNS, I feel a little slighted.

  • Report this Comment On August 17, 2014, at 11:01 PM, duudaa wrote:

    Stop wasting my money on junk we don't need. Stop!

  • Report this Comment On August 17, 2014, at 11:42 PM, DerekVance wrote:

    It is sad in a way... Reading some of the comments made here. What is so sad in how quickly, just two short (and not so brilliant) generations after the end of Cold War #1 there are people who still don't understand peace through strength. In one comment a person wrote...

    "Why is it only the USA building these weapons?"

    Is that REALLY what you think..? Are you so dumbfounded and ignorant to what Nations like China, Russia, North Korea, India and a host of South American Socialist Nations who don't care for the US are doing..? China is engaged in the largest military buildup since the USA did it in the 1980's. Russia is either building or buying more ships and attack carriers then ever.

    Even if you don't understand the principal of preparation and steadfast strength, you MUST understand what happens if you get it wrong. The consequences of NOT acting is far worse then the security provided by making it a bad idea to attack or obstruct the worlds sea trade (which accounts for over 70% of world trade) or attack a vulnerable nation.... "No one is doing that anymore" You say..? Eh-Hem..... I beg o differ. "There is no such thing as piracy on the high seas" you say..? Eh-Hem... Wrong again scooter.... "We've been at relative peace for decades, no one will start a war"...... REALLY..? Your willing to bet your freedom or even your life and the lives of those you care about..?

    Grow up, and most of all... Get your heads around the trends that are going on around you. I PROMISE you won't find them playing video games or smoking dope.... The world is not becoming a SAFER place right now.... It has become more dangerous then I care to remember... In just the last 6 1/2 years it has really gotten out of hand... Funny how that amount of time coincides with the time a particular President has been in office... I won't name names... But there is a good chance he's flying the wings off AF1 heading to another gold course....

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Katie Spence

Katie Spence has been a financial journalist for The Fool since 2011. She specializes in defense companies, “green" technology, autos, and robots. Follow her on Twitter for breaking news in the defense, auto, and robot industry.

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