BWX Technologies is about halfway through repairing 12 submarine missile tubes it welded incorrectly in 2018, Rex Geveden, president and CEO of the Lynchburg, Va., nuclear-hardware and fuel provider told investors Tuesday.
Under multiple subcontracts to Columbia- and Virginia-class submarine production prime General Dynamics Electric Boat, BWXT is on the hook to deliver tubes through 2021. The latest contract alone calls for the company to produce 26 tubes by that point.
In the wake of last year’s gaffe, which was disclosed in the 2018 second quarter and will cost BWXT $30 million, the current tube work is no longer profitable.
Geveden, on Tuesday’s 2019 second-quarter earnings conference call, said BWXT should be done with the fixes by year’s end, and that the company has not received new orders for missile tubes since last year’s bad welds. He also reaffirmed that BWXT will exit the tubes production business if future contracts do not include “favorable terms so that we could be profitable.”
Geveden said the company is in “discussions” with its customers about future tubes work, and that “the ultimate client,” Naval Sea Systems Command, “would like to have more than one domestic supplier, at least on the Common Missile Compartment Tubes.”
BAE Systems also makes common missile compartment tubes.
Geveden has attributed the bad tube welds to the difficulty of the work rather than BWXT’s workforce. The company’s Nuclear Operations Group, the largest of its three operating segments, makes tubes at a factory in Mount Vernon, Ind.
If its customers won’t let BWXT stay in the tubes business on its own terms, the company will cease using Building 219 at Mount Vernon for that work and instead manufacture naval nuclear reactor components there, Geveden said.
BWXT is already working near capacity on naval nuclear reactor and missile tube programs at its Mount Vernon and Barberton, Ohio, factories. The company is running mandatory overtime at the factories to finish work on reactors for the Virginia and Columbia submarines, plus Ford-class aircraft carriers, Geveden said. The company plans to expand its manufacturing footprint, and letting Building 219 take over reactors work — rather than acquiring new factory space — would save about $10 million, Geveden said.
