Such a judgment can be reached only after each shipyard has at least partially produced a Seawolf, with proven results, for better or for worse.

In a competitive showdown, Newport News, obviously, feels confident and competent, since Newport News has won the awards for 8 of the last 10 688's bid in open competition. Again, my suggestion is to let competition work.

Point 4: My last point is that with a backlog of 15 ships at one yard, Electric Boat, and 13 ships at the other, Newport News, there is no reason that any decision must be made this year to put either shipyard out of the submarine construction business.

The contract backlog at each of the yards is completed in 7 or 8 years, in 1997 or 1998, not in the next few years.

WHY NEWPORT NEWS SHOULD BE AWARDED CONTRACT

I would like now to respond to the subcommittee questions, sir. First, as to why Newport News should be awarded the contract for the SSN-22. My basic response is that Newport News should be awarded this contract if we were the successful bidder as determined by the U.S. Navy. On January 8 of this year we submitted our bid which was in full compliance with the Navy's request for proposal.

The second question is, What will happen if Newport News is not awarded the SSN-22? The effect will be that Newport News will most likely go out of the submarine business as our 688-class backlog is depleted. Our submarine employment will decrease from 12,500 people now over 5 years at the average rate of about 2,500 per year to 0 by the end of 1995. It would be the end of an era for us, an era we look on with great pride.

Although we could theoretically bid on the third or fourth Seawolf, realistically Newport News would be too far behind Electric Boat on the learning curve to be able to compete.

Our 688 backlog submarine work, as I mentioned, will be decreasing at the rate of about two subs per year through 1995. The last 688 we have under contract is now in our fabrication shop where the most intensive direct labor work is performed.

If we lost Seawolf-22, the impact on the economy of the Virginia Tidewater region, over a period of time, will be at least 30,000 jobs, a catastrophic result for any region. That, of course, takes into account our layoffs as well the effect it has in the neighboring community. Our area currently has an employment rate very similar to that of southeastern Connecticut, within 0.2 decimal points.

The last two questions submitted to us are basically of the same thrust, except that the Seawolf submarine volume awarded to us is assumed to be either one per year or one every other year. Both scenarios, obviously, are better than none at all.

Either way, though, we would continue to lose some submarine employees since our 688 backlog would be going out at the rate of two ships per year. Those two Los Angeles-class ships would be about equivalent to one Seawolf per year.

We would keep a small number of people employed the rest of the decade building Seawolfs. I would estimate that we would have about 7,000 builders working if we receive one per year, and about 4,000 if we only received one every other year.

With only one Seawolf, the cost to the Navy will go up no matter who builds them because of such low volumes. It would be highly speculative, however, to attempt a prediction now on the overhead conditions at each shipyard in 1995 when the 688's are completed. Our Newport News shipbuilding labor rates have traditionally been lower than those of Electric Boat, and I would expect that trend to remain during the 1990's. I emphasize that Newport News would still be able to keep its basic submarine construction capabilities in place at a rate of one Seawolf award every other year, starting this year with Seawolf-22.

THREE FINAL POINTS

Mr. Chairman, three final points. First, we currently have 27,000 employees at our shipyard. Of these, 55 percent craftsmen are members of a racial minority. Of our employees, 12,500 are involved in attack submarine work.

Second, the remainder are associated predominantly with aircraft carrier construction and overhaul. All of those contracts are completed at the same time Electric Boat completes its Trident submarine backlog.

The backlogs at Newport News and Electric Boat, Senator Rudman, are very similar: a total of 13 ships and 15 ships at Electric Boat, with a fairly close dollar value per employee at both yards of their respective backlogs.

Totaling Mr. Turner's 22,000 people and our 27,000, if you divide that into our backlog and you divide his number into his backlog, the sales per employee are equivalent.

Each yard will have only four ships of that backlog remaining to be completed in January 1995. Two years later in January 1997, based on current contracts and based on information supplied to the Navy by both contractors, each yard will have only one ship to complete.

I am attaching charts indicating by ship the backlog at each yard, and I believe you have those three charts.

My third and last point is that we at Newport News have invested more private money from 1980 to 1990 than was invested in that period by all other U.S. shipbuilding companies put together, a total of about $1.1 billion in new facilities, of which $550 million, one-half of the total, was for Seawolf facilities or related services to the Seawolf.

We should not be punished because we have made our people and our yard more modern and more flexible than any of our competitors.

I appreciate your attention, and I will be happy to try to answer your questions.

[The charts follow:]