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Obama has been good for the sub business

By David Collins

Publication: The Day

Published May 09. 2014 4:00AM

Certainly there are stocks you could have bought when President Obama moved into the White House that would have made you more money than General Dynamics.

But there are also many more that would not have done as well.

The General Dynamics share price was hovering around $55 at the beginning of 2009. This week, after General Dynamics was awarded part of the largest contract for Navy ships ever, $17.6 billion, the company's stock was trading at more than $110.

It's true that the Dow Jones Industrial Average has also about doubled in that time.

Still, I can't help but think that Obama's ties to the Crown family, major GD shareholders and early political supporters of the president, from his Chicago days, has helped secure a more solid future for the defense contractor.

Obama won't be in office that much longer, but, thanks in part to the record-making, multiyear shipbuilding contract awarded in part this month to General Dynamics, GD will be sure to build profitable submarines when this president has long faded into history.

Compare that to GD's submarine building crisis of 1981, when The Navy announced it would award contracts worth $1 billion for three attack submarines (yes, they've gotten a lot more expensive) to Newport News, barring the then troubled-plagued GD from the business.

Then Navy Secretary John F. Lehman said the decision to suspend competitive bidding and award the three-ship contract to GD's competitor was due to what he called "very serious problems in delivery schedules of 21 submarines."

Of course, here in Connecticut we know the north/south submarine building war had a happy ending, with the defense contract spoils eventually being shared.

The Crown family has a long history of savvy politicking going back to the presidency of John F. Kennedy, when General Dynamics beat out Boeing in a contest to build a new tactical fighter plane.

The company also very smartly lobbied for the Seawolf submarine program in the 1990s, parceling out the submarine subcontracting work to 30 states, in lots of different political districts, where more defense votes could be reeled in.

Some said the Seawolf campaign was the beginning of successful big lobbying in Washington.

Of course it is also curious that the commitment to many more years of expensive submarine building occurs at a time when relations with Russia are souring.

Who can forget the dizzying pace of Cold War defense building.

The announcement of the historically big submarine contract this month is good news here and a reminder of simpler times, when the region's employment base was built more on submarines and legal drugs than Indian gaming.

With slot machine revenues continuing to decline and submarine construction looking stable out into the future, you might have reason to ponder the cycles of history.

Maybe we should get ready for a disco resurgence. Maybe the Yugo will come back.

Even the peace-seeking, we-have-enough-submarines mayor of New London has to be a little pleased to hear the news that employment in his city might be more stable or grow in the years to come.

Oh, that's right. He's not running again. Like Obama, he will be out of office long before General Dynamics begins to hit its stride on its new 10-year submarine-building contract.

This is the opinion of David Collins.

d.collins@theday.com

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