Renewed Navy pact good news for GE’s River Works

LYNN – The U.S. Navy’s decision to renew a jet fighter engine contract through 2009 is worth $438 million to General Electric and represents a hedge against uncertain economic times for the firm.”This is one of our two mainstay military programs. It is very important,” River Works spokesman Richard Gorham said Thursday morning.The renewal gives GE the green light to build advanced fighter engines and equipment called device kits for 90 Super Hornet advanced fighters with another order for 26 engines and 24 device kits ordered by the Royal Australian Air Force.GE and the Navy signed the $1.5 billion Super Hornet contract in 2007. The four-year contract requires the Navy to exercise or renew the pact each year.About 3,600 employees work locally for GE making the River Works Lynn’s biggest employer. The company offered voluntary buyouts to some management employees this year and it has seen some commercial engine contractors cancel orders.Its other main military engine production program is the T700 helicopter engine.The company received additional good news recently when the Defense Department extended development funding for the F136 Joint Strike Fighter engine. GE and Pratt and Whitney are each developing an engine for the aircraft the military anticipates flying for two, or even three decades, after production begins in 2012.”For us to keep that funded means continuing employment in Lynn, probably for decades. It will mean pretty big numbers,” CWA-IUE 201 union President Jeff Crosby said.Crosby said the competition between the two major engine makers is aimed at promoting cost savings that could outweigh any savings resulting from one manufacturer producing the Joint Strike engine.”This is something the union and GE worked on very hard, “Crosby said.The contract renewal came ahead of the news that GE stock had settled down some after its chief financial officer said the troubled GE Capital unit will earn a profit this year.Keith Sherin’s comments came after four straight days of declines during which shares tumbled to an 18-year low on concern about how much exposure GE Capital has to toxic debt.Those worries, which have fueled speculation that GE will need to secure outside funding, have chopped shares by about 60 percent since the year began.After reaching a high of $7.17 Thursday, the share price settled to $6.66, just 0.03 below the opening quote of $6.69.(Material from The Associated Press was used in the story.)