Northrop Grumman to consolidate Gulf Coast shipyards
The US global security company Northrop Grumman Corporation plans to consolidate its Gulf Coast shipbuilding operations and explore strategic alternatives for its Shipbuilding business.
“Our decision to consolidate the Gulf Coast facilities is driven by the need for rationalization of the shipbuilding industrial base to better align with the projected needs of our customers. The consolidation will reduce future costs, increase efficiency, and address shipbuilding overcapacity. This difficult, but necessary decision will ensure long-term improvement in Gulf Coast program performance, cost competitiveness and quality,” said Wes Bush, chief executive officer and president.
“We are extremely proud of our Avondale shipbuilders and their dedicated contributions to our company and our nation. We will work with federal, state and local officials and others to explore alternate uses for Avondale as the last two ships under construction reach completion” said Bush.
The consolidation of Gulf Coast ship construction is the next step in the company's efforts to improve performance and efficiency at its Gulf Coast shipyards, which began with the integration of its shipbuilding operations in early 2008. Since that time, Gulf Coast organization and leadership, operating systems, program execution, risk management, engineering, and quality have been the focus of intense improvement efforts.
Consolidating new ship construction on the Gulf Coast in one shipyard will position shipbuilding to achieve additional performance improvement and efficiency over the long term. Ship construction at Avondale will wind down in 2013. Future LPD-class ships will be built in a single production line at the company's Pascagoula, Miss. facility. The company anticipates some opportunities in Pascagoula for Avondale shipbuilders who wish to relocate.
“Our decision to explore strategic alternatives for shipbuilding is the result of a portfolio assessment to determine how to best serve our shareholders, customers, and employees. The performance improvement initiatives underway in our Gulf Coast operations will be further enhanced by the facilities consolidation. Recognizing our company's long-term strategic priorities, we foresee little synergy between shipbuilding and our other businesses. It is now appropriate to explore separating shipbuilding from Northrop Grumman,” said Bush.
The company will evaluate whether a separation of shipbuilding would be in the best interests of shareholders, customers and employees by allowing both the company and shipbuilding to more effectively pursue their respective opportunities to maximize long-term value. Strategic alternatives for the shipbuilding business include, but are not limited to, a spin-off to Northrop Grumman shareholders.
