Northrop Grumman may separate shipbuilding from its portfolio - - The News for South Mississippi

Northrop Grumman may separate shipbuilding from its portfolio


PASCAGOULA, MS (WLOX) - Northrop Grumman's shipyards in Pascagoula and Gulfport are on the market. We learned that Wednesday morning from company CEO Wes Bush. He held a conference call with investors and explained Northrop Grumman's new strategic plan.

The plan is to streamline operations and cut costs. Northrop Grumman can accomplish that by closing shipyards in Louisiana by 2013 and moving that work to Northrop Grumman's Pascagoula shipyard.

The second step of the plan is to look for a buyer who's more interested in shipbuilding than Northrop Grumman is.

"Now is the appropriate time to consider whether separating shipbuilding from the rest of Northrop Grumman is in the best interest of our shareholders, customers and employees," Bush told investors.

The Northrop Grumman CEO said the decision to put a for sale sign on its Mississippi shipyards was part of the company's new strategic plan.

"Going forward, we perceive little synergy between shipbuilding and our other businesses," he explained. "Consequently, separating the businesses may afford each the opportunity to better serve its customers and optimize its value creation for shareholders."

Northrop Grumman is a Los Angeles based company, with interests in aerospace, electronics, information systems and shipbuilding. To Bush, spinning off the shipbuilding sector to a new owner just makes sense. But he says that will only happen if the Pascagoula shipyard, and its 11,000 employees are protected.

"We do have a strong commitment to ensuring that the shipbuilding structure going forward is a viable, sustainable business," said Bush.

The CEO believes his company took a step in that direction by announcing plans to close its shipyards in Avondale, Tallulah and Wagaman, Louisiana, and move that work to Pascagoula.

"All new future gulf coast ship construction will be located in Mississippi," Bush said.

Northrop Grumman's top boss says he's confident the Pascagoula shipyard is ready to take on this new challenge.

"We see this consolidation decision as necessary to preserve a viable, competitive shipbuilding capability in the gulf coast region that will serve the nation's needs and support robust employment in the gulf coast going forward," said Bush.

Analysts estimate that selling or spinning off the shipbuilding business could earn the company about $3 Billion. Investors seemed to like the idea. Soon after the spin off plan was announced, shares of Northrop Grumman jumped nearly four percentage points.

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