US Navy welcomes Northrop shipbuilding restructure

Navy Secretary Donald Winter welcomed on Tuesday a decision by Northrop Grumman Corp to consolidate its two ship sectors into one unit and said it could lead to better oversight of Navy contracts.

"He sees this as a positive step and trusts that the unification of the sectors will improve the oversight of Navy contracts, and streamline business practices across the facilities," said Capt. Beci Brenton, Winter's spokeswoman.

Northrop late said on Monday its two shipbuilding sectors, Newport News and Ship Systems, would be combined and named "Northrop Grumman Shipbuilding," effective Jan. 28.

Nothrop also said it will shift its missiles business into its Space Technology sector on July 1.

Both moves would help Northrop better serve its customers and improve utilization of its capabilities and resources.

"With the significant progress in the recovery and regeneration of our Gulf Coast shipyards following Hurricane Katrina, the improvements resulting from our investments in our yards, and the continued strength of our nation's military shipbuilding program, this realignment positions the company for the future," Northrop Chairman Ronald Sugar said in a statement.

Northrop said Michael Petters, a corporate vice president and president of Newport News, would be president of the newly merged shipbuilding unit.

Philip Teel, a corporate vice president and president of Ship Systems, would become head of the company's missions systems sector starting April 1. Teel will succeed Jerry Agee, who is retiring in August under the company's mandatory retirement policy for officers.

Northrop did not expect any facility closures or big cuts in shipyard jobs as a result.

Defense consultant Jim McAleese said the changes could help Northrop address recent Navy concerns about the company's performance on shipbuilding. They could also help Northrop as it seeks to move more aggressively into new markets with the U.S. Army.

Defense analyst Loren Thompson of the Virginia-based Lexington Institute said analysts had been asking Northrop for years why they didn't consolidate the two shipyards.

"This move is really overdue and probably would have been accomplished in 2006 if Hurricane Katrina hadn't set everybody back," he said.

Northrop said the new unit would be the world's leading military shipbuilder with $5.5 billion in revenues and about 40,000 employees. It builds and services conventionally-powered surface combatants, amphibious and auxiliary ships, nuclear- powered submarines and aircraft carriers.

Source:RamblerNews