Northrop Grumman rocks N.O. with plan to shut yard

Published 2:35 pm Thursday, July 15, 2010

In the worst economic blow for the New Orleans region since Hurricane Katrina, Northrop Grumman Corp. said Tuesday that it will shut its Avondale shipbuilding yard in 2013, wiping out up to 5,000 jobs.

The Los Angeles-based company said it would consolidate construction of Navy amphibious assault vessels at its yard in Pascagoula, Miss. In the meantime, the company said it is exploring options for the shipbuilding division and might spin it off as a separate company.

“Northrop Grumman has tragically chosen to turn its back on Louisiana and thousands of workers in the state,” said U.S. Sen. Mary Landrieu, D-La. She said she hoped the company would reverse the decision on the shipyard.

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Currently, two ships in the Navy’s LPD-17 San Antonio class of ships are under construction at the Avondale yard in Jefferson Parish, while two others are being built in Pascagoula. Under Tuesday’s move, the final two in the series will be built in Mississippi, ending work at the Avondale yard in early 2013.

Northrop Grumman CEO Wes Bush said the decision would reduce future costs, increase efficiency and address the industry’s current overcapacity in shipyards.

“We are extremely proud of our Avondale shipbuilders and their dedicated contributions to our company and our nation,” Bush said. “We will work with federal, state and local officials and other to explore alternate uses for Avondale as the last two ships under construction reach completion.”

Without giving a precise number, Northrop Grumman said some Avondale workers likely would be able to move to Pascagoula. The company made no mention of smaller yards in Tallulah, La. and Gulfport, Miss., saying all future LPD production would be in a single production line at Pascagoula.

In the two states, the company currently employs about 19,000 in its shipyards.

It was the second major economic hit to the New Orleans region in less than a week. On Friday, the last external fuel tank expected to fly for the space shuttle program was rolled out by Lockheed Martin Corp. at NASA’s Michoud Assembly Facility. At the end of September, only about 200 support staffers will be left from a payroll that numbered 2,700 in 2008.

Gov. Bobby Jindal met Monday with Northrop Grumman officials and said the state already was trying to line up new tenants for when the LPD program is completed in 2016. Jindal had hoped to get at least one of the remaining LPDs built at Avondale. He could not immediately be reached for comment on Tuesday.

There are no major Navy shipbuilding projects in the pipeline after 2016 for a yard the size of Avondale.

The New Orleans economy took a body blow from Hurricane Katrina in August 2005 and another when the national economic downturn crimped the benchmark tourism business.

The BP oil spill in the Gulf of Mexico added a new tourism threat as seafood sources dried up because the Gulf waters were closed and business leaders said a moratorium on deepwater drilling in the Gulf also could sap jobs.

U.S. Sen. David Vitter, R-La., said the Northrop Grumman announcement, along with the end of space shuttle work and the drilling moratorium “are pushing an otherwise good Louisiana economy south.”