Northrop Grumman to cut 642 workers at Pascagoula, Miss., shipyard, cites cyclical business

Wednesday, August 25, 2010

Northrop Grumman to cut 642 at Miss. shipyard

PASCAGOULA, Miss. — Northrop Grumman Corp. announced Wednesday it plans to lay off 642 workers at its Pascagoula shipyard by the end of the year.

The first 292 affected workers were notified under a federal law requiring 60 days notice of layoffs that affect 500 or more people.

The company said that the layoffs are due to the cyclical nature of shipbuilding, including the timing of contracts. The shipyard, which currently has about 11,000 employees, laid off 400 workers from May to mid-July, according to the Mississippi Department of Employment Security.

The shipbuilding process “can result in peaks and valleys in work where the number of employees exceeds the workload requirements,” said Irwin F. Edenzon, vice president and general manager of Northrop Grumman Shipbuilding-Gulf Coast. “This is currently the case here at our Pascagoula facility.”

Pascagoula Mayor Robbie Maxwell said the layoffs were unfortunate, but he wasn’t worried about the shipyard’s long-term future. He said such cutbacks typically, at some point, are reversed when workers are called back later.

“The bad news is that they’re laid off,” Maxwell said. “The good news is that they’ll be back to work. This is a cyclical thing. It doesn’t happen very frequently, but it does.”

On July 13, Northrop Grumman said it would close its shipyard at Avondale, La., near New Orleans, in early 2013 as it consolidates military shipbuilding at Pascagoula.

Two ships in the LPD-17 series of Navy amphibious assault ships are currently under construction at Avondale, but that work is expected to be finished in early 2013, leaving the yard without a mission. The final two ships in that series will be built at Pascagoula, and no major Navy shipbuilding project to replace the LPD-17 is in the works now for Northrop Grumman.

Avondale has about 4,700 workers, making it Louisiana’s largest manufacturing employer. The company recently laid off 110 workers at that yard.

Northrop Grumman also plans to close its shipyard at Tallulah, La., before the end of 2010, ending 95 jobs.

“I’m not concerned about Northrop Grumman shutting the shipyard,” Maxwell said of Pascagoula. “That’s not going to happen.”

In making the consolidation announcement in July, Nortrop Grumman also said it may shed its entire division that makes warships. The company said “strategic alternatives” for the shipbuilding division include splitting it off through a possible spinoff to shareholders.

The Navy’s recently released long-term shipbuilding plan — combined with a Pentagon effort to cut costs on big weapons programs — presents some challenges for Northrop. Rivals like General Dynamics, which is competing to build a new shallow water warship that the Navy plans to buy in big numbers, have seized a large share of the market.


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