PASCAGOULA, Miss. — As sparks illuminate the masks of welders fashioning a destroyer from apartment-sized steel plates, about 30 aerospace engineers work in a glow all their own: that of computer monitors bearing designs for the Navy's next generation of warships.
The engineers are on temporary assignment, sent from Northrop Grumman Corp.'s El Segundo research center, where they helped develop the B-2 Stealth bomber and the Global Hawk unmanned spy plane.
For The Record
Los Angeles Times Tuesday July 29, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 36 words Type of Material: Correction
Coast Guard contract -- In a July 14 article in the Business section about Northrop Grumman Corp.'s shipbuilding operations, Lockheed Martin Corp. should have been cited as Northrop's partner in winning the Coast Guard's Deepwater contract.
Northrop, the Century City-based defense contractor best known for its military aircraft, has become the world's largest military shipbuilder two years after an acquisition spree of defense companies. Northrop operates three of the five largest shipyards in the U.S.
It builds an array of military ships, from nuclear-powered aircraft carriers and submarines at its Newport News shipyard in Virginia, to destroyers and transports at its Gulf Coast yards in Mississippi and Louisiana.
Industry analysts had expected that Northrop, with its deep aerospace heritage, would get out of what was perceived as the low-tech, metal-bending shipbuilding business and keep only the high-tech defense electronics operations that it acquired. Instead, Northrop has plunged ahead with the hope of profiting from the Navy's campaign to transform its fleet.
The goal is to bring to the sea many of the lessons Northrop has learned in the air.
"For several years shipbuilding was in a slump," Northrop Chief Executive Ron Sugar said. "They were not being funded appropriately by the U.S. government. However, there's a recognition now that shipbuilding must significantly increase to be able to sustain the kind of Navy we need."
One ambitious project for the transplanted Northrop aerospace engineers is the littoral combat ship. The Navy envisions spending about $15 billion on a fleet of about 60 lightweight, high-speed ships to patrol overseas coastlines.
Rather than having ships made of steel and powered by propellers, Northrop's engineers propose that LCS vessels be made entirely of fiber composites -- much like those used in Stealth fighters -- and powered by electric jet engines. It's a complicated technology because water, not air, would have to be pumped through the engines.
Northrop has proposed two versions of the LCS. One has a wing-like body to improve the ship's aerodynamics and would lift more of the hull out of the water so it could hit speeds of 45 knots, versus the 30-knot top speed of the typical Navy ship.
"I don't think people truly understand the revolution in shipbuilding that is happening here," said Philip Dur, a former Navy rear admiral and president of the Northrop Ship Systems unit, as he showed off models of new sleek ships under development. Northrop is competing for the LCS contract with General Dynamics Corp., Lockheed Martin Corp., Textron Inc. and two other companies. Later this month the Navy is expected to whittle the list down to three contractors who will continue working on prototype designs.
When Northrop acquired Litton Industries Inc. and Newport News in 2001, the deals were part of an aggressive, decade-long string of acquisitions by then-Chief Executive Kent Kresa.
Shipyards in Pascagoula and Avondale, La., were subsidiaries of radar and navigation equipment maker Litton, which Northrop acquired for $3.8 billion. Northrop then outbid its defense rival General Dynamics to get Newport News for $2.1 billion as a defensive move to lessen competition for its two Gulf Coast shipyards.
Because of budget constraints, the Navy now envisions a new generation of multi-role ships that can do a variety of tasks. The number of ships in the Navy fleet has dropped from about 600 to 350 during the last few decades and that figure is not expected to turnaround.
"The Navy is undergoing a major transformation in naval shipbuilding and Northrop is right in the middle of it," said Jon B. Kutler, president of defense investment bank Quarterdeck Investment Partners and a former naval ship designer. "We've been building ships the same way for 200 years. Now there are new design techniques both in terms of how you build them and how you deploy them."
Northrop's ship unit employs more than 35,000 workers and generated about $5 billion in revenue last year, roughly one-fifth of Northrop's total.
Analysts say it's too early to know if Northrop's shipyard acquisitions will pay off because shipbuilding is measured in years, not a few quarters. Each yard can build only four or five ships at a time, with a ship taking several years to complete.
But analysts note that Northrop has won a series of significant Navy contracts.
Last week, the Navy awarded Newport News a $107-million contract to begin research and development work on a new generation aircraft carrier that has smaller crews, but with more aircraft sorties and increased electronic defenses.
The Navy wants Newport News to begin building the carriers in 2007, with a launch date of 2014. Current carriers cost about $4 billion each.
