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DEFENSE

Northrop Grumman's Ronald Sugar: Quietly in command

The former whiz kid from South Los Angeles often shuns the limelight. 'If you met him on the street, you'd never know he runs one of the world's largest defense companies,' a Wall Street analyst says.

July 05, 2009|Peter Pae

"You certainly learn how to deal with adverse situations and you learn how to handle yourself," he said. As the smartest kid in school, Sugar was voted the "most likely to succeed" and later was the valedictorian for the graduating class of 1965.

According to his high school yearbook, Sugar was not only the youngest graduate that year but also was a consummate nerd. The 1965 "Pylon" lists Sugar as having been a president of the school's geekiest groups, including the math club, the band and the scholarship society, and he was captain of the academic quiz team.

There seemed to be only one other student who could rival Sugar academically, a sophomore from Hawthorne who would later become his wife. Valerie Higuchi would graduate two years after Sugar, also as a valedictorian.

Valerie's father, Tamotsu "Tom" Higuchi, had served with the famed "Go for Broke" U.S. Army unit, the 442nd Regimental Combat Team, during World War II. The Japanese American unit was the most decorated during the war.

While her father fought in Europe, Valerie's mother lived in an Arkansas internment camp. After the war, the Higuchis returned to Hawthorne.

"We grew up in a blue-collar neighborhood. But his parents and mine were very bright people, and in today's world they would have gone to college," Valerie Sugar said.

The couple had met when Valerie was in sixth grade, and according to Valerie they officially began dating when she was in ninth grade.

After high school, Sugar attended El Camino College in Torrance because his parents couldn't afford a four-year university.

But Sugar would excel, and he was offered full scholarships to Caltech and UCLA. Figuring Valerie was likely to go to UCLA, he gave up Caltech for Westwood.

"We tell everybody that if our children made a similar decision, we would have been all over them." Valerie Sugar said.

The couple married in 1971 shortly after Valerie graduated from UCLA. They have two grown children; the older one, a son, graduated from Princeton University, and their daughter is a Dartmouth graduate.

There was little doubt that Sugar was among the brightest even at a time when the industry was attracting the nation's best minds as the Cold War ratcheted up the development of sophisticated weapons.

He would rise quickly through the ranks at TRW Inc., becoming at 35 the chief engineer for the development of the payload for the nation's first major military communications satellite system, known as Milstar. "They said I was too young to run it so they made me the chief engineer," Sugar recalled.

"I knew he was outstanding, so I knew he would move up the company rapidly," said Simon Ramo, co-founder of TRW and the father of the nation's ballistic-missile system.

Ramo, one of the last remaining so-called cowboys of aerospace, who retired from TRW in 1978, said "everybody wanted to hire Sugar."

A top post seemed only a matter of time, but Sugar, who had been at TRW for more than 20 years, was passed over as a possible successor to then-Chairman Joseph T. Gorman in 2000. He bolted for another company, Litton Industries in Woodland Hills.

The move would turn out to be timely. Northrop Grumman, on an acquisition spree, purchased Litton a year later in a deal that placed Sugar in line to be Northrop's CEO. Northrop then capped its spending spree by acquiring TRW.

In 2003, Sugar was named chairman and CEO of Northrop Grumman, succeeding Kent Kresa, who had rebuilt an aerospace company teetering toward bankruptcy. In the early 1990s, Pentagon contracts had dried up as the Cold War ended, leaving Northrop with one major program, the B-2.

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Defensive moves

Since taking the helm, Sugar has focused most of his attention on integrating the companies that had been acquired over the years and looking at expanding the company internally. Northrop, which generated $7 billion in annual revenue in 2000, could surpass $35 billion this year.

But Northrop and the defense industry are about to face some head winds as the Pentagon looks at cutting back on big-ticket weapon programs.

Sugar has said Northrop is in a better position than other defense companies because it isn't dependent on any one big Pentagon program. The company is involved in more than 20,000 programs, with no single contract accounting for more than 3% of annual revenue. Still, with the anticipated slowdown, Sugar has been urging Northrop managers to expand the company's engineering know-how to commercial and civil markets.

Sugar has taken some political hits for partnering with a European defense contractor to build a new generation of aerial refueling tankers for the U.S. Air Force and has been embarrassed by development problems in shipbuilding.

He was somewhat vindicated when Northrop upset heavily favored Boeing Co. last year for the $35-billion aerial refueling tanker contract. But that award was overturned and the Air Force has been forced to hold another competition.

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