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January 30 & 31, 2002

January 15, 2002

Northrop Grumman shakes up shipyards
Northrop Grumman Corporation's Ship Systems sector says it is "continuing to align" its Gulf Coast shipbuilding facilities. In this context, "align" looks to be a polite term for a fairly drastic integration and rationalization.

Now, "all future shipbuilding contracts will be bid and contracted by Ship Systems, rather than by our Avondale or Ingalls operations individually,'' says Dr. Philip A. Dur, Northrop Grumman corporate VP and president of the Ship Systems sector.

"We are currently moving work and personnel among all of our shipbuilding facilities on the Gulf Coast in order to achieve maximum efficiency and to optimize our workforce,'' he said. "We intend to expand this concept and have all our facilities involved in the construction of future ships."

"The proximity of our Gulf Coast facilities provides Ship Systems a significant strategic advantage on which we are currently capitalizing and will continue to enhance,'' said Dur.

He added that the Ship Systems "alignment" will "fully exploit the synergies of common engineering, procurement and information technology, as well as all administrative and support services."

All individuals reporting to Dur will have responsibilities across the entire Ship Systems sector. VPs of Operations for the Avondale and Ingalls facilities will report to him through a senior vice president, Operations. Managers of individual shipbuilding programs will be sector-wide positions, reporting to a senior vice president, Programs.

"This realignment fully utilizes all of our sector capabilities and will sharpen our focus on program operations and customer service,"Dur said. "In addition to the capability of building practically any class of ship for the U.S. Navy, Coast Guard, friendly international navies and select commercial shipping interests, we can also fully support them throughout their life cycles."

Dur said immediate imperatives are to "outperform customer expectations on the LPD 17 amphibious assault ship, in terms of cost, schedule and quality" and to "win a leading role in the development of the Navy's future generations of surface combatants, now designated as DD(X) and CG(X). We are much more than a traditional shipbuilding company. We are a ship systems integrator in the more complex designs which lie ahead."

While Northrop Grumman's recently acquired Newport News shipyard will remain a separate Northrop Grumman sector for the next 18 to 24 months, Dr. Dur said there are many current opportunities for collaboration, synergy and cross-sector savings. Additionally, Ship Systems will collaborate much more closely with other Northrop Grumman sectors where appropriate.

Several teams are working on a detailed implementation plan to be completed this month. Dur said while some individuals have yet to be named, he expects the sector to be fully restructured by the end of March.

"Through this new organization we have the opportunity to take maximum advantage of our strengths and add significantly to our success," Dr. Dur continued.

"We are very grateful for the support from our local, state and federal officials representing both Louisiana and Mississippi, as we seek to become a much stronger company - one that is capable of making significant contributions to national security, the success of our employees, our shareholders and the quality of the communities in which we work and live."