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Northrop Grumman Louisiana shipyard to close in 2013

By the CNN Wire Staff
Louisiana Gov. Bobby Jindal vows to do everything possible to keep the shipyard open.
Louisiana Gov. Bobby Jindal vows to do everything possible to keep the shipyard open.
STORY HIGHLIGHTS
  • Northrop Grumman will close New Orleans shipbuilding facility in 2013
  • Louisiana Gov. Bobby Jindal trying to keep New Orleans yard open
  • Company's Gulf operations will be consolidated in Pascagoula, Mississippi

(CNN) -- Northrop Grumman Corp. plans to close a New Orleans, Louisiana, shipbuilding operation in 2013 and consolidate its Gulf operations, affecting thousands of jobs, the company announced Tuesday.

Louisiana Gov. Bobby Jindal, who has been meeting with company officials, said he will do everything possible to keep the Avondale yard open.

"This presents a tremendous economic challenge to the Avondale area," Jindal said in a statement. "The roughly 5,000 direct jobs at the Avondale site support about 6,500 additional indirect jobs in the New Orleans region, meaning a total of roughly 11,500 jobs are at risk due to this change in the Navy's procurement program."

Northrop-Grumman said the decision was a necessity.

"The consolidation will reduce future costs, increase efficiency, and address shipbuilding overcapacity," Wes Bush, chief executive officer and president, said in a statement. "This difficult, but necessary decision will ensure long-term improvement in Gulf Coast program performance, cost competitiveness and quality."

As a result of the consolidation, Northrop Grumman, which has owned the Avondale operation since 2001, said it will recognize an estimated pre-tax charge of $113 million in the second quarter.

The company builds the LPD 17 San Antonio-class amphibious troop and cargo vessel for the U.S. military. Two other facilities that work on the LPD program also will be impacted, said Brandon R. "Randy" Belote III, vice president of strategic communications. The LPD vessels will be built only in Pascagoula, Mississippi, after the Avondale closure. Shipbuilding will continue in Gulfport, Mississippi.

The company also said it is considering options for its the shipbuilding business.

"Recognizing our company's long-term strategic priorities, we foresee little synergy between shipbuilding and our other businesses. It is now appropriate to explore separating shipbuilding from Northrop Grumman," said Bush. Options include spinning the division off to shareholders.

Although the state already is considering options for new work at the New Orleans shipyard, Jindal said he is asking Secretary of Navy Ray Mabus and the federal government to prevent jobs at Avondale from being lost.

Northrop Grumman will give details of the plans to investors Wednesday morning.

Bush said the company will work with federal, state and local officials to "explore alternate uses for Avondale as the last two ships under construction reach completion." Northrop Grumman said it anticipates some opportunities in Pascagoula for Avondale shipbuilders who wish to relocate. Belote did not specify how many jobs might be moved.