New Northrop Commercial Unit Planned : Aviation: The company hopes to expand its business in the private sector as contracts from the military shrink.

Northrop Corp. will set up a commercial aircraft division in January as part of an effort to expand its commercial business as military contracts become scarcer, the company said Wednesday.

The move to separate its military and commercial aircraft operations should enable Northrop to cut costs in both areas, the company said. About 2,200 current employees will be transferred to the new division headquartered in Hawthorne.

“We have carefully analyzed the future of the worldwide commercial aircraft structures business, and we see it as a long-term growth area for Northrop,” Northrop Chairman Kent Kresa said in a statement.

Northrop’s commercial aircraft division accounted for about 10% of the company’s total sales last year, generating $540 million in revenue. The company said it has a $1.1-billion backlog in fuselages and other parts for the Boeing 747 jumbo jet program.

Although the new division should help Northrop attract more commercial parts business, the company said it does not intend to establish itself as an independent commercial jet maker.

“We intend to participate strongly in this market, and especially in the wide-body segment of the market, as a major, high-quality commercial structures designer and subcontractor, working with prime aircraft manufacturers,” Kresa said.

Analysts said the move is an important step in Northrop’s efforts to strengthen its commercial business. They said it would free the company’s commercial operations from many of the detailed accounting practices required of defense contractors, procedures that can slow decision-making and inflate budgets.

“If you take the military system built to handle high-level bureaucracy and use it in a commercial business, you just end up carrying all that overhead and hurting your competitive cost position,” said John Harbison, head of manufacturing consultant Booz, Allen Hamilton’s aerospace practice.

But with the commercial aircraft business mired in a deep slump, analysts said the benefits of forming the commercial unit will likely not be apparent for several years.

“At this point in the cycle, orders have dried up and production is down,” Harbison said. “It’s a long-term strategy. It will increase their competitiveness on bidding during the next round.”

Separately, a Northrop spokesman declined comment on a published report that it has expressed interest in buying General Dynamics Corp.’s jet fighter division. Recent newspaper reports have quoted unnamed sources identifying Lockheed Corp. and Boeing as possible buyers of the division. Lockheed and Boeing officials have declined comment on the reports.