Northrop execs bail out of L.A., but the firm is still grounded in the region
Northrop Grumman Corp., the last big-name aerospace company headquartered in Southern California, is headed out of town this week.
The nation’s second-largest military contractor, founded in 1939 by visionary aircraft designer Jack Northrop, is officially moving its main office to Falls Church, Va., on Monday. It is a milestone for the corporation that along the way absorbed big names like TRW Inc., Litton Industries Inc., Westinghouse Electronic Systems and Teledyne Ryan Aeronautical.
Today, the company is an industry giant with about $35 billion in annual sales, building such things as sophisticated satellites, high-flying spy drones and the ghostly B-2 stealth bomber. While 300 members of its corporate staff departs, it still will have about 30,000 jobs in the Southland and remain one of the region’s largest private employers.
Photos: Northrop history in L.A.
The company joins an exodus of military companies — including Lockheed Martin Corp., Science Applications International Corp. and Computer Sciences Corp. — that have abandoned the Southland since the mid-1990s in favor of headquarters nestled nearer to decision makers in Washington.
“This is an important move for the company, and it’s one that we believe will improve the effectiveness in serving the nation and our customers,” said Northrop Chief Executive Wesley G. Bush in announcing the decision to move the company back in January 2010. “The proximity to Washington enables us to be a more integrated part of the federal process.”
Although the company is shifting about 300 employees from its corporate offices in Century City to Falls Church, a quarter of Northrop’s worldwide workforce will remain in California.
With sprawling complexes in Redondo Beach, El Segundo and Palmdale, Northrop maintains that Southern California will continue to play a vital role in U.S. aerospace. By moving its top executives closer to Capitol Hill, Northrop hopes to grow its business and forge closer relationships with government and military officials.
“Northrop feels they can do a better job for L.A. County if they’re based near Washington than if they were based here,” said Nancy Sidhu, chief economist for the Los Angeles County Economic Development Corp. “They might be right.”
Maybe so, but it doesn’t feel right, said Gerald Blackburn, president of the Aerospace Legacy Foundation, a nonprofit organization of former aerospace employees who work to preserve Southern California’s aerospace history.
“It’s the end of an era in a lot of ways,” he said. “The golden era of aviation and aerospace pioneering has given way to the current generation of leadership that’s more concerned about the bottom line. Douglas, McDonnell, all of the companies that were based here are gone.”
Having some of the world’s largest aerospace companies headquartered in the Southland helped define the region, said Joel Kotkin, a professor of urban development at Chapman University in Orange.
“It used to be that if someone thought of aerospace, they’d think of Southern California,” he said. “Those companies aren’t here anymore. The city let them go.”
When a company is based in a region it financially helps local universities and charities, as well as attracts ambitious professionals and adds to the region, Kotkin said. He points to the Walt Disney Concert Hall and J. Paul Getty Museum as examples of those benefits.
“Southern California used to be a place of great animal instincts when it came to business,” he said. “We no longer have that drive.”
It was in 1939 that Jack Northrop and six engineers built a $500,000 factory on a tract of Hawthorne farmland near the intersection of El Segundo Boulevard and Prairie Avenue. The company joined other Southland airplane makers, such as Lockheed Aircraft Co., Hughes Aircraft Co. and Douglas Aircraft Co.
During World War II, aircraft companies churned out war birds around the clock. Northrop was no exception. It did subcontracting work and built the P-61 Black Widow, which was the first aircraft built specifically as a night fighter.
The company also developed Jack Northrop’s innovative concept of a “flying wing” aircraft, which later became an experimental bomber known as the YB-49.
Decades later, the design would result in the B-2 stealth bomber, one of the largest weapons development efforts since the Manhattan Project produced the atomic bomb. At its height, the B-2 program involved about 40,000 employees at aerospace facilities around the country, including about 15,000 in the Southland.
But by the late 1980s, aerospace manufacturing in the Southland had peaked. The end of the Cold War triggered a major retrenchment that led to consolidation of the industry.
Under CEO Kent Kresa in the 1990s, Northrop acquired nearly two dozen companies with interests in virtually every aspect of the U.S. military.
The first big step was a $2.1-billion merger with Navy aircraft maker Grumman Corp. in 1994. Seven years later, Northrop picked up Woodland Hills-based Litton Industries, which had a large military electronics and shipbuilding business, for $5.2 billion.
In 2001, Northrop bought Newport News Shipbuilding Inc., which builds nuclear submarines and aircraft carriers, to spoil a bid by rival General Dynamics to become the nation’s largest military shipbuilder.
The company completed its last major deal in 2002, when it purchased satellite and missile maker TRW for $7 billion.
In Kresa’s decade-long buying spree and later under CEO Ronald D. Sugar’s management, Northrop grew from a billion-dollar company on the verge of bankruptcy to a $35-billion-a-year behemoth that builds spy satellites and nuclear submarines, manages websites and protects computer systems against hackers.
When Wesley G. Bush was named CEO in January 2010, he made a stunning announcement on his first day on the job: He said we would move Northrop’s headquarters out of Los Angeles.
In the following months, he pulled Northrop out of the Pentagon’s $35-billion aerial refueling tanker competition, shuffled top executives and then spun off the company’s $6-billion-a-year shipbuilding business to shareholders. At year’s end, the company reported about $35 billion in annual sales and $2 billion in profit.
Simon Ramo, the 98-year-old co-founder of TRW who meets with Bush regularly for lunch, said that the move to Falls Church “makes more business sense for Northrop at this time.”
“They still have plenty of work going on around Los Angeles. Where the company is based shouldn’t affect that,” Ramo said.
Indeed. Northrop’s nearly 30,000 employees in the Southland are spread throughout the area, building satellites at the company’s Space Park in Redondo Beach and manufacturing center fuselages for the F/A-18 fighter jet in El Segundo.
The company has a growing drone operation in Palmdale, where it builds the high-flying Global Hawk spy drone, the X-47B experimental drone bomber, and other top-secret military programs. In Rancho Bernardo, engineers work on developing the company’s robotic Fire Scout helicopter.
“California is vital to the success and future of Northrop Grumman,” Bush said in a statement this week. “Relocating our corporate office to be closer to our customers is intended to help us better serve all our businesses and help them prosper, including our businesses in California.”
Photos: Northrop history in L.A.
