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Jun 4, 2011 11:06 AM by Chris Welty

Northrop Grumman Returns $35M in Failed LA Deal

BATON ROUGE, La. (AP) - A $35 million slice of cash shoring up
next year's budget was available for spending only because poor
employment performance forced a Louisiana shipbuilding company to
return state economic incentive dollars.
Northrop Grumman Corp. didn't keep the number of workers it had
pledged as part of an eight-year-old $56 million upgrade deal with
former Gov. Mike Foster's administration. Because employment lapsed
below its promised level at the Avondale shipyard near New Orleans,
Northrop Grumman repaid $35 million to the state.
Other state agencies will benefit because workers didn't keep
their jobs at Avondale.
In August 2003, Northrop Grumman and the Foster administration
agreed to split the price tag for a $112 million upgrade of the
Avondale shipyard, which was then Louisiana's largest manufacturing
employer. The state would put up $56 million in its cash. In
exchange, Northrop agreed to employ 5,200 full-time workers and to
create a shipbuilding program to train new skilled craftsmen.
Louisiana Economic Development Secretary Stephen Moret said
Northrop Grumman Ship Systems was required to have 5,200 workers at
the shipyard in 16 different quarters from January 2003 through
December 2010.
Moret said the company reached that benchmark for only 12
quarters, the last time in 2005.
So, the company quietly reimbursed the state $34.6 million in
March. Another $4.4 million also was required to be repaid, but
that had remained an unspent balance, so the state just reclaimed
that balance.
The nearly $35 million is plugged into next year's 2011-12 state
budget for general operating expenses, part of a sweep of one-time
money from set-aside funds to help patch holes in state agencies.
The spending for the new year that begins July 1 has received
approval from the House and awaits debate in the state Senate.
A spokesman for Northrop Grumman didn't immediately return a
call for comment Friday.
Northrop Grumman has since spun off its troubled shipbuilding
division - including Avondale and other major shipyards in
Mississippi and Virginia - by handing off shares in a new company
called Huntington Ingalls Industries to its stockholders.
Plans call for the Avondale shipyard to close in 2013.

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