Northrop Grumman, the second largest defence contractor in US, fourth largest in the World and a global aerospace company had decided to move its headquarters from Los Angeles to Washington DC metro area.
In a blow to Southern California, Northrop Grumman Corp. said it would relocate its headquarters from Los Angeles — leaving the region that gave birth to the aerospace industry without a single major military contractor based here.
In 1994 Northrop purchased Grumman Aircraft (during a time when consolidation in aerospace industry was rampant- e.g. Lockheed + Martin Marinetta = Lockheed Martin, Boeing purchasing McDonnell Douglas et al) to form Northrop Grumman. Today NG is a 34 Billion USD company employing 122,000 people Worldwide.
The move came on the first working day for West Virginia native Wesley G. Bush, who succeeded longtime Chief Executive Ronald D. Sugar, who grew up in South Los Angeles and graduated from UCLA.
“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,” Bush said in his first public statement as the company’s chief executive. “The proximity to Washington enables us to be a more integrated part of the federal process.”
By relocating, Northrop brings its top executives closer to the nation’s decision makers on Capitol Hill, as well as U.S. military and intelligence customers, Bush said. The Pentagon is its largest customer. The company develops and makes a variety of products, including unmanned aircraft, satellites and nuclear submarines.
It is important to note that the desire to be at DC area is to reside physically closer to its major customer Pentagon and Capitol Hill where budget allocations are made.
Northrop’s planned move to be near the nation’s capital follows other big military contractors. Lockheed Martin Corp. and General Dynamics have also relocated to the Washington area.
Lockheed and General Dynamics have been two of the most successful companies in securing government contracts over the last 10 years, said Loren Thompson, a defense policy analyst for the Lexington Institute in Virginia. This is not something that Northrop’s top brass is likely to miss, he said.
“There’s only one customer in the defense business, and that’s the federal government,” Thompson said. “You can’t afford to be 3,000 miles farther away from your competitors.”
James McAleese, a lawyer in McLean, Va., who specializes in military contracts, said the decision to relocate was one that’s likely to be well received on Wall Street. “Wes Bush obviously wanted to make an impact in his first days on the job,” McAleese said. “He is being driven by the shareholders and the need to be responsive to the customers, which are in Washington.”
In addition to Lockheed Martin at Bethesda, Maryland, General Dynamics at Falls Church, VA, SAIC at McLean, VA et al, in recent years another major player Boeing also moved their HQ from Seattle to Chicago.
In general, is the concentration of such major federal and defence contractors so close to Capital Hill a good thing?