PASCAGOULA — Landing not one but two significant multi-billon dollar contracts within two weeks at Northrop Grumman Ship System’s Ingalls Operations has business leaders using hyperbole that normally might seem a bit over the top. But when describing the impact the new contracts will have on not just Jackson County, but the entire state, it would be difficult to exaggerate.
“It is pretty exciting,” said Blake Wilson, president of the Mississippi Economic Council. “It is big news. The long-term impact is just unbelievable. It dramatically strengthens the bedrock of the Coast. It has a tremendous economic impact on the region.”
In late April it was announced that a team headed up by Northrop Grumman Ship Systems, parent company for Ingalls, had received a $2.9-billion contract spread over four years for systems design for the DD (X), the next generation of advanced surface warships for the U.S. Navy. Company officials said that contract could be the most important in a decade for the Ingall’s shipyard.
A couple of weeks before the DD (X) announcement, the U.S. Navy awarded Northrop Grumman a $1.3-billion construction contract to construct the eighth LHD multipurpose amphibious assault ship. Construction of LHD 8 is expected to begin in May 2003 at Ingalls.
Most advanced in fleet
Dr. Philip A. Dur, president of Northrop Grumman Ship Systems, said the new ship will be the most advanced LHD in the fleet with major enhancement that will include introduction of gas turbine propulsion, replacing the steam propulsion used in previous ships of the class. Dur said the challenge for the propulsion systems design team has been the upgrading of specifications to include two 35,000 horsepower turbines, which will be the largest ever in U.S. military applications.
Wilson said that the recent contract awards prove that continued investments in the shipyard by the legislature and private business have kept Mississippi on the competitive edge of shipbuilding. Wilson said if Ingalls is selected to build the DD (X) ships, the work could span a 25- to 30-year period.
“By having the front end design work here in Mississippi, that positions Mississippi to get more and more of the actual work,” Wilson said. “This could be similar to the Spruance class back in the 1970s. Ingalls did the design and then ended up building many of those ships.”
Wilson said that the economic impact goes beyond the 11,000 employees at Ingalls. There are also 530 Mississippi vendors, and that creates a large economic impact.
“It is great to go out and chase smokestacks for new industry, but it’s also important to realize the impact of existing industry on this state,” Wilson said. “Announcements like this really drive that home.
Terry Carter, president/CEO of the Jackson County Chamber of Commerce, summed up his excitement with the new contract in one word: “Hallelujah!”
“I think the DD(X) award is a big, big win for Northrop Grumman Ship Systems and, indeed, Jackson County and the State of Mississippi,” Carter said. “Hopefully this $2.8-billion contract will ultimately enable Northrop Grumman to be well positioned when it is time to bid for construction of these new ships. We’re very proud Northrop Grumman was selected for this first phase. This is the kind of news that we need.”
Carter said getting news of both contracts in the same month is monumental. He is hopeful that the contracts will lead to the stabilization of the local workforce hit by layoffs from other employers in the area including the Friede Goldman shipyard, International Paper and Rohm and Haas. Carter is hopeful the Ingalls contracts could even lead to an expansion of the workforce in the future.
“We in Jackson County have every reason now to have full faith and confidence in a solid economy,” Carter said.
A study conducted by the University of Southern Mississippi (USM) Gulf Coast’s Gulf South Economic Research Center for Northrop Grumman concludes that operations in Pascagoula and Gulfport generate 18,000 jobs and $2.1 billion worth of commerce each year in Mississippi. Northrup Grumman is the largest private employer in the state.
“If a major global manufacturing firm released plans to relocate to the Mississippi Gulf Coast with operations employing nearly 11,000 workers, with average wages in excess of $40,000, that announcement would make headlines because of its expected total impact on local and regional economies,” said Dr. Phil Jeffress, USM professor of economics, and director of the research center. “Northrop Grumman Ship Systems is already in our midst, and its significance to our local economy is no less important than if we were realizing its impact for the first time.”
Economic multiplier effect
Jeffress and Dr. Brian Rungeling, a professor of economics at the University of Central Florida, used Northrop Grumman Ship Systems’ employment, payroll, expenditures, subcontractor information and a model of the regional and state economies to generate their report. The study said that in addition to the annual income of $725 million, for every $1 generated by Northrop Grumman Ship Systems another 60