Find a Security Clearance Job!


Newport News Shipbuilding

Newport News Shipbuilding is a division of Northrop-Grumman, the largest non-government-owned shipyard in the United States, as measured by each of revenues, size of facilities, and number of employees. Its primary business is the design, construction, repair, overhaul and refueling of nuclear-powered aircraft carriers and submarines for the US Navy. Revenues from contracts with the US Navy were $1,600 million (94%), $1,753 million (94%), and $1,697 million (97%) in 1997, 1996, and 1995, respectively. The company is currently the only shipyard building the Navy's nuclear-powered aircraft carriers, the only non-government-owned shipyard refueling and overhauling the Navy's nuclear-powered aircraft carriers, and one of only two shipyards building nuclear-powered submarines. Since its inception in 1886, the Company has developed a preeminent reputation through the construction of 264 naval ships and 543 commercial vessels.

It is only towards the end of the 19th Century that the building of ships became an important industry in the Southern States. No part of the Union was endowed by nature with a greater variety of the finest timber than these States; and the failure during the existence of the slave system to turn the presence of this timber to the fullest account in the highest branches of shipbuilding was of a piece with the partial failure to use the numerous other resources of the South for the purposes of general manufacture.

The great shipyard at Newport News, Virginia, was not only one of the largest in the United States, but also one of the largest in the world. The moving spirit in the enterprise was Collis P. Huntingdon, who perceived the extraordinary advantages offered by the situation, and, with characteristic energy and determination, made the most of them. It was not until 1890 that the great shipyard and drydock company which he formed and controlled began to construct vessels; but before the first ten years had gone by, it had finished and delivered thirty-two, the majority of which had been built for companies or private persons; but this number also included three gunboats and three first-class battleships for the national government. The new drydock, which was completed in 1902, has a depth of 30 feet, a width of 162, and a length of 827.

Newport News Shipbuilding Inc., a Delaware corporation, began stand alone operations on December 12, 1996. Previously, on December 11, 1996, in connection with a corporate spinoff reorganization, Tenneco Inc. [the company's former parent] and its subsidiaries completed various intercompany transfers separate existing businesse operations so that the shipbuilding business would be a separate company. Tenneco Inc. subsequently distributed pro rata to holders of Tenneco's common stock all of the outstanding common stock of Newport News Shipbuilding.

Aircraft carrier and submarine construction contracts with the US Navy have generated the majority of the company's revenues. Overall, the company's US Navy business accounted for approximately 94%, 94%, and 97% of the company's revenues for 1997, 1996, and 1995, respectively. Newport News built nine of the 12 active aircraft carriers in the US fleet, including all eight nuclear-powered aircraft carriers. For the last 36 years, Newport News has been the sole designer and builder of the US Navy's aircraft carriers.

The company is the only non-government-owned shipyard presently engaged in refueling nuclear-powered aircraft carriers. Aircraft carrier work is generally assigned by the US Navy based on the type of work, location, and cost. The company finished the overhaul and repair of the USS Dwight D. Eisenhower in early 1997. In late 1997, overhaul and repair work was completed on the USS Enterprise, and in the third quarter of 1998, similar work will be completed on the USS Theodore Roosevelt. The company also completes "Post Shake-Down Availabilities" on carriers and submarines, consisting of repairs and maintenance after original delivery of a vessel to the US Navy.

The company completed its Consolidated Refueling Facility ("CRF") at a cost of approximately $20 million in early 1997. The CRF supports the Company's Naval refueling program by consolidating refueling operations from 13 different facilities throughout the Company. The CRF is a 58,000 square-foot complex consisting of production, warehousing, and training areas. The company also began planning and construction of a $26 million Radiological Support Facility ("RSF") in late 1997. Scheduled for completion in 2000, the RSF will relocate radiological support activities from 23 sites in the shipyard to a single facility.

Newport News is also one of two US manufacturers of nuclear-powered submarines. The company has constructed 53 nuclear-powered submarines, including 39 attack submarines and 14 of the larger, fleet ballistic missile submarines. Newport News delivered its final Los Angeles-class submarine on August 15, 1996.

At the urging of the US Navy, Newport News and Electric Boat reached an agreement in February 1997 to cooperatively build the first four new nuclear attack submarines ("NSSNs"). The teaming agreement calls for each company to construct certain portions of each submarine, with final assembly, testing, outfitting, and delivery alternating between the two yards. Electric Boat will act as the prime contractor and lead designer under the agreement.

Newport News expanded its overhaul work in 1994 with its first contract to overhaul a guided missile destroyer, the USS Thorn. The company has completed a series of destroyer repair jobs since that time. In the first quarter of 1997, the Company completed its first overhaul of an Aegis-class ship, the USS Monterey.

The company also completed the complex conversion of the second of two container ships to roll-on, roll-off heavy armored vehicle Sealift transportation ships for the US Navy. The first ship was delivered in August 1996 and the second ship was delivered in May 1997. As part of a strategy introduced in the early 1990's to add to its core US Navy business, the company pursued orders for products and services from commercial customers.

The company's principal facilities are located in Newport News, Virginia on approximately 550 acres owned by the Company at the mouth of the James River. Its facilities include seven graving docks, a floating dry dock, two outfitting berths, five outfitting piers, a module outfitting facility, and various other shops. Dry Dock 12 is the largest in the Western Hemisphere, and has recently been extended to 662 meters. Dry Dock 12 is serviced by a 900 metric ton capacity gantry crane that spans the dry dock and work platen.

In December 1997, Newport News completed its acquisition of Continental Maritime Industries, Inc. ("CMI"), a ship repair yard in San Diego, California engaged in repair programs for the US Navy's West Coast fleet. The acquisition is a key component of the company's long-term strategy to broaden its base of services to the Navy.

At the end of 1997, the Company had approximately 18,400 employees, of whom approximately 55% were covered by collective bargaining agreements with various unions.

On 22 January 1999 Newport News Shipbuilding and Avondale Industries notified the Department of Justice (DoJ) Antitrust Division of their proposed merger. This transaction was not subsequently consumated.

On 25 April 2001 it was announced that Newport News had agreed to be acquired by General Dynamics for cash, without exploring alternatives with Northrop Grumman. While Newport News stated that a nuclear "monopoly" already exists due to the recent history of Navy approved "teaming" with General Dynamics (the only nuclear capable competitor), many believed that there was national security value for the United States in maintaining, not eliminating, competition.

Northrop Grumman announced on May 9, 2001, its offer to acquire Newport News Shipbuilding, citing concerns that the previously announced merger agreement between Newport News and General Dynamics Corporation would create an unhealthy monopoly, resulting in an unacceptable and anticompetitive consolidation of the U.S. shipbuilding industry. The Board of Directors of Northrop Grumman has authorized management to match General Dynamics' offer of $67.50 per share for all the outstanding shares of common stock of Newport News.

In a letter to Newport News Chairman and Chief Executive Officer William P. Fricks (see attached), Northrop Grumman Chairman, President and CEO Kent Kresa said that he believes that a "combination of Newport News and Northrop Grumman (which recently purchased shipbuilder Litton Industries) would offer a variety of strategic benefits, including significant cost savings to the U.S. Navy and the opportunity for Newport News employees to become a part of a larger, more diversified company. In contrast to General Dynamics' offer, the product portfolios of Northrop Grumman and Newport News in no way overlap, provide opportunities for efficiencies, and the combination of our two companies would preserve the current competitive landscape of the military shipbuilding industry."

Mr. Kresa also said that the "proposed transaction with General Dynamics raises serious antitrust issues" and, that if permitted to proceed, "would leave the nation vulnerable with only one nuclear capable submarine and ship builder." Mr. Kresa also cited a 1999 Department of Defense analysis that indicated that "over 75 percent of the total shipyard engineering talent and over 95 percent of the Navy R&D investment would exist in a combined General Dynamics-Newport News entity." Mr. Kresa added, "Nothing has changed since that analysis. This would be an unacceptable position for the U.S. government, the Navy and for Northrop Grumman."

On 23 October 2001, the Department of Defense concluded that the benefits and savings offered by the proposed Northrop Grumman acquisition of Newport News were comparable to the savings of the proposed General Dynamics/Newport News merger and the Northrop Grumman transaction had the additional benefit of preserving competition. On that date, the Department of Justice announced that it had filed suit to block General Dynamic's proposed acquisition of Newport News. On 02 November 2001 Northrop Grumman Corporation stated that it was informed that the Department of Justice had closed its investigation of the company's previously announced proposal to acquire Newport News Shipbuilding, thereby allowing the company to proceed with the acquisition.

On 06 November 2001 Northrop Grumman Corporation amended its offer for all outstanding shares of common stock, including associated rights, of Newport News Shipbuilding. On 08 November 2001 Northrop Grumman Corporation and Newport News Shipbuilding announced that they had signed a definitive agreement under which Northrop Grumman will acquire Newport News Shipbuilding. Newport News Shipbuilding's shareholders may elect to receive either $67.50 per share in cash or a number of shares of Northrop Grumman common stock designed to provide a value of $67.50. The acquisition is valued at approximately $2.6 billion, which includes the assumption of approximately $500 million of Newport News Shipbuilding debt.

Following the close of the transaction, Newport News will initially be operated as a Northrop Grumman sector. Longer term, Northrop Grumman plans to combine its two shipbuilding businesses into one operating sector.

Join the mailing list