The Avondale closure will come in early 2013 as the company consolidates military shipbuilding at Pascagoula.
The company said the layoffs now planned for Pascagoula are due to the cyclical nature of shipbuilding, including the timing of contracts.
The first 292 affected workers were notified under a federal law requiring 60 days notice of layoffs that affect 500 or more people.
The shipyard, which has about 11,000 employees, laid off 400 workers from May to mid-July, according to the Mississippi Department of Employment Security.
The shipbuilding process “can result in peaks and valleys in work where the number of employees exceeds the workload requirements,” said Irwin F. Edenzon, vice president and general manager of Northrop Grumman Shipbuilding-Gulf Coast. “This is currently the case here at our Pascagoula facility.”
Pascagoula Mayor Robbie Maxwell said the layoffs were unfortunate amid the slow economy, but he wasn’t worried about the shipyard’s long-term future. He said such cutbacks typically are eventually reversed when workers are called back.
“The bad news is that they’re laid off,” Maxwell said. “The good news is that they’ll be back to work. This is a cyclical thing. It doesn’t happen very frequently, but it does.”
Two ships in the LPD-17 series of Navy amphibious assault ships are under construction at Avondale, but that work is expected to be finished in early 2013, leaving the yard without a mission.
The final two ships in that series will be built at Pascagoula, and no major Navy shipbuilding project to replace the LPD-17 is in the works now.
Avondale has about 4,700 workers, making it Louisiana’s largest manufacturing employer. The company recently laid off 110 workers at that yard. Northrop Grumman also plans to close its Louisiana shipyard at Tallulah before the end of 2010, ending 95 jobs.
“I’m not concerned about Northrop Grumman shutting the shipyard,” Maxwell said of Pascagoula. “That’s not going to happen.”
However, Greg Kenefeck, a spokesman for the Metal Trades Department of the AFL-CIO, which represents about 4,000 Pascagoula workers, said the layoffs were cause for concern.
He said the Mississippi workers had been led to believe “they would be a bit insulated” from cutbacks, as Northrop Grumman said it foresaw work being available in Pascagoula for Avondale workers.
“Our greatest fear is the entire Gulf Coast,” Kenefeck said. “Northrop Grumman wants to get out of shipbuilding. That’s what they’re angling to do.”
But another union, the International Brotherhood of Electrical Workers, said it wasn’t affected by Wednesday’s announcement.
“You’re talking to the wrong guy,” said IBEW local business manager Jim Couch. “I’m still hiring.”
In making the consolidation announcement, Northrop Grumman also said it might shed its entire division that makes warships. The company said “strategic alternatives” for the shipbuilding division include splitting it off through a possible spinoff to shareholders.
The Navy’s recently released long-term shipbuilding plan, combined with a broad Pentagon effort to cut costs on big weapons programs, presents some challenges for Northrop. Rivals like General Dynamics, which is competing to build a new shallow water warship that the Navy plans to buy in big numbers, have seized a large share of the market.
“Northrop Grumman is reacting to the uneven work flow,” Kenefeck said. “The Navy has been tightening down on its procurements. They’ve been uneven from one year to another.”
Marianne Hill, senior economist for the state college board, said Northrop Grumman’s Pascagoula yard accounts for a huge share of Mississippi’s shipbuilding jobs. In June, that figure totaled 15,000 of the 23,100 jobs making up the transportation equipment sector of the state economy, exceeding the expanding and high-profile automaking industry.
“At this point, shipbuilding is clearly larger than automaking,” Hill said.
Mississippi has been struggling with a high unemployment rate, exceeding the national average. The July rate, on a seasonally adjusted basis, was 10.8 percent, down from 11 percent in June. Louisiana’s rate is 7.2 percent, up from 7 percent in June. The national rate for both months was 9.5 percent.