Defense Titan Northrop Grumman to Leave L.A. for D.C. Area

Contractor eyes proximity to Washington customers, but will keep about 27,000 jobs in California.

Northrop Grumman, the second-largest defense contractor in the United States, and the last remaining major aerospace firm headquartered out of Los Angeles, announced on Jan. 5 that it will be moving its corporate office to the Washington, D.C., area.

The relocation will enable the maker of military ships, submarines and unmanned spy planes to keep its top executives in proximity to its U.S. defense and intelligence customers.

"As a global security company with a large customer base in the Washington, D.C., region, this move will enable us to better serve our nation and customers," said Wesley Bush, Northrop's chief executive and president.

The company said it was engaged in a search to identify a specific location within the Washington, D.C., region, including the district, Maryland and Virginia. It plans to complete the search by spring 2010 and open the new corporate office by summer 2011.

This comes as a significant blow to the city Los Angeles. Though Northrop Grumman will remain one of Southern California's biggest private employers, with about 27,000 people on its payroll locally, the loss of the corporate headquarters is alarming to Los Angeles.

Already facing 12.6% unemployment, Los Angeles County has seen a series of iconic companies leave the area in recent years, including Hilton Hotels Corp. just last year. This is particularly true in the area of aerospace and defense.

At the height of the Cold War, 15 of the 25 largest aerospace companies in the United States were based in Southern California. But a combination of circumstances has vastly diminished that industry.

The fall of the Soviet Union precipitated large cuts in defense in the 1990s, while the Defense Department urged consolidation of its bases. At the same time, the aerospace industry saw a series of mergers that swept the corporate headquarters of several companies from one coast to the other.

For example, Lockheed, of Calabasas, Calif., and Martin Marietta, based in Bethesda, Md., merged in 1995. As a result, Lockheed Martin shifted its headquarters to Maryland.

In many ways, the aerospace and defense industries are concentrating their corporate power in close proximity to the capital. General Dynamics moved 15 years ago from St. Louis to nearby Falls Church, Va., while just this past September, Science Applications International moved its corporate headquarters to McLean, Virginia, from San Diego.

California Governor Arnold Schwarzenegger has said such moves are part of the industry trend and shouldn't be viewed at potentially hurting the state's economy.

"This is not about a reduction in our focus on California," Bush said. "We believe the corporate office will function more effectively in the Washington region."

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