Newport News Shipbuilding, Inc.
Newport News Shipbuilding, Inc.
headquarters: 4101 washington ave.
newport news, va 23606 phone: (757)380-2000 fax: (757)380-4713 toll free: (800)753-8790 url: http://www.nns.com
Newport News Shipbuilding for more than a century has designed, built, and repaired a wide variety of vessels for the U.S. Navy as well as commercial customers. A subsidiary of Northrop Grumman Corporation since late 2001, the company is the only shipyard in the United States that designs, builds, and refuels nuclear-powered aircraft carriers. Another important area of its business is the design and construction of nuclear-powered submarines. Although the bulk of its business is for the military, the shipyard provides after-market services, including overhauls and repairs, for commercial vessels as well.
Headquartered in the Virginia city for which it is named, the shipyard's main production facility sprawls across more than 550 acres that stretch along two miles of waterfront in the Hampton Roads port area. Although its specialty vessels are nuclear-powered aircraft carriers and submarines, the shipyard has the capability to design, build, and maintain every type of ship in the fleet of the U.S. Navy.
Northrop Grumman's acquisition of Newport News Shipbuilding in November 2001 climaxed a bitter battle between two of the country's biggest defense contractors. Although Newport News stockholders were initially partial to the advances of another "suitor," General Dynamics Corporation, government opposition to the combination and a Justice Department suit to block the acquisition eventually prompted Newport News to drop its plan. The bid from Northrop Grumman was at first regarded as hostile, although shortly after abandoning its plans to combine with General Dynamics, Newport News began serious discussions with officials of Northrop Grumman. Federal opposition to the acquisition of Newport News by General Dynamics centered on fears that the merger would give General Dynamics a monopoly in the construction of nuclear-powered submarines. The only U.S. shipyards involved in the nuclear submarine business are Newport News and the Electric Boat Corporation, already part of the General Dynamics family.
Under the acquisition agreement, signed November 8, 2001, the shareholders of Newport News had the option of receiving $67.50 in cash per share or an equivalent value in Northrop Grumman stock. In announcing the definitive agreement, Kent Kresa, Northrop Grumman's chairman and CEO, said, "We are very pleased with our strategic acquisition of Newport News. With Newport News, we are creating a $4 billion world class, fully capable shipbuilding enterprise with expertise in every class of nuclear and non-nuclear naval vessel. Newport News' long and distinguished history and reputation for innovation and excellence in shipbuilding are highly regarded worldwide."
Although plans called for Newport News to be operated as a separate sector of Northrop Grumman in the short term, long-range plans envision the eventual integration of its operations with those of Northrop Grumman's Ship Systems Sector, which includes the Ingalls and Avondale shipyards located on the Gulf Coast.
As a subsidiary of Northrop Grumman, Newport News is not required to disclose details of its financial performance. However, in the three full years before its acquisition by Northrop Grumman, the shipbuilder had managed to post a profit each year. In 2000, net income was $90 million on revenue of nearly $2.1 billion, compared with a profit in 1999 of $97 million on revenue of nearly $1.9 billion. The company's profit in 1998 was $66 million on sales of $1.86 billion. For Northrop Grumman, the combined acquisition of Newport News and Litton Industries earlier in 2001 paid off in the final quarter of the year, when the company reported revenue almost doubled to $4.3 billion from $2.2 billion in the fourth quarter of the previous year.
Although Newport News Shipbuilding is no longer traded publicly, the struggle between General Dynamics and Northrop Grumman for the shipyard during the spring, summer, and fall of 2001 drew plenty of comments from security analysts. The bid for Newport from Northrop Grumman followed by only two weeks the announcement from General Dynamics of its plan to acquire the shipbuilder. Many analysts believed that Northrop Grumman was more motivated by a desire to block the General Dynamics' takeover than any genuine interest in Newport. Earlier in the year, Northrop had spent $3.8 billion to acquire Litton Industries, which included major shipbuilding and defense electronics operations. Typical of analyst comments was this observation from Paul Nisbet of JSA Research, Inc.: "I suspect the concerted effort by Northrop Grumman to persuade the Justice Department this was a monopoly situation that would kill Litton over the long term bore fruit and they in turn went to the Defense Department."
FAST FACTS: About Newport News Shipbuilding, Inc.
Ownership: Newport News Shipbuilding is a wholly-owned subsidiary of Northrop Grumman Corporation.
Ticker Symbol: NNS
Officers: Thomas C. Shievelbein, Pres., 2001 base salary $435,000
Principal Subsidiary Companies: As a subsidiary of Northrop Grumman Corporation, Newport News Shipbuilding and its former subsidiaries have all been integrated into the parent company.
Chief Competitors: In its principal area of business—the design, construction, and repair of nuclear-powered aircraft carriers—Newport News Shipbuilding stands alone, with no competition at all. In its secondary area of specialization—the design and construction of nuclear-powered submarines—the shipbuilder's principal competitor is General Dynamics' Electric Boat Corporation headquartered in Groton, Connecticut. In addition to its construction of military vessels, the company also provides after-market services for both naval and commercial ships; and in this business, it competes with a wider number of U.S. shipbuilders and ship repair companies.
Newport News Shipbuilding was established in 1886 by railroad magnate Collis P. Huntington, who had founded the Chesapeake & Ohio Railroad to move coal from the Ohio River Valley to port facilities at Newport News, Virginia. Seeing the need for a ship repair facility in the Hampton Roads port area, Huntington opened one of his own, naming it the Chesapeake Dry Dock & Construction Company. Its name was later changed to Newport News Shipbuilding. The shipyard delivered its first vessel, a tugboat, in 1891. By 1897, the company had built three warships for the U.S. Navy.
The pace of naval ship construction accelerated in the early 1900s. To demonstrate America's naval might, President Teddy Roosevelt in 1907 sent the Great White Fleet of American battleships on a round-the-world tour. Seven of the 16 vessels in the fleet were built by Newport News. Between 1907 and 1923, the shipyard turned out six of 23 dreadnoughts produced for the U.S. Navy.
During the difficult years of the Great Depression, Newport News began turning out aircraft carriers. Two of the most famous fighting ships of World War II were the Yorktown and the Enterprise, both of which were built by Newport News. In 1940, a syndicate of underwriters bought the company for $18 million and took its stock public. The years preceding America's entry into World War II saw a frenzied pace of shipbuilding for Newport News. By 1940, the shipyard's order book included seven aircraft carriers and four cruisers for the U.S. Navy. Before long, it was forced to deal with additional requests for so-called Liberty ships, merchant vessels that were pressed into military service during the war. To accommodate this overwhelming workload, the shipyard opened an emergency production facility on the Cape Fear River in North Carolina. Its first Liberty ship was launched by the end of 1941. In all, the company built 239. In the years following the war, Newport News focused on repair work and conversions as well as some new construction challenges, including the building of the famous passenger liner United States.
Shipbuilding experienced a general slump in the late 1950s and early 1960s, but Newport News managed to avoid the worst of it because of its decision to get involved in nuclear-powered shipping. Working with the U.S. Navy and Westinghouse, the company in 1954 had developed and built a prototype nuclear reactor for a carrier propulsion system. In 1960, the shipyard, in partnership with the Navy, launched the Enterprise, the world's first nuclear-powered "super" aircraft carrier. Only a year before, Newport News had launched it first nuclear-powered submarine.
As competition intensified in the late 1960s, Newport News decided to merge with Tenneco Corporation in 1968. In the 1970s, its shipbuilding operations were substantially expanded with the opening of a new North Yard. It was in this new yard that the company built two of the largest tankers ever built as well as three huge carriers to transport liquefied natural gas. Toward the end of the 1970s, commercial shipbuilding demand began to weaken, and Newport News again turned its attention largely to naval construction.
In 1996, Newport News went public once again. However, in the early years of the new millennium, as the consolidation trend among major defense contractors accelerated, the need for change was apparent. General Dynamics sought to acquire the shipyard, but when the federal government expressed its opposition to such a union, an agreement was struck with rival suitor Northrop Grumman.
CHRONOLOGY: Key Dates for Newport News Shipbuilding, Inc.
Collis Huntington establishes shipyard
Shipyard delivers first ship, a tugboat
Last of six dreadnoughts for U.S. Navy completed
Company goes public, trading on the NYSE
First nuclear submarine launched
First nuclear-powered "super" aircraft carrier launched
Tenneco Corp. acquires Newport News
Newport News once again goes public
Northrop Grumman acquires company
The heart of Newport News Shipbuilding's strategy is its corporate Principles of Leadership, which call upon management and employees collectively to demonstrate uncompromising ethics and integrity; show foresight while striving for continuous improvement; exhibit respect and dignity for all employees; and motivate, develop, and empower employees to give their very best. Other major tenets of the corporate leadership principles encourage managers to build teamwork and diversity within and across functional boundaries; show compassion yet have the strength to make tough decisions; exhibit strong personal commitment and accountability toward achieving company objectives; communicate clearly and often, listen well, give recognition, seek feedback, and encourage candor; and take action based on sound planning and relevant facts.
During the 1970s, Newport News Shipbuilding focused a great deal of its energy on the construction of commercial vessels, specifically tankers for the transport of petroleum products. However, by the early 1980s, much of the demand for such tonnage had faded, which caused the company to refocus on its design and construction of naval vessels. It is the only U.S. shipyard to design, build, and repair nuclear-powered aircraft carriers and one of only two American shipyards involved in the design and construction of nuclear submarines. This concentration on its core defense products has allowed Newport News to weather the weakness in demand for commercial vessels and the barriers to competition with other world shipbuilders because of cost differentials.
The most profound trend of the late twentieth century and the early twenty-first century has been the sharp decline in domestic demand for commercial tonnage, which reflects the basic weakness of the U.S. maritime sector. Newport News has chosen to focus on its core defense products, including the nuclear-powered aircraft carrier and nuclear submarine.
The most important of the shipyard's products are the nuclear-powered aircraft carrier and the nuclear submarine. In addition to the design, construction, overhaul, and repair of such vessels, Newport News provides a wide variety of after-market services for commercial vessels.
Newport News seeks to involve itself in the affairs of the communities in which it operates, believing that "an investment in communities where we have facilities supports both our strategic business goals and our responsibility as a good corporate citizen and neighbor." To help make its communities "a better place to live," the company makes donations of money, volunteer time, and materials. Local organizations to which corporate support is directed include those involved in education, culture, and health and human services. Cash donations from the corporation have surpassed $1 million annually, which is supplemented each year by more than $2 million of in-kind contributions from Newport News employees.
In the area of education, Newport News believes its support is one of the best ways the company can invest for the future and help the country achieve its ideals. To that end, the company has contributed generously to a number of universities, including the University of Virginia, William & Mary, Virginia Tech, Old Dominion University, Hampton University, Christopher Newport University, and Norfolk State. Through its corporate membership in CHROME (Cooperating Hampton Roads Organizations for Minorities in Engineering), the company helps to encourage minority students to pursue careers in engineering and science.
In the realm of civic and community activities, Newport News employees have volunteered their time to a number of organizations through the company's Volunteer Opportunity Listing, a monthly publication used to coordinate volunteer projects around the company.
NEWPORT NEWS MANAGES VASCIC
Established in 1998 by Virginia's General Assembly, the Virginia Advanced Shipbuilding and Carrier Integration Center, or VASCIC, works to promote the quality and competitiveness of Virginia's shipbuilding industry. Appointed to manage the center was Newport News Shipbuilding. With its partners from U.S. Navy laboratories, Virginia colleges and universities, and suppliers of electronic systems and software, Newport News works through VASCIC to develop new technologies for aircraft carriers and advanced shipbuilding. The center's benefits to the state of Virginia include job creation, a cornerstone for Newport News urban development, creation of a state technology hub, and an opportunity for industry, government, and academia to work together. For the U.S. Navy and other potential shipbuilding customers, the center provides a state-of-the-art research and development integration facility, transitions technology across multiple platforms, and builds infrastructure and relationships for a long term, world class collaborative center.
Through the United Way, the company, its employees, and retirees have contributed nearly $1.5 million to 51 different agencies. Company blood drives each year collect nearly 1,200 units of blood for the American Red Cross. Cultural organizations that have benefited from the company's generosity include the Virginia Living Museum, Mariner's Museum, Virginia Symphony, Virginia Stage Company, Peninsula Fine Arts Center, Virginia Air and Space Museum, and WHRO Public Radio and Television.
Although Newport News' products sail the seven seas, the bulk of its business is domestic, most of it focused on the American defense sector.
As of December 31, 2000, the last full year before the company was acquired by Northrop Grumman, Newport News Shipbuilding employed approximately 17,000 employees. About 4,000 of these employees were design and engineering professionals.
SOURCES OF INFORMATION
"general dynamics-newport deal off." associated press, 26 october 2001.
"newport news shipbuilding." hoover's online, 2002. available at http://www.hoovers.com.
northrup grumman newport news home page, 2002. available at http://www.nns.com.
scheider, greg. "rivals compete to buy newport news shipbuilding." washington post, 20 august 2001, e14.
vascic home page, 2002. available at http://www.vascic.com/.
For additional industry research:
investigate companies by their standard industrial classification codes, also known as sics. newport news shipbuilding's primary sic is:
3731 ship building and repairing
also investigate companies by their north american industrial classification system (naics) codes. newport news shipbuilding's primary naics code is:
336611 ship building and repairing