Louisiana economic officials are reaching out to domestic, foreign firms to take over Avondale

State economic officials have reached out to domestic and foreign shipbuilders to gauge interest in acquiring Northrop Grumman's 5,000-employee Avondale shipyard, slated to close in 2013.The Los Angeles-based defense contractor plans to consolidate its Gulf Coast operations in Mississippi, and announced earlier this month that it will begin the process by laying off 110 workers at its Avondale facility, and 95 more at its Tallulah yard, where Northrop intends to cease operations by the end of the year.
Northrop has also said it will consider getting out of the shipbuilding business entirely by selling the Gulf Coast operation that it is consolidating in Mississippi as well as its other major shipyard in Virginia.
"While we would be thrilled to see a sale go through to a well-capitalized company with intentions to maintain a high-level of employment there, that doesn't mean that any buyer wouldn't be equally attractive," Louisiana Economic Development Secretary Stephen Moret said Wednesday in an interview with the Times-Picayune.
Northrop, which, through a spokesman, declined to comment Tuesday, has received "at least one offer" for the Avondale shipyard, Moret said, suggesting a seemingly low-ball bid.
"It's not clear that any offers have been made from bidders that have the financial capacity to complete a transaction at a price and on terms that are acceptable to the company," he said, without elaborating.
Moret said that in a best-case scenario, a domestic or foreign shipbuilder may be interested in acquiring the yard with "a commitment to maintain the employment at that level going forward based on a plan to move additional work to that site."
An outright sale to a foreign shipbuilder, he said, could provide an opportunity to develop a presence in the market in the United States. On the other hand, some analysts have suggested BAE Systems, Britain's largest defense contractor, could make a run at acquiring Northrop's shipbuilding operations, which it reportedly does not intend to sell separately.
"There's really a variety of options in front of this," Moret said.
As the six major shipyards across the country struggle to keep busy, persuading another to join in the fray would probably require considerable government incentives, said James McCaul, a shipbuilding expert with International Maritime Associates.
Otherwise, McCaul isn't sold on the potential that another shipbuilder could take over the Avondale yard. "I don't think shipbuilding would restart on it," he said. "If it did, it would be on a much smaller scale than what currently exists."
A more likely scenario, he said, is that the Avondale site, the smallest of Northrop's three major shipyards, including Pascagoula, Miss., and Newport News, Va., would draw one or more midsized companies and maintain 1,500 to 2,500 jobs.
State and local officials have expressed concern in recent months about potential losses in the Gulf Coast, heightened by the effects of the BP oil spill and the impending loss of some 900 skilled Lockheed Martin jobs as the last external fuel tank expected to fly rolled out of the NASA Michoud Assembly Facility in eastern New Orleans earlier this summer.
Moret said he expects Northrop to proceed with "a relatively small proportion" of force reductions, perhaps as many as 500, at the Avondale yard through the end of the year.