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Under the Radar

Northrop Grumman’s local employees produce a variety of things for the U.S. Department of Defense and U.S. allies. Yet a good deal of the work is intangible. It’s not something a person can touch, let alone see.

The defense giant, which had $33.8 billion in revenue last year, employs 4,800 people in San Diego County at four campuses: Rancho Bernardo, Carmel Mountain Ranch, Kearny Mesa and San Diego Bay. Their work centers on the fine points of software, systems integration and radio communications. Ship repair, one of the most tangible things Northrop does in San Diego, may not be in Northrop’s hands too much longer. Northrop Chief Executive Officer Wes Bush said in July that management sees “little synergy” between its shipbuilding sector and its other businesses; that it is “now appropriate to explore separating shipbuilding from Northrop Grumman”; and that the corporation might spin the unit off to shareholders. Bloomberg L.P. reported last week that four private equity firms are exploring bids.

Northrop, based in Los Angeles, has 120,000 employees in total and 30,000 in California. Its local headcount was good enough to rank the company 12th on the San Diego Business Journal’s list of Largest Employers, published Oct. 4, which ranked organizations based on the number of local employees as of Aug. 1.

In San Diego, Northrop concentrates its efforts on information technology, cybersecurity and unmanned systems. San Diego is “the center of the universe” for unmanned aviation, said Jim Zortman, a Northrop sector vice president who is site manager for the Unmanned Development Center.

One thing that makes the region an unmanned aviation center is the presence of a big competitor, privately held General Atomics, which designs and builds unmanned aircraft in Poway.

Unmanned Aircraft Hub

The nerve center of Northrop Grumman’s unmanned aircraft effort is nearby in Rancho Bernardo. In 1999, Northrop bought the remnant of the company variously known as Ryan Aeronautical Co. and Teledyne Ryan Aeronautical from Allegheny-Teledyne Inc. The deal gave Northrop 300 employees and a history of building unmanned systems, notably target drones. That base has grown to 2,300 employees and continues to grow.

If you’re looking for a scene like one found inside the Convair plant on Pacific Highway during the 1940s, however, forget it. “You won’t find aircraft production lines,” said Zortman, a retired U.S. Navy vice admiral. Northrop does software development and sensor integration — desk jobs — in Rancho Bernardo. Actual aircraft go together at other sites, such as Palmdale.

Northrop’s Aerospace Systems unit can accomplish its work in six leased buildings. The unit is negotiating a lease on a seventh building, said spokeswoman Cynthia Curiel. Northrop hired 370 people in 2009 and has hired 100 this year. There are 125 job openings, many requiring very specific technical knowledge.

Northrop’s products include the X-47B, a vehicle the size of a fighter jet that will fly off aircraft carriers. It lacks a pilot and it lacks a tail. The latter point makes it less visible to radar. The X-47’s first flight is expected at the end of the year. The U.S. Navy plans to deploy the craft by 2018.

Another big project is Global Hawk, which Zortman compared to “a low-hanging satellite.” Variants of the high-altitude, jet-powered spy aircraft are going to the U.S. Air Force, U.S. Navy and European customers. Published reports say Japan may buy up to four Global Hawks, possibly using them for missile defense.

Working With Whirlybirds

Coming into its own is unmanned helicopter technology. Northrop is in low-rate initial production on its Fire Scout helicopter model. The U.S. Navy has ordered 19 of the aircraft. Though there are no guarantees, the Navy could order as many as 168 Fire Scouts, a Northrop spokesman said. The move could keep Northrop busy through 2020 and beyond.

New York-based Schweizer Aircraft Corp. — a unit of Sikorsky Aircraft Corp., which itself is a unit of United Technologies Corp. — makes the airframe for Fire Scout. Northrop then adds the electronics it needs to run autonomously at its plant in Moss Point, Miss. The Navy plans to put Fire Scouts aboard its new-design Littoral Combat Ships and is getting practice with the aircraft by flying them off frigates, Zortman said. He added that the U.S. Coast Guard has identified a requirement for a helicopter very much like Fire Scout. There are also potential foreign military sales.

Fire Scout can carry 600 pounds of sensors, but there is talk of it carrying weapons.

In September, Northrop announced the existence of its Fire-X program, which mates Fire Scout electronics with a Bell Helicopter Textron Inc. aircraft about twice the weight of Fire Scout. It will be able to fly farther and carry more than the diminutive Fire Scout. The Navy is probably the service closest to getting Fire-X, Zortman said.

If it made the sale, Northrop would gain a key customer in the Navy. “They tend to bring a crowd with them,” Zortman said. The Coast Guard as well as U.S. allies often follow the Navy’s lead in making purchases for two reasons, he said: for easy interoperability with the U.S. fleet, and because the rigor of the Navy’s test program proves the product works.

Defense analyst Jim McAleese, principal of McAleese & Associates P.C. in Sterling, Va., has a different view. He sees the U.S. Army driving the success of the Fire-X. The Army is the principal user and acquirer of rotary-wing, all-purpose aircraft of that size, he said, adding that early this year Sikorsky announced it was working on an unmanned version of its Black Hawk helicopter.

“The market itself for unmanned Army utility helicopters is still significantly speculative at this time,” McAleese said. The U.S. Marine Corps is looking for unmanned helicopter with a smaller cargo capability, the analyst added.

Command, Control, Communications

Zortman said Northrop has a local payroll of $446 million and contributes to the San Diego economy by buying $300 million in products from 650 local suppliers. Those suppliers range from giants such as Goodrich Aerostructures, a Chula Vista-based unit of Charlotte, N.C.-based Goodrich Corp., to small businesses.

Roughly half of Northrop’s San Diego work force concentrates on projects other than unmanned flight. Here are a few:

• A Navy computer network project dubbed Canes employs 226 Northrop employees in San Diego. Canes will provide computer programs for command and control, as well as common logistics and business office programs, for Navy computers on board ships and at shore facilities. The Navy’s Space and Naval Warfare Systems Command, or Spawar, awarded the deal, which could be worth $775 million and last until 2014 if the Navy exercises all of its options. Canes stands for Consolidated Afloat Networks and Enterprise Services Common Computing Environment.

• Another group designs and produces two-way radios for fighter jets, the F-22 and F-35. The software-defined radio performs several dozen communications, navigation and identification functions that, in the old days, were performed by a variety of electronic systems.

• Yet another group works on “bacon” for the Air Force. That’s the Battlefield Airborne Communications Node, abbreviated as Bacn and pronounced like the pork product. Bacn is an Internet server and communications relay in the sky. Packed into a converted business jet or a Global Hawk flying over a battlefield, the electronics can translate signals of radios that normally cannot talk to one another.

• In a nonmilitary project, Northrop provides information technology and telecom services for San Diego’s county government. The defense contractor has 120 people on the project and several major subcontractors. The $650 million deal, signed in 2006, runs for seven years and has a five-year option.

Northrop Grumman trades on the New York Stock Exchange as NOC. As of last week, the stock’s 52-week range was $49.34 to $69.80.

In January, the company has announced plans to move its headquarters to the Washington, D.C., region. The move, set for 2011, will only involve 300 people, Northrop said, adding that California will remain a “significant location” for research, development and manufacturing.

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