Northrop Grumman returns $35M to La. from failed deal

A $35 million slice of cash shoring up next year’s budget was available for spending only because poor employment performance forced a Louisiana shipbuilding company to return state economic incentive dollars. Because its employment lapsed below its promised level at the Avondale shipyard near New Orleans, Northrop Grumman repaid $35 million to the state. In August 2003, Northrop Grumman and the administration of Gov. Mike Foster agreed to split the price tag for a $112 million upgrade of the Avondale shipyard near New Orleans, which was then Louisiana’s largest manufacturing employer; as a result, the state would put up $56 million in cash. In exchange, Northrop agreed to employ 5,200 full-time workers and to create a shipbuilding program to train new skilled craftsmen. Louisiana Economic Development Secretary Stephen Moret says Northrop Grumman Ship Systems was required to have 5,200 workers at the shipyard in 16 different quarters from January 2003 through December 2010. Moret said the company reached that benchmark for only 12 quarters, the last time in 2005. So the company quietly reimbursed the state $34.6 million in March. The money is plugged into next year’s 2011-12 state budget for general operating expenses, part of a sweep of one-time money from set-aside funds used to patch holes in state agency budgets.