Northrop Plans Bigger Push Into Adjacent Markets


By Karen Jacobs/Reuters
Defense contractor Northrop Grumman is planning a bigger move into related markets to bolster profit in a tougher defense budget environment.Chief Executive Wes Bush, who spearheaded the spin-off of the company’s shipmaking business earlier this year, is de-emphasizing sales growth and has instructed his division heads to pursue market opportunities and contracts that will add to earnings, three of the division heads told Reuters at this week’s Paris air show.

“We’re going to have to move into market adjacencies and start to put some pressure on our competitors and create new market share for us that otherwise wasn’t there,” said Jim Pitts, president of the electronics systems unit.

On May 6 exclusively to Aviation Week first, Northrop unveiled its Firebird optionally-piloted vehicle that flies medium-altitude ranges, to help fill out its product offering in spy planes that collect intelligence. Firebird can fly up to 30,000 feet in altitude.

At the time Northrop executives told Aviation Week that while unlikely to eclipse Predator or Reaper in order numbers, Northrop sees an opportunity for a niche market with the OPV while the Pentagon and FAA continue to wrangle over rules for flying UAS in open airspace.

Northrop makes small unmanned aerial vehicles, and its Global Hawk UAV, which is being deployed over Libya in the enforcement of a no-fly zone, serves the higher end of that market, as it can go up to 60,000 feet.

“We’re trying to position ourselves so that depending on where the market goes, we have a portfolio that can address those needs,” said Gary Erwin, president of Northrop’s aerospace systems unit.

The company is also moving to extend its business internationally, as more than 90 percent of its business is tied to the U.S.

Linda Mills, head of the company’s information systems unit, said Northrop had been adding staff to its cyberfacility in the U.K.

At the air show June 21, Northrop announced a partnership with Finmeccanica’s SELEX Galileo to develop exportable products in the directional infrared countermeasure (DIRCM) market, which deals with protecting military equipment against guided missile threats.

Pitts said the partnership will target products to countries that the defense contractor typically can’t reach because of U.S. rules that restrict exports of certain defense products.

“This is an innovative way for us to go into the marketplace,” Pitts said. “We think that is a whole untouched marketplace that other companies are going after.

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