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Northrop Pulls Out of Air Show to Cut Costs

Thursday, 13 Oct 2011 06:31 PM

Northrop Grumman Corp Thursday pulled out of the 2012 international air show in Farnborough, England, a dramatic move underscoring the company's drive to cut costs as it prepares for leaner times in the global defense market.

Northrop has participated in the air shows -- which alternate between Paris and Farnborough -- each year, without interruption, since it merged with Grumman in 1994, said spokesman Randy Belote.

Belote said the company had already been reducing its footprint at the international air shows in recent years, but pulling out completely would save millions of dollars.

He said it did not diminish the company's commitment to Britain or other international customers.

"Northrop Grumman continues to focus its international business development activities and resources in areas that better support its customers' needs," he said.

Virginia-based defense consultant Loren Thompson said it would be the first time in decades that the company -- one of the five largest U.S. defense contractors -- was not present at the big international showcase of commercial and military aircraft.

"This is just the latest indication of how determined Chairman Wes Bush is to cut costs," Thompson told Reuters. "They're going to break the mold in terms of what is expected in terms of industry leaders."

Bush has realigned the company around four business areas focused on cybersecurity, logistics, communications and intelligence, and unmanned systems, and recently spun off the company's shipbuilding business.

The company, which moved its headquarters to the Virginia from Los Angeles this year to be closer to key government customers, has also cut headcount and reduced its exposure to lower-margin work. Northrop derives more than 90 percent of its revenue from the U.S. government.

Belote said Northrop was reevaluating its participation in other international air shows as well, but was only prepared to announce its decision about Farnborough at this point.

Northrop and other arms companies have been scaling back the lavish parties, free-flowing alcohol and luxurious company "chalets" at the Paris and Farnborough air shows in recent years, concerned that too ostentatious of a presence could undermine their promises to improve affordability.

Lockheed Martin Corp decided in 2010 to halve its corporate presence at that year's Farnborough air show, and stopped sending top executives like Chief Executive Robert Stevens. The company had no immediate comment on its plans for the 2012 air show.

Boeing Co and Airbus, part of Europe's EADS , have grown weary of the ever-growing number of air shows in recent years, according to industry insiders, who say the companies would be happy to scale back.

© 2017 Thomson/Reuters. All rights reserved.

 
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Northrop Grumman Corp Thursday pulled out of the 2012 international air show in Farnborough, England, a dramatic move underscoring the company's drive to cut costs as it prepares for leaner times in the global defense market. Northrop has participated in the air shows --...
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2011-31-13
Thursday, 13 Oct 2011 06:31 PM
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