Litton's Ships Come In

Like most conglomerates, once-glamorous Litton Industries has been struggling through troubled times lately. But last week the company regained some of its old luster by snaring one of the biggest defense awards in history--a $2.1 billion Navy contract to build 30 destroyers. The vessels will be constructed during the next eight years by Litton's Ingalls Shipbuilding Division at Pascagoula, Miss.

Litton has been fighting for that contract for three long years. The company first persuaded the Mississippi legislature to vote a controversial $130 million tax-exempt bond issue to build the most modern shipyard in the country. Litton then contracted to lease the facility from the state for 30 years, paying enough to retire the bonds. The yard uses speedy, cost-cutting "modular" techniques developed by the Japanese; sections of ships are built separately, swung into place and welded together. Litton's hopes for defense work were hardly dampened by the fact that Mississippi's Senator John Stennis is chairman of the Armed Services Committee.

The company formed its own team of marine architects, and for the first time the contractor, not the Navy, will design a major combat ship. The destroyers will be of a new, larger class to be used mainly for antisubmarine duty. In pursuit of the award, Litton spread word that, if it won, it planned to hire 2,000 additional black workers, who might otherwise drift to the ghettos of the North. Litton will also subcontract about 60% of the job to other firms. Some work may well go to Maine's Bath Iron Works Corp., which was Litton's major competitor for the award.

Because the contract is on a fixed-price basis, any unanticipated expense will presumably come out of Litton's profits, now estimated at $85 million. Thus the company will have quite an incentive to keep costs within projected limits--something that not many contractors have managed recently on big defense jobs.

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