Northrop to move headquarters

WASHINGTON — Defense contractor Northrop Grumman said Monday that it plans to move its corporate headquarters from Los Angeles to the Washington area by 2011.

Executives at the company said they are looking for a site in Maryland, Virginia or the District of Columbia and plan to identify one by this spring. The move of its headquarters will involve about 300 of the company's 120,000 employees around the world.

Northrop, whose biggest customer is the Pentagon, makes military planes, tanks, ships and other equipment. It currently has about 40,000 employees in the Washington region.

"We are a global security company and all of the federal processes, whether the executive branch or Congress, are in the Washington area," said Wes Bush, chief executive and president. "We think we'll be able to do a better job for our customers and our company by having our corporate office there."

Bush said the company is looking for the best tax-incentive package from each of the three jurisdictions. Maryland is home to Lockheed Martin, the biggest defense contractor in the country. And Virginia is home to General Dynamics, another major defense player.

"This will be largely driven by the economic incentives that states typically can put forward," Bush said.

Defense industry experts say Northrop's move is a sign that contractors are fearing shrinking budgets from the Pentagon and sense a need to be closer to their biggest customer, as competition for fewer deals becomes more fierce. Northrop's move follows another big contractor's decision in September to move to the region: SAIC moved its company headquarters to McLean, Va., from San Diego.

Northrop's headquarters has been in the Los Angeles area for decades, mainly because Southern California was once considered a powerhouse for the aerospace industry. The company's change of its corporate headquarters is seen as a blow to Southern California, economic development officials say.

Still, Northrop executives said they expect to continue to have a "substantial" presence in California, with roughly 30,000 employees there.

"This is not about a reduction in our focus on California," Bush said. "We believe the corporate office will function more effectively in the Washington region."