Northrop Grumman has announced it will delay delivery of LHD-8, the U.S. Navy’s last Wasp-class large-deck amphibious assault ship, by several months while the company swallows a financial charge due to shipbuilding issues.

“In its current state, the ship does not meet our quality standards and it will not be delivered until it does,” Northrop Chairman and Chief Executive Officer Ronald Sugar said. “We are deeply disappointed by the impact of this unanticipated development on our customer and our shareholders. This is not acceptable to me or anyone at this company. We are taking all necessary steps to strengthen quality processes and management oversight of our Gulf Coast shipbuilding programs.”

The major U.S. defense contractor – and the only major warship builder next to General Dynamics – said it expects to record a pre-tax charge to 2008 first quarter earnings of $320 million to $360 million, with an exact figure to be identified later this month.

As of early March, the Navy had said it expected builder’s trials in June, acceptance trials in August, delivery in November and commissioning in May 2009. Since then, the shipmaker apparently became more aware of construction issues on the unfinished ship, to be known as the Makin Islands, and shook it down. Now, Northrop said, the LHD-8 is expected to be delivered in the second quarter of 2009, a period running through March of that year.

“In recent weeks, lack of progress in LHD-8 onboard testing preparatory to sea trials prompted the company to undertake a comprehensive review of the program, including a detailed physical audit of the ship,” according to a Northrop statement April 15. “This examination identified the need for substantial rework on the ship, primarily in electrical cable installations.”

Cost to complete

Northrop said its charge primarily will reflect a review of the estimated schedule and cost to complete the LHD-8, as well as related financial affects on other ships being built in its Gulf Coast shipyard, and an evaluation of purchased intangible assets associated with its recently restructured Shipbuilding business.

While the last of the Wasps, LHD-8 is the first such warship to be built with gas turbine engines and electric drive. Over its life, the design is supposed to provide “significant” savings in manpower and maintenance costs associated with traditional steam-powered amphibious ships, according to the Navy.

The armed service is pressing for manpower cost savings through new technology in several shipbuilding designs, like DDG-1000 destroyers, Littoral Combat Ships and Ford-class aircraft carriers. But the Navy also has suffered high-profile challenges, concerns or setbacks in these programs, as well as others.

Northrop said delays in LHD-8 construction and financial performance for the program were exacerbated by Hurricane Katrina. The 2005 hurricane wrought significant damage to Gulf Coast shipyards, but the company has come under increasing criticism as U.S. shipbuilding problems – including problems in the Coast Guard Deepwater program – have grown in recent years, attracting congressional outrage and action.

Photo: US Navy