Ingalls Shipbuilding, Inc. History

Company History:

Ingalls Shipbuilding, a division of Litton Industries, is a leading supplier and servicer of marine vessels to the United States Navy and also builds ships for some allied navies. With approximately 14,000 employees, Ingalls was Mississippi's largest employer and one of the most financially healthy shipyards in the United States going into the mid-1990s. The company has played an important role in the U.S. defense industry since World War II.

Ingalls Shipbuilding was established in 1938 by the Ingalls Iron Works of Birmingham, Alabama. At the time, the iron works wanted to build a new shipyard to serve a growing market for cargo and passenger ships. As it needed a location with access to a deep water channel, a railroad, and a large and willing work force, company representatives approached the city of Pascagoula, Mississippi, about building the new shipyard on its river bank. City officials eagerly supported the proposal and even approved a $100,000 bond issue to help develop the site. Ingalls Shipbuilding was officially incorporated in 1938 and production of ships started within a year, thus initiating a legacy of shipbuilding innovation and success that would span the remainder of the twentieth century.

Ingalls Shipbuilding's first vessel was the SS Exchequer, a cargo ship launched on October 16, 1940. The ship was unique because it was the first one in the world to sport an all-welded steel hull. Prior to the SS Exchequer, ship hulls were created by overlapping steel plates and attaching them with rivets. In contrast, Ingalls welded the steel plates end-to-end, which resulted in a much more durable hull. The innovation, which became the global standard, is credited with revolutionizing ship design. During 1940 and 1941, Ingalls launched three more cargo ships, and the venture was considered an early success.

Ingalls's business changed radically with the onset of World War II, as the shipyard put its commercial operations on hold and shifted into high gear for the war effort. Indeed, throughout the early 1940s Ingalls operated around the clock building all types of ships for the U.S. military. As production surged and the traditional Ingalls work force was depleted as its young men went off to war, women were called on to replace them. Vera Anderson, for example, became the company's own version of "Rosie the Riveter," according to company annals, and even went on to become a national welding champion.

The first ship Ingalls completed for the war effort was the USS Arthur Middleton, a combat loaded transport launched in December 1941. Ingalls finished five more ships in 1942, including two aircraft carriers, before completing a total of 20 vessels during 1943. Throughout World War II, Ingalls built more than 60 ships ranging from submarine tenders and aircraft carriers to troopships and net layers. Many of those ships returned to Ingalls after the war and were converted into commercial cargo ships--Ingalls constructed, in 1945 alone, a total of 22 commercial cargo ships, many of which were converted war vessels.

By 1945, after fewer than seven years in business, Ingalls had been catapulted to the status of a prominent U.S. shipyard and was able to boast a seasoned work force and relatively large production capacity. During the late 1940s and 1950s, Ingalls parlayed that status into a string of contracts to build commercial ships. Besides building cargo ships, Ingalls launched a variety of vessels ranging from oil tankers and ice breakers to tow boats and passenger ships. In the late 1950s, in fact, Ingalls completed two of the largest luxury passenger ships ever built: the SS Brasil and the SS Argentina. In addition to building ships, Ingalls branched out during the 1950s into manufacturing off-shore oil rigs, rail cars, tunnels, mobile drilling platforms, and even a locomotive, among other commercial equipment.

Ingalls focused on the booming commercial sector during the 1950s, but it wisely stayed active in the military side of the business; although military contracts nearly halted after World War II, the Cold War was just beginning, and the Navy would call for increasingly more vessels in the mid-1900s. In the early 1950s, Ingalls converted segments of its commercial shipbuilding operations into highly sophisticated production facilities designed to build Navy combat ships. Before the end of the decade, the high-tech operation had built five innovative tank landing ships as well as eight dock landing ships. More importantly, Ingalls launched two newly designed destroyers in 1959: the USS Morton and the USS Parsons. Technology developed for those ships formed the foundation for Ingalls's core market of building major surface combatants during the next three decades.

Also during the 1950s, Ingalls entered the submarine business. Realizing the importance and potential of nuclear technology, Ingalls modified two of its shipways in 1955 to accommodate submarine construction. The company also established a nuclear power division to develop atomic submarine technology, having already gained experience in submarine construction when it produced the country's last conventionally powered submarine, the USS Blueback, which it launched in 1960. In 1961, though, Ingalls completed two groundbreaking, high-tech nuclear submarines: the USS Sculpin and the USS Snook. Ingalls would deliver ten more of the vessels during the 1960s and early 1970s and would overhaul and refuel nine others, thoroughly establishing its leadership role in the development of advanced defense-related technology.

By the time it launched its nuclear submarines, Ingalls had grown into the third largest shipbuilder in the country. In 1961, Litton Industries, Inc. purchased the company for $8 million along with $9 million in assumed debt. Litton was a diversified conglomerate with an emphasis on high-tech industries. Founded in 1954 by Charles "Tex" Thornton, Litton had expanded rapidly by developing its own technologies and acquiring other firms. Thornton hoped to integrate his patented electronic technologies into Ingalls's submarine and oil-drilling equipment operations.

Ingalls's first move under the Litton umbrella was to begin the construction of a new, ultra-modern shipyard that could produce complex ships faster and more efficiently. In a unique arrangement, the state of Mississippi partnered with Litton to finance the new shipyard. Dubbed the "shipyard of the future" by Litton, the facility was begun in 1968 on the river bank facing Ingalls's original facility in Pascagoula. Litton's plan for the new facility was to utilize "inverted modular" construction techniques, in which entire sections of the ship would be built--including piping, electrical systems, and ventilation--and then assembled and installed on land prior to completing the hull.

Traditional shipbuilding entailed striking the keel and building the hull, and then outfitting the ship from the inside, a relatively slow and costly procedure. Although the advantage of modular shipbuilding techniques had been known since before World War II, no U.S. builders had adopted modular methods because of the space and cost required to set up modular manufacturing facilities. The new Ingalls shipyard was, and would remain into the 1990s, the only completely new shipyard of any kind to be built in the United States since World War II, and Litton hoped to thereby help give Ingalls a competitive advantage in the industry.

Besides building a giant new shipyard, Ingalls launched nearly 50 new types of ships and submarines during the 1960s. In addition to several cargo and container ships and nuclear submarines, the company completed an exploratory fishing vessel and an amphibious assault ship, among other projects. In 1969 and 1970, Ingalls landed two pivotal contracts. The first was for the design and construction of a series of new-generation amphibious assault ships. The second was a contract to build 30 high-tech "multimission" destroyers. The assignments--two of the largest Navy contracts ever awarded--were an important win for Ingalls and its new shipyard. Besides keeping its production facilities busy, the contracts also helped the company develop expertise related to surface combat ships that would give Ingalls a technological edge for years to come.

However, the new Ingalls shipyard faced several challenges during its early years. Although its first vessel, the SS Austral Envoy, set sail in September 1972, four years after construction on the shipyard had begun, the modular system of ship construction took longer to implement than expected. During this time, Ingalls began to experience delays in their production schedules and budget overruns. Litton posted a string of losses in the early 1970s, attributed in part to the struggles of Ingalls.

In 1973, Litton jettisoned its chief executive, Roy Ash, and brought in engineer Fred O'Green, who brought Litton into shape during the remainder of the decade by eliminating nonperforming divisions and streamlining operations at Ingalls. During the late 1970s, in fact, Ingalls got its new shipyard running like clockwork, and the facility began living up to its parent company's expectations. By 1975, Ingalls was delivering high-tech destroyers and assault ships at the rate of one every six weeks. The company delivered the last eight units of its two pivotal Navy contracts at the rate of one per month, setting a new peacetime production record. Between 1975 and 1980, in fact, Ingalls delivered 60 percent of all the ships supplied the U.S. Navy and had to scramble during the period to hire and train its work force, which swelled to a peak of 25,000 in 1977.

Ingalls entered the 1980s poised to take advantage of emerging industry trends. Through its major defense contracts of the mid-1970s, the company had positioned itself on the forefront of naval shipbuilding technology. For example, it was using advanced computer-aided design and computer-aided manufacturing techniques and had achieved a marked competitive advantage with its inverted modular shipyard. Ingalls was also starting to make strides in automating shipbuilding procedures, which would reduce its labor-related costs during the decade. All of these advantages, combined with increased defense spending by the federal government, would allow Ingalls to achieve record profitability during the 1980s.

Ingalls's first major victory of the 1980s was the delivery of USS Ticonderoga in December 1982. The giant surface missile cruiser was delivered well ahead of the date specified in the original contract. More importantly, the Ticonderoga was representative of a new generation of ultra high-tech naval surface vessels for which Ingalls's production facilities were eminently qualified to produce. The Ticonderoga was outfitted with the Aegis radar system, which was designed to revolutionize the Navy's ability to protect its battle groups from missile attacks. The Ticonderoga also gave Ingalls a chance to showcase its cutting-edge engineering team and manufacturing operations. During the 1980s, Ingalls was awarded contracts to build 19 of the 27 ships built in the Navy's Aegis program.

In addition to a throng of Aegis guided missile cruisers, Ingalls produced a number of other commercial and military vessels. Importantly, much of its work during the decade was building drilling rigs, including two that were semisubmersible, for the oil industry. The company also delivered four guided missile destroyers, a high-tech cement barge, and five amphibious assault ships. In 1985, Ingalls landed an important Navy contract to design and construct a new class of amphibious assault ships to be delivered in the early 1990s. In 1987, moreover, Ingalls was asked to build one of a new class of destroyers labeled the Arleigh Burke class. The program, which became one of the largest in U.S. military history, was created to form a new type of craft that would give the United States a decisive edge through the end of the century.

In addition to a string of new construction projects, Ingalls continued to benefit during the 1980s from a steady flow of repair and modernization work. More important modernization programs included the installation of vertical-launch missile systems on Naval surface ships and the 1987 restoration of the USS Stark after it was severely damaged in a Persian Gulf missile attack. As Ingalls's workload grew, so did its bottom line. By the late 1980s, Ingalls was posting consecutive annual profits of more than $100 million. Annual sales were topping $1 billion. Improved profitability was partly the result of increased productivity, as evidenced by Ingalls's work force shrinkage to less than 15,000 by the early 1990s.

The shipbuilding industry slumped during the late 1980s and early 1990s. U.S. economic malaise combined with huge cuts in military spending sent industry profits tumbling. More than 70 percent of the shipbuilders in the United States were forced out of business or acquired by larger competitors. Due largely to its technological expertise and reputation, Ingalls Shipbuilding managed to emerge from the melee relatively unscathed. New Navy contracts slowed during the early 1990s, but Ingalls succeeded in landing several significant jobs. Importantly, the Navy continued to seek the high-tech, large ships produced by Ingalls, focusing its cutbacks on submarines and support vessels. Ingalls entered the 1990s with more than $1 billion of contracts scheduled for delivery during the early part of the decade.

To augment its defense-related work, Ingalls began to renew its efforts to enter the commercial shipbuilding industry. The company also began focusing on international expansion, particularly in Israel, Venezuela, Germany, and the Middle East, among other locations. Still, Ingalls continued to secure new Navy contracts going into the mid-1990s by sustaining its high-tech orientation and by working to improve its productivity. Ingalls delivered six new ships in 1994: three Aegis destroyers and one amphibious assault ship for the U.S. Navy, and two guided missile corvettes supplied to the Israeli Navy. Ingalls generated annual revenues of about $1.5 billion between 1992 and 1994, and profits of about $130 million to $140 million annually.

Further Reading:

• Bergstrom, Robin P., "The Hour When the Ship Comes In," Production, August 1991, p. 44.
• Deady, Tim, "Litton Sailing Right Along on Military Shipbuilding," Los Angeles Business Journal, July 27, 1992, p. 6.
  Ingalls Shipbuilding Record, Pascagoula, Miss.: Ingalls Shipbuilding, 1988.

Source: International Directory of Company Histories, Vol. 12. St. James Press, 1996.

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