Litton sailing right along on military shipbuilding; building what Navy needs keeps revenue, profit flowing.

Mention the Los Angeles County defense industry and most people think of high-tech weapons systems, missiles and supersonic aircraft. But military shipbuilding produces in excess of $1 billion a year in revenues for one contractor, Litton Industries Inc., the electronics company that is headquartered in an ornate office complex in Beverly Hills.

While most military contractors have struggled with spending cuts, layoffs, cost overruns and charges of contracting fraud, Litton's Navy shipbuilding operations have been sailing along. By just about all accounts, the Ingalls Shipbuilding unit in Pascagoula, Miss., is a solid, well-run business with good prospects for the future and is one of the few defense contractors that can boast of delivering products early and under budget.

After problems with cost overruns and delivery delays in the early 1970s, the shipyard has earned Litton profits hundreds of times above the $8 million it paid for the yard in 1961. For example, Ingalls has made $325 million in early delivery incentives from the Navy.

"It is probably the strongest Naval shipbuilding operation in the country right now," said Byron Callan, an industry analyst with Prudential Bache in New York. "There are a lot of walking wounded out there that don't have very good prospects. Ingalls does because it builds ships that are needed to replace existing ships."

Ingalls, which employs about 16,000 and is one of the largest employers in Mississippi, builds destroyers, cruisers and the huge amphibious assault ships for the U.S. Navy. It also has a contract to build three small surface war ships for Israel and has a total backlog of contracts valued at more than $4 billion, according to Litton.

Located on the Pascagoula River where it meets the Gulf of Mexico, the shipyard, in the 1970s, employed up to 25,000 but in more recent years has maintained its current, smaller workforce. In every year since 1986, the division's operating profit has exceeded $100 million and its revenues have been around the $1 billion mark.

In 1991, the division's revenues were $1.2 billion and its operating profit was $130.4 million. Litton's total revenues last year were $5.2 billion and its before-tax operating profit was $183.6 million.

The shipbuilding unit gets high marks from just about everyone, even unions that represent most of Ingalls' workers.

"As far as I'm concerned, it's a pretty good company to work for," said Bobby McTigue, business manager for local 693 of the International Association of Boilermakers, one of several unions that represent workers at Ingalls.

Gary Holland, editor of the Mississippi Press daily newspaper in Pascagoula, said generations of local family members have worked at the shipyard, which has a reputation as a well-paying operation with good benefits.

"I've been here for 28 years and I would say that it is generally a well-thought-of company. I know in the early years there were some problems with delays, but in recent years it seems to have done well and has a good reputation around here," he said.

Litton bought the shipyard for $8 million from Ingalls Shipbuilding Co. in 1961 and by the early 1970s had expanded the facility from 200 acres to 800 acres. Over the years, Litton has spent about $800 million on capital improvements at the facility.

Litton boasts that one key reason for the unit's success is that it uses a modular type of construction process rather than the traditional shipbuilding method of making the hull first.

"When we completed the expansion and got our contracts from the Navy in the early 1970s, there were some problems and it took us a few years to work the kinks out," said Litton spokesman Robert Knapp. "But since then I have to tell you that it's been a very good operation for us."

Callan, the industry analyst, said a clear advantage Ingalls has over most competitors is that it builds the kind of ships the Navy needs and Congress has funded. So far, spending cuts on Navy programs have been aimed at submarines, support and auxiliary vessels and aircraft carriers rather than destroyers, cruisers or the amphibious assault ships.

Gerald St. Pe, 52, has been division president since 1985 and says the company is fortunate to be in the military shipbuilding segment that has escaped defense spending cuts.

"The company had the foresight to see that naval vessels in the future would have a high degree of electronic content and it would be changing its procurement methods to ordering many ships that could be built from one type of hull rather than many different types of ships from different types of hulls," he said.

St. Pe projected that over the next four or five years the division will maintain its yearly revenue flow in the $1 billion range and its operating profit should exceed $100 million a year. He said, however, that the yard's workforce will probably be reduced to about 14,000, mainly through attrition.