The Benefits of Defense Companies Clustering around Washington, D.C.January 27, 2010
Northrop Grumman, one of the largest military contractors, announced earlier this month that it would move its corporate offices to the Washington, D.C., area from Los Angeles. The company's goal is to settle near the U.S. capital by 2011—bringing it closer to its major government customers. The new offices will house only 300 of its worldwide 120,000 employees. Some 30,000 workers dedicated to research, development and manufacturing are to remain in California. Jerry Wind, a marketing professor at Wharton, said geographical proximity to customers and stakeholders makes sense for generating business during an era of declining defense spending. "The move may have greater value than just the 'symbolic ties,'" said Wind. "This is especially critical when considering aerospace and military decisions—which are complex and involve multiple stakeholders and influentials." Several other major military contractors also have a strong presence in the Washington area, including Lockheed Martin. Northrop Grumman's move may even spur others to flock closer to D.C. "While the location decision is complex—involving multiple factors— the move of a major player such as Northrop Grumman does add to the viability of the aerospace and defense cluster around Washington," said Wind. "[It] increases the area's attractiveness to other companies in this industry and the related industries serving them." |
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