Can you describe the development of Northrop Grumman Italia within the wider corporation?

Northrop Grumman Italia has a rich history in integrated navigation systems, tracing back to the establishment of Litton Italia in 1961. Litton Italia was acquired by Northrop Grumman Corporation in 2001, becoming Lital, and then Northrop Grumman Italia in 2007. The company size has changed over the years, with a reduction in workforce numbers from about 1,500 to 200 over the course of 50 years. Northrop Grumman Corporation is the fourth largest defense company globally, with its mission systems sector alone having a turnover of $12 billion, approximately equal to the entire Leonardo company. Northrop Grumman Italia falls within this division and contributes around €60 million to €70 million of the division’s turnover. Despite having a relatively small turnover, the company has the highest operating margin within its division.

How important are the national and international markets to your operations?

Currently, the Italian market accounts for at least 70% of our turnover, but we hope to reduce this to less than 50% within five years. Unfortunately, the wider corporation has not taken full advantage of the opportunities available in the vast capabilities of the Italian industry. Therefore, we hope to expand our international presence. We are analyzing several options, with a focus on South America and the farther reaches of Europe. South Korea is also of particular interest due to the number of programs under development, particularly in UAVs and fighter helicopters. While competition is tough, Korean companies are keen to collaborate with European companies. Many companies have contributed significantly to European programs such as the Eurofighter, but volumes have been decreasing, making growth and even survival challenging as we are all competing for the same captured markets.

How are new developments in the Italian aerospace industry impacting Northrop Grumman Italia’s strategy?

Changing supplier-customer relationships require European companies to adjust their business models and targets. The Eurofighter model in which the customer covers all development costs is no longer applicable, and companies must approach the customer with a solution, not just a product or project proposal. In most cases, the development must be self-funded, resulting in lower margins and tough competition. Therefore, Northrop Grumman Italia’s strategy focuses on product development, enlarging its portfolio, and targeting new markets, leveraging on the marketing network and platform of Northrop Grumman Corporation. The company is also developing adjacent products, transferring technology to different applications, and covering lower price ranges to extend its market reach. It is also important to be competitive in terms of cost and performance, as consumer companies such as Samsung and Garmin are attempting to upgrade into higher-margin markets. With the Italian government no longer a significant customer to national companies, they are in constant competition with foreign countries in the wider market.

Where are you focusing your R&D efforts?

Northrop Grumman Italia is always in tune with what the market is looking for and has new ideas to propose. The company is hoping to change its funding model and work with the government and other funding bodies, rather than self-funding every project. Northrop Grumman Italia has realized the need to cater to a wider range of customers, balancing price and accuracy in accordance with applications, where some may not require the same amount of precision and would prefer to pay a lower price. The company also provides ITA-free products, making them easier for customers and end-users to export worldwide.

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