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Released June 12, 2003

SOUTHERN MISS STUDY AIDS
NORTHROP GRUMMAN'S EXPANSION

LONG BEACH -- Work at The University of Southern Mississippi's Gulf South Economic Research Center (GSERC) is helping promote new economic development on the coast and in the state as a whole.

The center, based at the university's Gulf Park campus, completed a study in March that helped obtain millions of dollars for expansion of one of the Gulf Coast's chief economic powerhouses, Northrop Grumman Ship Systems.

In April, Gov. Ronnie Musgrove approved a bond issue of $48 million to continue a partnership with Northrop Grumman. The funds included in the bond issue are being used to modernize and expand the company's state-owned shipbuilding facilities in Pascagoula.

Before the Mississippi Legislature first approved the bond issue, however, Northrop Grumman enlisted the services of GSERC to evaluate the economic impact of the project.

Gulf South Economic Research Center Director Philip W. Jeffress said economic studies conducted by the center, such as the Northrop Grumman study, are helping to change the way the public views the value of academic research.

"Academics are sometimes accused of an 'ivory tower' existence, engaging in research that few people read about and only a handful of their colleagues appreciate," Jeffress said. "However, lack of a clear application does not dilute the importance of this kind of research, nor does it suggest that conclusions drawn from academic research will never really matter."

Jeffress said in contrast to scholarly research, the Gulf South Economic Research Center engages in practical research that often focuses on local questions or issues requiring timely results for impending decisions.

In the Northrop Grumman Study, for example, the Gulf South Economic Research Center sought to answer two primary questions vital to the project's future: What is the projected economic impact of the project on employment, income and output of state tax revenues in Mississippi; and second, will the additional tax revenues generated by the project be sufficient to cover principal and interest costs incurred by the state over the life of the bonds? GSERC's study concluded that the construction phase of the Northrop Grumman

Project will increase output by about $632 million and boost income by nearly $248 million.

The study also concluded that increased operations will add as many as 350 new engineering and technical specialist jobs for the project that will generate a statewide total of about 740 new jobs, $62 million per year in additional output and more than $28 million per year in added income.

In addition, the project will add another 1,650 new jobs in shipbuilding at Northrop Grumman Ship Systems. That will generate a total increase of nearly $329 million per year in added output, $152 million per year in income and a total increase of 3,100 new jobs statewide.

Thus, the total projected increase of 2,000 new jobs at Northrop Grumman Ship Systems will generate more than 1,840 new jobs in other businesses throughout Mississippi.

Over the course of the next 20 years, the Northrop Grumman expansion is projected to generate more than $294 million in additional tax revenues for Mississippi, creating a surplus of more than $32 million in state tax revenues after all principal and interest on bonds have been paid off.

"The economic impact study compiled by GSERC has played a major role in demonstrating the economic benefits of our expansion program partnership," said Dr. Philip A. Dur, president of Northrop Grumman Ship Systems. "We are grateful for the conscientious efforts and precise analytical abilities displayed by Dr. Jeffress and his team."

Jeffress said the value of GSERC's research is apparent in the number of parties that will benefit from Northrop Grumman's expansion.

"It is certain that Northrop Grumman Ship Systems will benefit as the recipient of the bonds," Jeffress said.

"A more complete answer, however, includes the Mississippi Development Authority, legislative committees and the full legislature, Mississippi taxpayers and those who will gain directly or indirectly from the economic impact of Northrop Grumman's expansion. This study clearly illustrates the value of practical research in support of business and community development."

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April 20, 2004 4:09 PM

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