With increased orders from the U.S. military, Northrop Grumman will spend $2 million this year expanding its Plymouth operations, the company said.

The expansion calls for hiring 60 new workers and converting 7,000 square feet of existing offices into laboratories and testing space for the division that makes and tests precision-guided artillery kits for Virginia-based Northrop Grumman. There is currently about 36,000 square feet of lab space in that building.

The growth in business comes from military contracts won a few years ago by Alliant Techsystems (ATK) and Orbital ATK Inc., said spokesman Jarrod Krull. Northrop Grumman bought Orbital ATK Inc. and its Plymouth operation in June 2018 for about $7.8 billion.

The small guidance kits that ATK originally developed and tested on a pilot basis for the military were created to help the Army convert its inventory of standard artillery shells into smart, precision-guided artillery shells.

Each of the new electronic kits contained a GPS guidance system and could be screwed into the head of a regular artillery shell. Once equipped with the new smart kit, each 155-millimeter artillery shell could then steer within 10 meters of an intended target — an accuracy range that has improved from within 200 meters of a target, Krull said.

About 20,000 of these electronic guidance kits have been made or tested for the military since roughly 2004, “and we expect that number to go up,” Krull said. The expected growth is driving the expansion.

The Plymouth building now houses 720 Northrop Grumman workers. It is “at capacity” and can no longer accommodate growth, Krull said.

About 100 to 150 office workers in the building will be relocated to a new site that will be nearby. The location has not been finalized. The move and the lease at the new location could cost an additional $500,000 a year, Krull said.

Relocating office workers could begin as soon as this summer. Renovations at the current site could be finished by year’s end, Krull said.

The current site will be converted into high-tech laboratories where the precision-guided artillery kits undergo sophisticated tests to ensure they can withstand severe temperatures, vibrations, wind and shocks. Tests involve putting kit electronics through temperature extremes ranging from minus-30 degrees to above 110 degrees. Other equipment performs drop tests and measures how accurately electronics perform after impact.

No explosives are used at the test facility, Krull said.

The renovations should alleviate cramped conditions and speed up testing, officials said, adding that they plan to add the 60 new workers over three years.

The state of Minnesota will assist the expansion project with a $600,000 loan from the Minnesota Investment Fund. The state also promised a $700,000 rebate grant from the state’s Job Creation Fund. The rebate will be received only if the company delivers on its investment and hiring promises.

“We are pleased that Northrop Grumman is choosing to continue its growth in Plymouth. The company’s decision is a testament to the strength of Minnesota’s economy and the value of our workforce,” said Steve Grove, commissioner of the state Department of Employment and Economic Development, in a statement.