Workers at Northrop Grumman Corp.’s Ingalls shipyard in Pascagoula, Miss. rejected a proposed labor contract for the second time, forcing a strike and halting production at one of the nation’s largest shipyards, the Pascagoula Metal Trades Council said

The compensation offered in the latest version of the contract didn’t offset cost-of-living increases caused by Hurricane Katrina over the last few years, the union said.

Members of the union, which represents 11 craft unions and more than 6,700 workers, have been working under a contract extension since their previous agreement expired on March 4.

The last strike at Ingalls yard was in 1999. Employees at Northrop’s other shipbuilding facilities in Gulfport, Miss., New Orleans and Tallulah, La., all have new labor agreements. Northrop is the biggest private-sector employer in the state of Mississippi, and the nation’s largest shipbuilder.

Shares in the Los Angeles-based defense contractor rose $1.05 to $73.16 in afternoon trading Thursday on the New York Stock Exchange.