UPDATE 1-US Navy explains plan to scrap DDG-1000 destroyer

(Adds statements from Navy, lawmakers and industry executives)

By Andrea Shalal-Esa

WASHINGTON, July 23 (Reuters) - A U.S. Navy decision to scrap the DDG-1000 destroyer program after just two ships could have "potentially devastating consequences" said Sen. Susan Collins, a Maine Republican whose state includes General Dynamics Corp's (GD.N) Bath Iron Works shipyard.

U.S. Navy Secretary Donald Winter and Chief of Naval Operations Adm. Gary Roughead spent hours with lawmakers on Wednesday explaining their decision.

Collins said Deputy Defense Secretary Gordon England had promised to work with her to "mitigate the impact on Bath Iron Works' work force of the termination of the DDG-1000 program."

Bath Iron Works is building one of the new destroyers, Northrop Grumman Corp (NOC.N) is building the other at its Ingalls shipyard in Pascagoula, Mississippi.

Defense analyst Loren Thompson of the Lexington Institute said the net effect on Northrop and General Dynamics would be minimal since they would likely get more work building older model DDG-51 destroyers.

Lockheed Martin Corp (LMT.N), which builds the Aegis combat system used on the DDG-51 ships, but had lost the contract for the combat system on the DDG-1000 to Raytheon Co (RTN.N), would also benefit, Thompson said.

The Navy has spent almost $10 billion to develop the new stealthy warship over the past 15 years and was due to spend another $19 billion in coming years, according to the Pentagon's latest acquisition report to Congress.