Stevens Defines New Reality at Reuters Aerospace and Defense Summit

Bethesda, Md., 09/08/2010 --

Lockheed Martin Chairman and CEO Bob Stevens participated in the Reuter's Aerospace and Defense Summit on Sept. 7, which is an on-the-record editorial board discussion with editors and reporters on aerospace and defense topics. Media coverage of Mr. Stevens' remarks is reprinted below courtesy of Reuters. Please visit their website for more information on the annual Reuters Aerospace and Defense Summit.

Bob Stevens
REUTERS/Molly Riley

Lockheed says aligned for "new reality"
Andrea Shalal-Esa and Karen Jacobs
Sept. 7, 2010

(Reuters) - Lockheed Martin Corp is well aligned with the Pentagon's priorities as the defense industry braces for a "new reality" shaped by massive deficits, tighter budgets and rapidly changing security threats, Chief Executive Robert Stevens said on Tuesday.

Lockheed, the world's largest defense contractor, expects to reach an agreement with the Pentagon "any day now" for a fourth batch of F-35 fighter jets, and it sees no major obstacles in the way of an agreement, Stevens told the annual Reuters Aerospace and Defense Summit in Washington.

Lockheed is sticking to projections that it will sell 750 F-35 fighter jets to the eight U.S. partners in the project, the world's costliest military acquisition program, despite the global economic downturn.

"I'm quite sure the numbers will vary many times" but the radar-evading family of aircraft remains "the most economical" and is on its way to meeting overseas sales targets, he said.

He said the F-35 fighter program would account for over 20 percent of the company's revenues and profits once the plane reaches full production rates, perhaps in five to seven years.

Stevens, a former Marine and son of a steelworker, said the company was intensely focused on streamlining its business, given the current tighter budget outlook and mounting concerns about the massive U.S. budget deficit.

"We've got to be leaner, we've got to be more focused and disciplined," Stevens told the summit, saying that weapons systems of the future needed to be more flexible to respond to rapidly changing threats.

Stevens said he expected a shift in spending toward more communications systems, command and control equipment, and more adaptable weapons systems such as a new coastal warship that Lockheed is competing to build for the U.S. Navy.

"I think we'll see a shift away from land forces and more resources to naval," Stevens said, citing possible challenges from North Korea, Iran and even China.

"The velocity of global events is accelerating and the volatility of the consequences associated is much higher," Stevens said. "What you need to have are more flexible systems so that those who are at the cutting edge can adapt themselves to meet this new reality."

Lockheed was well positioned for the new environment with its F-35 and F-16 fighter planes, C-130 transport planes, missile defense systems and the steel single-hull coastal warship it is competing with Australia's Austal to build for the Navy.

Stevens said he expected the Navy to pick a winner in that competition this fall, possibly by the beginning of November.

Given the importance of the program to the Navy, which will buy 55 of the ships over coming years, Stevens said it was prudent of the Navy to take its time in making the award.

"It's wise to invest the time now. Our proposal will be updated and submitted soon," Stevens said, calling the Navy's plan for a ship that can be easily reconfigured for different missions "a brilliant approach."

Stevens, who turns 59 on Wednesday, said he had not received a raise in recent years, and the company was taking a broad set of measures to increase productivity and cut costs.

Hundreds of Lockheed executives had responded to a voluntary buyout plan, which will generate "substantial savings" for the company, he said. The deadline for executives to respond is midnight on Tuesday.

The plan, under which Lockheed is offering buyout packages to employees who hold jobs at the directorial and vice presidential level, will cut overhead costs and management layers and give younger workers opportunities to take on broader assignments, Stevens told the summit.

Lockheed has also received "very healthy" expressions of interest in two large units, the Enterprise Integration Group unit and Pacific Architects and Engineers Inc, and hoped to wrap up a deal by the end of the year.

He said Lockheed Martin has the cash needed to make acquisitions in areas of interest, such as cybersecurity, but the company would be "selective" in bidding for assets.


Lockheed CEO Stevens says he learns a thing or two from new generation
Sept. 7, 2010

Lockheed Martin Corp. CEO Robert Stevens, who turns 59 years old tomorrow, says he learns every day from the new generation at the defense company he heads — although he still doesn't IM.

The son of a Pennsylvania steelworker who enlisted in the Marines instead of college, later completing his education on the GI program, says, "I am one of the luckiest people you are going to meet."

And he revels in the different approaches to solving problems that employees from different generations bring to the table.

"I go to leadership training every day," he said at the Reuters Aerospace and Defense Summit.

"And part of the people who train me are the recent college graduates who tell me what their view of the world is. Because it's not only a different view, the way they solve problems is very different than the way people I went to college with solve problems. It's fascinating."

For instance, "their use of technology, the way they communicate with one another, is entirely different," Stevens says, punctuating his comments with hand gestures.

As part of the Baby Boom generation, Stevens says he's used to participating in a lot of meetings. "Today's younger employees, they don't have a lot of meetings. They'll use Instant Messaging, I don't."

"If you ask me in the morning how I'm doing, the full expression from me is probably, ‘fine'," he says.

The generational difference in approach is just fine by him. Stevens says the value of a company like Lockheed "is the ability to look at the world through as many different lenses as you possibly can. Diversity has a real meaning."


Lockheed interested in cybersecurity M&A
Soyoung Kim
Sept. 7, 2010

(Reuters) - Lockheed Martin Corp expects more defense assets to come up for sale in the face of budget pressures and a changing security environment, Chief Executive Officer Robert Stevens said on Tuesday.

Speaking at the Reuters Aerospace and Defense Summit in Washington, Stevens said Lockheed Martin has the cash needed to make acquisitions in areas of interest such as cybersecurity, but the company would be "selective" in bidding for assets.

Stevens said Lockheed Martin does not intend to get into the shipbuilding business and is not interested in the Northrop Grumman's (NOC.N) naval division recently put up for sale.

Lockheed Martin is selling its Enterprise Integration Group unit and Pacific Architects and Engineers Inc business as part of its portfolio review.

Stevens said the company has received "very healthy" expressions of interest from several parties, and the company is making "very good" progress in the sale process.