Lockheed Martin CEO Marillyn Hewson Discusses Growth Strategy at Annual Media Day
Lockheed Martin Chairman, President and Chief Executive Officer Marillyn Hewson shared the corporation’s business growth strategy during the annual Media Day event.
Hewson stated that LM’s product, technology and innovation portfolio are well aligned with the challenges which its customers are currently being confronted with. “The global landscape is changing faster every day on a political, economical, technical, social and cultural level creating the most complex environment we’ve ever seen so far” according to Hewson.
The evolving global power dynamics
In the first part of her speech, Ms. Hewson gave important clues about evolving global power dynamics as well as Lockheed Martin’s upcoming restructuring.
“This is a world where developing nations, rogue nations, non-state groups, and even individuals are more and more able to influence global events. Vast sums of money can cross the world in a keystroke. In such a world, strength, flexibility, and adaptability are at a premium. We must be innovative and agile to keep up with these evolving challenges and emerging threats. At LM we’re delivering revolutionary systems that meet this imperative. The F-35 is a clear example; it’s the stealthiest, smartest, and most advanced aircraft in history. In the last year we’ve come significantly closer to making the future reality. For example, in 2014 we’ve met our production target of 36 aircraft and this year we’ll deliver more units. More specific the F-35 C variant completed its first phase of sea trials – ahead of schedule- meeting 100 % of the threshold requirements (also conducting night operations). Last month the Marine Corps received its first F-35 C carrier adding it to its growing fleet of F-35Bs (the STOVL model). Another example is the Littoral Combat Ship. Our first two ships demonstrated their value during a crisis. The USS Freedom delivered supplies at the typhoon-ravaged Philippines and the USS Fort Worth provided support for the search and rescue for the tragedy of flight AirAsia 8501. We look forward to delivering two more ships later this year. Furthermore we look forward to the new Frigate configuration. Several of the options we’ve proposed will increase the survivability and lethality of the current design. Today we offer a full range of integrated air and missile defense solutions. For example we’ve delivered more than 2,000 Patriot Advanced Capability-3 interceptors (PAC-3) since the program started. Today, PAC-3 is in the inventory of 6 nations and we’re on contact with 2 more. And there’s our fully integrated THAAD system (Terminal High Altitude Area Defense): a 100 % mission success in flight tests. The U.S. Army’s first operational THAAD system has been in service in Guam for nearly two years. In addition to the U.S our expanded Aegis systems are supporting the missile defense needs of several international customers throughout Europe, Asia and the Middle East. Our MEADS program (Medium Extended Air Defense System) is a candidate for the national defense system of a number of European countries, including Germany and Italy. In 2014 we met our goal of achieving 20 % of total sales outside the U.S. and over 25 % of our backlog is from international orders. We expect these number wills continue to grow.to meet the increasing demand we took a number of steps e.g. opening new offices in Canada, The U.K., Israel, Qatar and the U.A.E. As we continue to grow our business internationally, we will pursue opportunities to expand our presence in grow markets in order to provide the close partnership our customers are looking for” Ms.Hewson said
The Digital Technology
Ms. Henson mentioned that this second trend has created huge opportunities but also gave Lockheed Martin unprecedented risks. “Sophisticated analytics are helping us to predict everything from stock market trends to the next disease outbreak. The wide demand for smart phones is estimated to grow 6 times over the next six years. Mobile data traffic is estimated to increase over 11 times in five years. Much of that demand will come from developing nations fueling their economies with smart phones and digital solutions. This rise in digital demand created an increasing need for capacity and satellite systems. The societies’ increasing dependence on digital networks has made the world more vulnerable to digital disruptions. For example last year it was estimated that hackers had accessed personal information from almost half of all American adults. Unnecessary to say they pose an equal threat to our national security. A -recent- quote from the Pentagon “Cyber adversaries have become as serious a threat to U.S. military forces as the air, sea, undersea and land threats represented in operational testing for decades”. LM has been addressing this threat for quite some time; given our line of work we’re often a target of coordinated, advanced and persistent threats (we faced 50 of these campaigns in 2014 alone and that number will expect to grow). We’ve made significant investments to protect ourselves, our information, our war fighters and our shareholders. As of this moment we are the cyber security provider for more than 200 customers worldwide supporting critical infrastructure for energy, chemical, financial and pharmaceutical industries. We have over 12 years of intelligence about these threats and we use it to predict, identify, and respond to them for our customers.” she added.
She enlightened that Due to the growing demand of data traffic Lockheed Martin developed its A2100 satellite system (a backbone of global satellite communications –carrying internet, TV, and secure communications around the world). This system reduces the number of parts and also streamlines its production so its customers can get it into orbit more quickly and at a fraction of the costs (25 % faster production and at 35 % lower costs).
Lockheed Martin has teamed up with the FAA for the En Route Automation Modernization project (ERAM) to upgrade the 40 year old digital infrastructure of the National Airspace System. It’s on track to be operational by the spring of 2015.
In conclusion, from cyber security to commercial space, from oil and gas industries to the FAA, Lockheed Martin has the technology, the capability, and the experience to secure an increasingly connected world.
The Increasing global population
She also underlined that the third trend is the increasing population of our planet. “As a consequence of this growth we see an increase of resource scarcity and climate change and these elements are reinforcing each other. A higher population means more mouth to fill and an increase in demand for energy, land and water. These increasing demands have an accelerating effect on climate change, in fact 2014 is as we know the hottest year in human history” she said. As a result “The competition for scarce resources, such as food, water, and energy will likely increase tensions within and between states and could lead to more localized or regional conflicts, or exacerbate government instability” according to the Director of National Intelligence.
For over 50 years LM has been helping their customers monitor and analyze our changing climate and weather patterns with advanced environmental satellite systems. So far Lockheed Martin produced over 40 satellites for the U.S. Air Force’s Defense Meteorological Satellite Program and launched itsr latest model (the DSMP-19) just last year. This model is equipped with technology to collect geophysical information in all weather conditions.
Currently Lockheed Martin is building the GOES-R Satellite (Geostationary Operational Environmental Satellite R series) for the U.S. National Oceanic and Atmospheric Administration, or NOAA. This model will improve U.S. weather fore casting including improved tornado warning times and enhanced hurricane direction and landfall projections. The satellite is scheduled to launch in early 2016. Another area where Lockheed Martin is breaking ground is assisting farmers with precision mapping to maximize crop growth while reducing waste of vital and costly fuel, seed, and supplies. The agricultural industry uses GPS technology to guide tractors within inches of their desired locations when planting, watering, fertilizing, and harvesting crops.
As far as the increasing global energy demand is concerned Lockheed Martin has made significant progress in the search for commercial viability of new energy technologies such as tidal power generation and Ocean Thermal Energy Conversion (OTEC). Regarding OTEC, this year LM starts detailed design and pre-construction for the largest OTEC power plant off the coast of Southern China. This 10 MW plant (designed by LM and build by Reignwood) will provide 100 % of the power needed for a green resort.
In addition to resource pressure and climate change, population growth brings demands for more innovative ways to keep people healthy. Regarding this matter genomics is a promising technology. Last year we began a partnership with Illumina, the global leader in gene sequencing. By collecting genomic data across large populations, public health and wellness around the world can improve and at the same time reduce the costs of health care.
The worldwide economic uncertainties
Ms. Henson stated that Lockheed Martin has taken a number of steps to manage the economic uncertainty our customers are facing. “At times of tight budgets, in the U.S. and around the world, we have to make sure every dollar our customer spends goes farther and spends smarter. We know that 70 % of weapons system cost is in sustainment and the best way to manage sustainment costs is to build into the systems’ design. The F-35 is a perfect example. We’ve designed the F-35 sustainment system simultaneous with the aircraft. We are currently demonstrating the F-35’s global sustainment system by supporting 120 U.S and allied aircraft today. And that number is growing every month. We embrace the DoD’s “Blueprint for affordability”. The goal is to reduce the cost of a F-35A fifth generation fighter to the equivalent of today’s fourth generation fighter. We’re applying that same focus across all of our programs. LM was named as a Tier One contractor by every branch of the U.S. Military Services for our on-time and on-budget contract performance. Our business areas were named nine times on the Tier One list –more than any other company. As a technology leader we know that our future depends on our continued investment in innovation and scientific technology. We increased our independent R&D investment for the third consecutive year in 2014 (to more than US$ 750 mln) and we will increase it again this year” she said.
We are proud to support NASA on their journey to Mars. We took a huge leap forward in December with the successful first test flight of the Orion deep-space capsule, the next-generation space craft designed to transport humans to Mars and bring them safely back home. The test data we’ve received so far looks great. This test has demonstrated that Orion is the most reliable, safe, and affordable means to return humans to the moon and someday reach Mars and beyond.
All these achievements are a tribute to the hard work and dedication of the 112,000 man and woman working at LM.
