Top Priorities for New Lockheed CEO: Fix F-35, Boost International Sales

By Sandra I. Erwin
Just three days after Lockheed Martin Corp. announced that Marillyn A. Hewson will become the company's next CEO, she told Wall Street analysts her immediate attention will be on the F-35 Joint Strike Fighter and on expanding the firm's international sales.
"My number-one priority is F-35," Hewson said Nov. 12 during a conference call with analysts. "That will be a challenge for us and a priority for me personally for years to come."
Hewson, currently executive vice president of the company's electronics systems unit, will be taking over Lockheed Martin Jan. 1 when CEO Robert J. Stevens is scheduled to retire.
Her appointment was announced Nov. 9 following the resignation of president and COO Christopher E. Kubasik, who had been slated to replace Stevens but was asked to resign after an ethics investigation confirmed that he had a close personal relationship with a subordinate employee. His actions violated the company's code of ethics and business conduct, Stevens said.
Stevens sought to assure investors during the Nov. 12 call that the unexpected management shakeup would not affect the company's operations or financial performance.
Hewson faces a bumpy road ahead as she tries to get the F-35 program on track following years of restructurings, cost overruns and schedule delays. Defense Department officials have been vocal about their disappointment in the F-35, the Pentagon's largest procurement program valued at nearly $400 billion. Pentagon acquisition chief Frank Kendall described F-35 earlier this year as a case of "acquisition malpractice." Lockheed Martin executives have been seeking ways to reduce costs as they negotiate the next batch of low-rate production aircraft that the Pentagon will be buying next year.
Hewson will be taking over the nation's largest defense contractor at a time when military spending is headed for a downturn. She made no bones about her intention to broaden Lockheed's non-U.S. customer base as a hedge against cutbacks in U.S. military spending.
"Our strategy is to grow domestically and internationally," she said. She cited missile defense, F-35, fighter programs [such as F-16], airlift, cyber, energy and military satellites as Lockheed's core markets for the foreseeable future.
The company has been preparing for Pentagon budget cuts, which are expected to continue for the next five to seven years, she said. "We've seen this coming. ... We are not going to see a major change, we've been proactive in recent years to address cost structure and make products more affordable," Hewson said. "We have a strong portfolio, we are constantly listening to our customers and adjusting our portfolio. ... We'll weather this and we'll excel in this environment."
Stevens said that despite the "difficult and sad situation" surrounding the events that led to Kubasik's resignation, he was encouraged by the way the process unfolded during the ethics investigation.
"There was improper conduct at the highest level of the company," Stevens said. "And someone came forward believing in the process without fear of reprisal. ... That is rare today."
Photo Credit: Navy courtesy of Lockheed Martin

Topics: Aviation, Joint Strike Fighter, Business Trends, International

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