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ianstone
09-07-2010, 05:38 PM
Lockheed says aligned for "new reality"
Robots to change face of warfare (http://www.reuters.com/news/video/story?videoId=153176497&videoChannel=2602) Mon, Sep 6 2010


(http://www.reuters.com/news/video/story?videoId=152765239&videoChannel=2602)







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http://www.reuters.com/resources/r/?m=02&d=20100907&t=2&i=198731019&w=460&fh=&fw=&ll=&pl=&r=2010-09-07T150821Z_01_BTRE686163S00_RTROPTP_0_AERO-ARMS-SUMMIT















Robert Stevens, CEO Lockheed Martin Corp., listens to a question during the Reuters Aerospace and Defense Summit 2010 in Washington September 7, 2010.
Credit: Reuters/Molly Riley





By Andrea Shalal-Esa (http://blogs.reuters.com/search/journalist.php?edition=us&n=andrea.shalal.esa&) and Karen Jacobs (http://blogs.reuters.com/search/journalist.php?edition=us&n=karen.jacobs&)
WASHINGTON | Tue Sep 7, 2010 2:47pm EDT

WASHINGTON (Reuters) - Lockheed Martin Corp (LMT.N (http://www.reuters.com/finance/stocks/overview?symbol=LMT.N)) 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 (http://www.reuters.com/summit/AerospaceandDefense10) 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 reachs 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 (http://www.reuters.com/places/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 (ASB.AX (http://www.reuters.com/finance/stocks/overview?symbol=ASB.AX)) 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.