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The Strategist Six: Marillyn Hewson

Posted By on March 2, 2017 @ 11:00

Marillyn A. Hewson is Chairman, President and Chief Executive Officer of Lockheed Martin Corporation.

Welcome to The Strategist Six, a feature that provides a glimpse into the thinking of prominent academics, analysts, government officials, military officers, reporters and interesting individuals from around the world.

1. You recently gave a personal commitment to President Trump to drive the cost of the F-35 down. How will Lockheed Martin achieve that?

President Trump is going to spend a lot of money on defence. The F-35 is the largest project in the Department of Defense, so his attention was appropriate. He really did accelerate the negotiation for the most current batch of F-35’s and sharpened our focus on making sure we were driving the cost down. So we were able to get a negotiation done in very short order with the US government. From February we settled on Lot 10 (LRIP 10) which is the next batch of aircraft (90) and we brought the price down significantly for those aircraft—about 8% for the air vehicle which is Lockheed Martin’s responsibility. Last year we produced 46 aircraft; this year we are going to do 66 and then continue to ramp up. Some of the cost reduction we achieve through volume and through the learning-curve process. But we also focused on improvements in the manufacturing process and the materials we use. So those are some of the ways we are driving the cost down.

2. Will Lockheed Martin’s cost review have an impact on the price that Australia will pay for its F-35s? What do you estimate will be the average fly-away cost of Australia’s F-35s?

The most recent lot we negotiated (LRIP 10) come in at US$94.6 million per aircraft (AU$123 million) for the F-35A and that’s the version Australia is purchasing. Australia will get the benefit of that cost reduction and I think there are eight aircraft in that lot that are Australian aircraft. And then we are going to continue to ramp up that program and drive that cost down. In fact we are focused on a US$80–85 million per aircraft by 2020. When we drive the price of that aircraft down that savings benefit also comes to the Australian government.

3. There’s still plenty of debate about the all-round capabilities of the F-35 and talk of the ‘Advanced Super Hornet’ as a competitive alternative to the aircraft. How confident are you that the F-35 will maintain a clear technological and performance edge over any potential rivals in the market place?

As of today it is the world’s most technologically advanced fighter—unmatched in terms of its capability whether it’s stealth, speed, flexibility and integrated sensor fusion. How will we keep it that way? We will continue to upgrade it over time just as we have done with other aircraft that we have produced. We will continue to upgrade the software as the threats change and keep it on the leading edge.

4. Lockheed Martin now has a much broader footprint in Australia across its key business sectors and you have recently established the STELaRLab, a multidisciplinary R&D facility in Melbourne. How important is Australia in the context of the organisation’s global strategy?

Australia is very important to Lockheed Martin as a customer and partner for us for the long term. We have been here over 70 years and we have been engaged in a range of defence capabilities we have provided to Australia from C-130J’s to F-35’s to radars to training for pilots. The STELaRLab which we are opening in Melbourne—Australia is the first country where we have opened a multi-disciplinary research lab like that—was a very competitive process. We chose Australia because it’s an important partner and because the Australian government has a focus on science and innovation and on bringing the best capabilities to the defence industry. You also have very skilled people coming out of your universities— over the next three years we’re going to hire about 20 PhD graduates and we have invested AU$13 million in that lab. In the broader sense for the company most of our growth is outside the US—last year about 27% of our sales were outside the US. One of our important countries in that growth is Australia where we want to be a partner for many, many years.

5. You are one of the world’s highest profile CEOs. What would you say to young Australian women who might aspire to lead a major global business like Lockheed Martin?

First of all I would say that they can do it. So they should get out of their comfort zone and see running a large corporation as an aspiration. I mentor a lot of young girls and women because I think it’s important as a role model to tell them that they can have that opportunity. What I say is perform the best you can on today’s job—make sure you are working hard but when opportunities come along, get out of your comfort zone and take those opportunities. Building that experience is what puts you in a position to be ready for the next job. In my career I was often the only woman in the room. Now we have a strong pipeline of women coming up through Lockheed Martin—24% of our employees are women and 21% of our leaders are women. I would encourage young women to look at technical degrees if they want to work in a leading technology company like Lockheed Martin.

6. There’s a lot of debate in the US about the country’s economic outlook and the Trump administration’s economic strategy. How do you personally view America’s prospects in the medium term?

I think our economic growth is going to increase. What I see is a focus on reducing regulations which has been a damper on growth; on looking at tax reform which again has held back investment; getting more stability in defence and government budgets so that people can plan and invest. When you have stability and you eliminate regulations that impact small, medium and large businesses, and you look at how to make us more competitive in the global market place with tax reform, that’s going to be an impetus for growth. Moreover I think that consumers are more confident about the future so they are going to spend. I am personally very optimistic about the United States’ future.

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[1] LRIP 10: http://www.defensenews.com/articles/pentagon-lockheed-sign-f-35-contract-for-90-jets

[2] STELaRLab : http://www.lockheedmartin.com.au/au/what-we-do/stelarlab-research-development-operations-centre.html