August 05, 2013
Credit: Rockwell Collins
Kelly Ortberg became CEO of Rockwell Collins on Aug. 1, succeeding Clay Jones, who had led the aviation electronics and communications company since it was spun off in 2001. Ortberg met with Aviation Week editors to talk about how he plans to guide Iowa-based Rockwell Collins through the downturn in U.S. defense spending and capitalize on a growing commercial aviation market.
AW&ST: Rockwell Collins has been run by one CEO, Clay Jones, since it was spun off as an independent company in 2001. How are you going to make your imprint?
Ortberg: You'll see me establish myself with a little bit different personality, but I don't think you'll see a fundamental shift in the strategy of the company. I'm an engineer and Clay's not, so I come at things differently, though in the end we get to the same place. Clay has been a great ambassador and representative of our company and our industry, but he hasn't done everything by himself. We've got a very strong leadership team.
So, how should we view this change in management?
I'm billing this as a full-steam-ahead transition, not a course correction. I've been with Rockwell Collins for 26 years, so I'm no newcomer. I've run both our government and commercial organizations. I come at this very well schooled in the strategies of our business. Many of the growth items are programs or technologies that I've been in the middle of driving. My first priority as I take over is to accelerate growth. The credit crisis had a major impact on business aviation, and we moved right from that to sequestration and its effects on the Defense Department budget. That left us with about five years of no top-line growth. We know we are in cyclical markets, but we can't continue to be a vibrant company with no top-line growth. You can't cut your way to prosperity.
How is Rockwell Collins's split between commercial and defense sales changing?
When we spun out as an independent company in 2001 we were 60% commercial. The pendulum swung back to 60% government four years ago. This year we'll be about 50-50. We estimate that with the recovery of the commercial market accelerating, we'll move to 56% commercial in five years. But I believe that the need for a strong defense is always going to be there. There are still a lot of opportunities.
Then how do you view the near-term in defense?
We believe sequestration is here to stay. This year, in our guidance to investors, we estimated it would [cause] $120 million in lost revenue. We'll do the same for next year. I see nothing that is going to drive a grand bargain and make this go away. In a strange way, I'm almost to the point where I'd rather get to the bottom quickly. The uncertainty is what is more difficult than the actual cutting of budgets.