December 31, 2012
Credit: Credit: Lockheed Martin
AW&ST: Is any executive really ready for the kind of position you're going to step into on Jan. 1? It came like a bolt from the blue.
Hewson: Let me give you a framework of how well I have been prepared. January 31st will be my 30th anniversary with Lockheed Martin. I've had 19 different leadership positions, worked in three of the four business areas and had six years at the corporate office. I have been running the largest business area for the corporation—Electronic Systems—which has all the elements of a chief executive, except that of running a public company. So I've been directly engaged in formulating the strategy for the company with [Chairman and CEO] Bob Stevens and [CFO] Bruce Tanner and the executive leadership team. In April, when I was named to move into the president-COO role and Chris was named to be CEO, I was transitioning to help him be the most successful CEO he could be. So I had been thinking since April about what he needed to do to get ready. We just adjusted the transition process a bit in this last month. I'm ready.
The defense industry had a good run during Bob Stevens's tenure as CEO. You're taking over just as it seems the market is going south. That has got to be daunting.
I look at our portfolio and even with downturns there is still very strong demand for the products and services that we provide: tactical aircraft, air mobility, rotary wing, defense and commercial satellites, the Orion space capsule, cybersecurity, irregular warfare and ground vehicles. I accept that we may not see the same trajectory of growth in defense budgets in certain regions of the world, including the U.S., but there are regions where defense budgets are increasing. Right now 17 percent of our sales are international, and our intent is to grow our non-U.S. business to 20 percent in the next few years. We see a lot of growth in the Middle East and Asia- Pacific, and we still have strong footprints in the U.K. and Australia. We will continue to grow as a company through this cycle of business.
Is that 20-percent goal conservative or a stretch?
I plan to exceed it. But remember that there is still domestic demand for our products and services. When you look at the elements of the new defense strategy that was rolled out by Secretary [Leon] Panetta, it is right in line with our portfolio and what we provide. The F-35 is recapitalizing a lot of other fighter programs, but it also brings unique capabilities for the U.S. and our international partners. It will be a big element for us, both domestically and internationally.
On the subject of the F-35, it is about $21 billion over budget and as much as eight years behind schedule.
It is the largest and probably the most complex development program ever. The flight-test program is going extremely well. We are ramping up production, and we're knocking down the inevitable technical challenges, including the software. Those are all things that are not insurmountable. We are also driving down the cost of the program as we move down the learning curve.
Where are you on the F-35 software?