Marillyn A. Hewson, Chairman, President and CEO, Lockheed Martin Corporation

[Music] we're very pleased tonight to have Marilyn Houston who is the president chairman and CEO of Lockheed Martin as I think everybody in this area knows Lockheed Martin is based in Bethesda and as a result of a merger of Lockheed and Martin Marietta around 1995 Lockheed Martin is a company of about a hundred thousand employees a market capitalization of about 98 billion dollars and revenue of about 50 billion dollars Maryland is I was born in Kansas grew up largely in Alabama graduate of the University of Alabama with two degrees from University of Alabama joined Lockheed at the time about 35 years ago and has had 22 different leadership positions as she rose up to become in January of 2013 the chairman and the CEO and chief executive officer so very impressive career and thank you very much for doing this now let me ask you the beginning since you've been that the CEO the stock has gone up roughly 330 percent the market capitalization is up roughly two hundred and eighty percent another company that you compete with General Dynamics has a female CEO as well and their stock is up about 250 percent since she became the CEO that's Phoebe novakovic do you think that women can run defense companies better than men or they can run all companies better than [Applause] I'm just looking at the audience how many women are out there clapping but I would just say David it's a team sport isn't it isn't all about me on the performance of our company but I'm really proud about what our team has been able to accomplish over the last five six years I'm in my sixth year as CEO so when you walk into the shareholders meetings so they give you a standing ovation that must be pretty happy we had some happy shareholders yes but they always you know they always keep a bead on us to make sure that we're constantly creating value so it's it's what have you done for me lately so okay during the transition of the president the United States not long ago Donald Trump set out a tweet saying that your biggest product the f-35 was too expensive and I think you were out of the country at the time I was I was in Israel where we were delivering their first to at 35 so what was your reaction to the president's States tweeting that you were charging the US government too much did you call him or did you have any warning this was coming well first of all we needed to get those aircraft delivered and you know one of the most interesting thing was that Prime Minister Netanyahu you had here this morning to speak he was at that event and he asked me about the fact that our new president was going to get a better price on those aircraft and you know maybe you should get a rebate on the ones that we were delivering so that presented a bit of a challenge but you know we you know what was important was to recognize what our president-elect was communicating I mean he's trying to communicate to the American people that he was gonna be that he was gonna get good deals on the equipment that he purchased and and that he was gonna increase defense spending but he's gonna make sure that he spent the taxpayers dollar wisely and so we I personally engaged my team engaged to have a chance to have a dialogue with him I was that the first time you ever met him or had you known him before no I had never known him before but I had an opportunity with him this was before he was president so this was in December before he came in to his role in January so I I went to Mara Lago I went to the Tower right I just started the dialogue because what's important was for him for us to be able to answer his questions for him to understand the capabilities that that was going to bring our men and women in uniform how important it was and then what we were doing to drive the price down so you did give him a little discount we drove the price down yes we got you know we got the deal done and we did it in accelerated fashion and we and he now since he's been president defense budgets have been going up and recently the budget caps have been lifted even further so the record the defense budget is now higher than it's ever been I think over when you count everything over seven hundred billion dollars annually so is this a great time to be a defense company CEO because you got all these big budgets and what could be better than being a defense contractor right now well let me just put it in perspective for you we're certainly encouraged by the fact that that our country is now spending more on defense but if you just sort of look back over the last few years it's we're playing catch-up in a large way and that is impacted not not only an industry but it's impacted our customers I mean if you look at the Department of Defense and the challenges that they've had with that with the budget caps and and the cut back on spending the modernization the recapitalization of equipment has not been at the level it needs to be so today we're in a catch-up mode in my view I mean certainly want to maintain our technological superiority over our adversaries or over the potential adversaries what it's been for industry is that we managed through that downturn just like any well-managed company but we didn't invest at the level that we would would have in terms of innovation in terms of other areas of the business because we were in a down cycle now with the up cycle it's time for us to really bring forth the innovations and and continue to spend the efforts that we had to align with the priorities of our customers rightly or wrongly many people in the public say what defense contractors are too expensive and they don't have the the best image you might say in some circles maybe not in circle as you travel one but some circles people would say defense companies are not the most popular types of companies you think that's an unfair image and why do you think that image exists in parts of the country well I'll start by saying I think unfortunately that image is is something that we see for large corporations and large institutions in general today and it's something that we face and and have a dialogue around of how do we communicate to the American people what large corporations and what large institutions do and from a defense contractors standpoint what what's different for us is that things are much more transparent you know we're no different than another fortune 500 or fortune 100 company that's engaged in the activities but we're investing in the communities where we work and live we're spending a lot on philanthropy we're bringing a lot of economic growth I mean you consider you mentioned our 51 billion dollars in sales you think about the jobs we the jobs and the and all of that that it does for the economy and what we invest in STEM education so that's important so to be the CEO of a major defense company you're the largest defense contractor United States government has right so do you need a security clearance and how long does it take to get one of those well you know sixty thousand of our employees have security clearances so it's a very important element of our business I personally have to have certain we have sensitive and classified information that I need to be briefed on so I have the appropriate clearance associated with that but so it's you know it's an important element of our business the work that we do and we have to in particularly have to have US citizens in a large measure working on those projects so let me talk about your background because I don't think it's as well-known as I think it should be because it's an incredible story that you know you haven't advertised particularly but you grew up in Kansas and your father died when you were nine years old and you had four siblings and out of your mother's support five children father died when the kids are all very young and he had been not a wealthy man so what was it like when your father died and your mother said we got a scrimp a bit well it was tough frankly I mean my father was he was with the department the army and my mother was the at-home mom with five children and we were actually in Alaska he had been moved to Fort Richardson Alaska at the time when he had a sudden heart attack and died so I would give him a lot of credit and my parents because they had insurance that paid for the house and car in Kansas so we moved right back to Kansas integrated back into our community there and made our way but frankly it was a it knocked the props out of you know what was we were we were not you know we were average family but set us back a lot but I give great credit to my mother who raised five children on her own and she just passed away a couple years ago at 97 so I mean incredibly what she had she was from Alabama she was from Alabama but she taught us the value of a dollar you know we had to learn how to economize a very young age she'd send us in to pay the power bill the electric bill she just got her kids out said you've got to learn how to do these things because you've got to be taught me to be very self-reliant I would say well I was told that she used to say to you go to the grocery store here's five dollars and bring back seven dollars of groceries yes that's true that's very true learn how to economize so I learned early out of economize yes okay so you went to University of Alabama and did you get a scholarship and you didn't have to work or do you have to work to get through college oh no I didn't have a scholarship I worked nights I worked on what's called the graveyard shift so to speak from 1197 in the morning and then I went to class from 8:00 to 1:00 or 2:00 and then I'd sleep unless I had a date and then I'd go right back to work and without sleeping because you can do that when you're 18 or 19 years old but yes I work full-time paid my own way through school finished in three and a half years and and you know you do what you do what you have to do so you graduated and you graduated in 1977 and then you've got a master's degree at University of Alabama as well and graduate in 1979 so after you graduated did you say I want to be the CEO of Lockheed Martin or what did you say no I started looking for a job and I took a job as an economist here in Washington with the virile labor statistics out of out of college they were in the midst of redu and the producer price index it was a good job for a grad student to come in and so I actually started my career here four years later I decided you know we went at about four or five years with the government we look for the next position and I and I interviewed several companies one of which was Lockheed in Marietta Georgia and started there as a senior industrial engineer so have you ever running that any people from the Bureau of Labor Statistics who you know you were working for in those days and now you're the CEO of Lockheed Martin have you ever called you for a job or anything since then or no but I do hear from you now and then you know this era of social media and now and then I'll get an email from somebody or I might run into somebody in the local area that I worked with that was many years ago and think about it I've been a lackey 35 years so that was a long time ago but they all say they knew you were gonna be successful they always say that so when you went to Marietta Georgia you worked your way up and as I said earlier you had I think 22 different leadership positions so you must have been moving around a lot well I actually was in Marietta for about 13 years I 18 months and I was promoted to supervisor and industrial engineering and then about the two-year mark I was put on a general management development program and great credit to a sponsor that that he put me forward for the program so I spent two years rotating around the company and at the end of the two years I was a manager over all of our production estimating and budgets now one point your husband was unemployed and he got a job interview with a company and what company was that hey you surprised me a bit he his company went out of business and so he was out looking for a job we had a five month old baby so we were very much hoping he'd find a job and it was a tough labor market at the time but he came home one day and he said okay I got a job and I said where and he said sorry I said what why why my company you know that it just turned out he went to work in the finance department we didn't really cross paths I was in I was running industrial engineering by that time but it's interesting for about five years he retired from Lockheed after five years so you have given him a lot of credit for what you've been able to achieve because you might describe after he retired he took on the role that you know many people would say a woman might have normally taken under the life and he took on that traditional role is that fair to say yes I say he retired I mean our kids were three and six two boys and we moved from Marietta Georgia to Fort Worth Texas because my job moved us and so at that time we you know you know how stressful it is to have a couple of young children at home and I said why don't we try you working from home for a year and we just never changed the model so he became the at-home dad you you know he was the coach he was a scout leader he was the went on the field trips and he managed that because I traveled a lot in my job and it we were maybe a new age family back then and the way that we worked but it worked for us and today our kids are in their 20s and they're off doing their thing and he's you but when I said he retired he basically was that five remark he got he got a retirement check from Lockheed Martin not long ago so so he's five years right so I guess he's happy with the shareholder performance as well yes he is so let's talk a moment about the product I mentioned earlier their fighter jets now I've known for a long time there's an f-14 f15 f-18 there was an f-22 and then you'd come up with something called the f-35 what happened between 22 and 35 well the fact is that aircraft are not numbered by Lockheed Martin I mean they're the US government determines what what the number is so an F standing for a fight or a B for a bomb or you know that the the terminology is kind of general and and usually it is sequential we had we won the contract with with our 35 which was was the experimental you know you named him with an x-ray why if they were experimental or a prototype so we had named our offering in this competition but when they announced the winner Lockheed was the winner and the secretary Air Force said the f-35 and we were all shocked because we thought it was gonna be the f23 so once he named it that's what number it became you didn't want to tell him he made a mistake I guess he seems aware of the contract but so in the history of our country this is the biggest defense contract ever tens of billions of dollars I assume why is it cost that much to make these planes and what's so great about this plane what's so unique about the f-35 well first of all you know when you put it in perspective I mean today the last lot that we negotiated the conventional basic aircraft there's three variants but the f-35 a which is your conventional variant of the aircraft was priced at ninety four point three million dollars and we're on a path to drive that down to eighty million dollars by 2020 think about that you know you think about if you fly a maybe fly a Gulfstream or something like I think about what you pay for that and think about think about the most sophisticated jet fighter in the world that might cost eighty million dollars I mean that's pretty remarkable in my mind it is it is the most advanced fighter in the world it is stealth it has sensor fusion and not only is it you know a game-changer in terms of providing air superiority but it also can communicate with all assets on the battlefield and makes them better so it is basically a force multiplier it's a fabulous aircraft and I don't have to tell you that talk to some of the pilots that fly it well the unique thing about the plane I thought initially was it was supposed to be available for the Air Force the Navy and the Marine so it was a fighter pilot that would be fighter plane to be used for all of them that was unique and does it work for all the services and each of them use that yes absolutely as I said there's three versions so you have 35 days with US Air Force flies and a lot of our allies and partners around the world fly that the B is the is the Marine Corps version which is the short takeoff landing version and then the C is a navy version which is a carrier version so suppose a foreign government calls you up and says you know we'd liked a couple of those f-35s are you allowed to make it for them well you know that it's a government-to-government relationship we don't we don't sell direct to any country and the program was started out with eight international partners who put money in upfront for the development and helped with the requirements so that you get the economies of scale the economies of commonality you can interoperate together with those countries we've had some other countries join in so Israel South Korea and Japan or more security cooperation partners there are other countries around the world that are very interested in it like Belgium and Finland and Canada and others that haven't signed up yet for the aircraft but that is not a decision by Lockheed Martin to seal that aircraft there's really a technology release decision on the part of the US government now one of the your other products is a helicopter you bought sikorsky aircraft or helicopter from United Technologies why did you buy it and are they making the marine one which is the president's helicopter and how much does that cost here in - the prices aren't I was trying to get him I'm always negotiating for a good deal okay well first of all yes we bought Sikorsky it's been about two years ago that we purchased the company it was a great acquisition for us they're a natural fit and it was Sikorsky was a company that we were very interested in for a number of years we've been doing business with them for over 40 years for the image 60 Romeo helicopter and just you know our mission systems and their helicopters and so when the opportunity came up we took the opportunity to buy the company great integration into our company it brings a Blackhawk helicopter it brings a ch-53 KA helicopter for the Marine Corps and as you mentioned the marine one which is as a base is BAE the s-92 are our commercial version which is called the VH 92 and I will I'm happy to say that that program is on schedule and on cost in producing that cost a lot of money to make air to marine one because you've got to have all kinds of security things in there so it's not something you can sell to any other country I assume so you only make them what did 23 of them you're gonna make or something like that that's right and when are they going to be available well we we're on a path of they'll you know we have to go through the test flight we've had the first flight and things like that but it takes time for them to roll that I think it's 2019 or so but I was gonna mention to Union oh it's based on this estimate - which is a great commercial helicopter if you're interested in a helicopter David I would suggest 540 million dollars maybe maybe yes something that had a good deal to get discounted by 2 or something we can we can do a deal so what's it like to be the CEO of our nation's largest defense contractor you get about 70 percent of your revenue I think from the US government and you know how much of your time you have to spend with the US government how much time you to spend with employees customers outside the United States how do you spend your time that's say in a typical week percentage time typical week is kind of tough to say but I would say probably I kind of tracked this just to see but I would say somewhere between 60 to 70% of my time is with the strategy to business the customers and engagement around the world they're travelling around the world on the on the customer side of the business because it's important in my role to be out meeting with not only our congressional leaders and our government leaders to make sure we're aligned with what their needs are in their priorities but I travel a lot outside of the United States 30% of our businesses outside of the United States with governments around the world I see now you were recently voted the 22nd most powerful woman in the entire world not just business but everything so when you saw that did you say I should be higher or did you say I should be that's pretty high I mean and how does it feel to be the 22nd most powerful female in the entire planet of 3.6 billion women I get an oppa my brother that said well why was Oprah higher than you or something like that but you know it's not something I there's lots of lists I mean it really comes down to having the privilege of leading a national asset and a company that's doing some of the most important and interesting work in the world now the company that you originally started at Lockheed was famous for having something in California called the skunk works can you describe how it got that name and what it actually does well it's an interesting story it was during World War two so it was about 1943 or so that that a gentleman named Kelly Johnson who's the father of the skunk works and this is part of our aeronautics business was given the responsibility of doing a very secret project which was the xp-80 and you know the p80 was a very important aircraft in that timeframe but it was secret project and all the facilities were filled it's world war ii they're building all kinds of products you know to support the war effort so they got a circus tent and they created this secret project of the small hand-picked group of people to work on that project in the circus tent well one of his employees one of the engineers really liked the little Abner comic strip you know and cap comic strip and if you recall it it had it had this secretive mysterious place out in the forest called skunk works one day the phone rang and you know joking around he just picks up the phone and says well this is Andy Culver of the skunk works and the employees liked it so much they started calling themselves calling their little you know circus tent secretive work the skunk works and then it emerged to being the skunk works and today this year we're celebrating 75 year anniversary of the skunk works that has done remarkable aircraft sr-71 the f-117 you know they have 22 just remarkable aircraft that have come out of that I said it had nothing to do with the aroma so you mentioned that plane sr-71 which was a very famous plane that I think now is in the Air and Space Museum of the Smithsonian it went at I think six times the speed of sound or something like that three times in very high there's a rumor there was a rumor in the defense press somewhere that you're making in the skunk works in SR 72 so can you tell us right now is that true you know we are working on hypersonics and hypersonics would be something over Mach 5 we're doing work in that technology and it's important technology so that's probably all I'm gonna say about it okay all right okay so let me go back to what it's like to be a woman in your position do you think that there when you started out were you often the only woman in the room at at Lockheed I was and so was that intimidating or was it a kind of thing where you said I can show them and I'm better than them the men you know I I think it's like any team you come into you have to establish your credibility recognizing that I was a different gender so maybe the you know the first moment I was different in that sense but after that once you're contributing in your part of the team it it was no longer a factor for me at least in through my career but what I'll tell you is really positive is that today a 22% of our leaders are women twenty four twenty five percent of our workforce are women so the pipeline of women it's no longer the only there's only one woman in the room we have many women leaders in the room and and it's you know we've come a long way on the pipeline back thirty five years ago there weren't as many women coming out of engineering and and other professions to come into the to the workforce just as the case was for a customer but you look at our customer day look at our military services how many women are involved how many men and women but women are in uniform and and in leadership positions it's just the pipeline issue and we're always working on that pipeline to get more women let's talk about some national issues that have been lately in the news a tax bill were you in favor of the tax bill that passed the Congress absolutely very much so very much in favor of it right so are you going to do anything particular with the money you're going to give money to the employees you're going to buy companies with it what are you going to do with the extra money that you're gonna get well first off you know I just want to highlight frankly the intent in my view of that tax reform was to make us more competitive on the global stage so everything about what we're doing with the savings that comes with a reduced corporate tax rate for us is around our sustained long-term growth I mean that's the area that we're focused on augmenting long-term growth and being more competitive with the products that we have so we are we've already committed that this year we've increased our our money toward research and development in capital expenditures by another 200 million we spend this year moon it's been about a billion - on R&D for our business and then we we are we've done for employees we're increasing what we provide them in terms of training and education we just recently announced an increase in the tuition reimbursement for them so that they can get additional education we're going beyond four-year colleges but into special courses to certification so broadening that for rescaling to deal with the changes in technology that are happening and making sure that they're in that we're giving more to STEM education initiatives from a philanthropy standpoint we think that's important responsibility for us you know we we hire 11 or 12,000 employees every year mostly engineers and we have 60,000 scientists and engineers and while we can hire people into our company they want to come to work for a company that does some of the most important work in the world we know that that pipeline coming out of the colleges in universities in our country is not where it should be so we're among companies that are focused on that and then the last thing I would say David is is that you know we have a Technology Ventures fund to fund where we invest in small companies startups that have technologies we're interested in we're increasing our funding there and then we're looking in other areas it will Arness talking about another so you're very much in favor of it you think going to use it elegantly okay recently the president's announced that he wanted to have tariffs on steel and aluminum now we don't know exactly what that will mean whether how the regulations will work and so forth but this is what he's announced and you are the the US government is your biggest customer so presumably you don't want to upset them by saying you don't like that position on the other hand you import a lawful lot of steel and aluminum for your products so which side are you on that was tariffs issue well I think you know grant and we haven't gotten all the details that have come out yet but just based on what what we're seeing the messaging coming out of the administration we don't at Lockheed Martin we have a lot of long term contracts there's not going to be a direct impact on us as a company but there could be a significant impact on our supply chain because they build the components that go into the products that we produce which means they're probably buying raw materials aluminum and steel so that's a watch for us if they're you know if they're going to be buying them outside of the United States that has a tariff on and that could be that could increase the cost of our products and so I'm concerned about that I'm what I'm hopeful of is as we look at these tariffs that we we really are that that the country looks at being more targeted in the way that they're applied I mean do they need to be across the board to all of all of the countries particularly since we rely a lot on countries to to be our partners and our allies and the way that we address the global security challenges partners are also trading partners and I think that whole trust of partnership is an important element let's talk a moment about artificial intelligence presumably that's going to be very important for defense contractors as it is for other companies what can you tell us about what you're doing to take advantage of the revolution going on in artificial intelligence well it's a very important area that we're investing in you know I mentioned hypersonics and laser weapons and autonomy and artificial intelligence is all areas for us that we think our customers are looking for solutions in that to use that technology but in artificial intelligence you can think about we're working on a helicopter that will be unmanned out of our Sikorsky operation and so that's an opportune time and telecom an unmanned helicopter we have other unmanned vehicles that we have but that autonomy and using the artificial intelligence for actually flying that's a price for the unmanned this alone its price thing I do unmanned helicopter that's that sounds pretty novel but even in the cockpit of our aircraft you know it's very using the artificial intelligence by fusing information in such a way that the pilot doesn't have to you know you can't the human mind just can't move at the same speed as what you can get through that computing power and so they can make the right decisions to deal with the situation and we have we have such things as collision and avoidance so even on our f-16 and we'll be putting this on our f-35 we have technology there through artificial intelligence that if a pilot doesn't realize that they're about ready to hit the ground this aircraft will take control and avoid we've already saved six pilots lives with that type of technology so that's just a few examples of how we apply the artificial intelligence now what about cyber warfare that must be an important part of your business now so first of all you presumably have products or services you provide the US government maybe we could talk a little bit what you do but also you protect presumably a lot of the nation's secrets in your own company how do you make certain that our enemies around the world aren't trying to get your secrets why can't I mean they are trying to get our secrets I mean this is a constant threat that a company like ours in many countries companies have in the u.s. of other countries trying to get at our secrets but what I would say is for Lockheed Martin we've been involved in in protecting our systems and government systems for many many years long before the term cyber was even coined I mean it's an important element of business for us and we take it very seriously because we know that we are a target and and government customers are a target so we have we've invested a lot in the technologies that to protect that but I think it's a constant you know these these threats are advanced and they're asymmetric and they're constantly changing and it's it's really important for us to stay on top of that and keep investing in it I would you know as I as I think about you know what what from the standpoint of cybersecurity in another area that's really important is that we have good information sharing that we see a threat we let our colleagues or other companies know about that and we've done that for many years in the defense industry but now it's being broadened more across other industries and I think that's a very important protection element for us you mention your colleagues in the defense industry there we have basically five defense companies the United States so Lockheed Martin Boeing General Dynamics Raytheon and Boeing when I say Boeing but we're grabbing what the Grumman sorry Northrop Grumman so five is that enough defense companies I mean then we need 10 or 15 so get more competition is five enough you know it's I think it's up to the market forces as to whether or not you know any if there's any consolidation or we need more I mean I thought I think that's what drives and I you mentioned about how Lockheed and Martin Marietta came together 95 I mean there were roughly 1213 companies back then when we when that when the defense market was gonna need to be consolidated in fact we had there was something called the last supper some of you may recall this where the leaders of those companies were brought into the Pentagon and they were told we're not going to have enough for all of you so you need to figure out how to get together and that's what that's what Martin Marietta and Lockheed did is that's where that merger happened and many mergers happen during that time and so what you have today is five prime contractors but you have a very extensive supply chain of medium and small companies and the market forces of consolidation and things like that I mean that's just another that's our that's our system there's you know it'll it'll adjust the competitive environment sounds like a better outcome and the actual last supper I guess so you're the CEO of a major company in the Washington area I guess one of the biggest companies in the area and maybe one of the in the country can you go just shopping anywhere without people coming up in you and ask you for a job or asking for you for something can you you're pretty visible can you just go shopping the way and or go to a theater or go to a restaurant and people bother you or not I don't say bother me I mean we have a lot of employees and a lot of folks in this area I don't find that intrusive I you know I like people okay and what do you do for relaxation are you an exercise person or you a traveler or sports serve what I like to play golf like to get out and play some golf really like to travel I mean our family gets together in travels I I travel a lot for the job probably 40 50 percent of my time I travel on a business travel but one of the things we really enjoy is getting together as a family to travel and always try to create some fun travel that our kids will find as long as mom and dad pays for it and it's fun they'll come some people say that the higher a handicap of a CEO the better the stock will perform if it's a low handicap that means a CEO is spending too much time playing golf so I assume your what your handicap is your are you it's not a scratch golfer okay and today when sounds must be pretty low so you can beat your husband or see better than you or he's better than me but you know I always remind him that there's the average for women and there's the average for men and so and if he has a close putt you just give it to him or just so today what would you say the biggest challenge is for the US defense industry is it budgets is it the present United States and understanding what you do is it foreign competition what is the biggest challenge the US defense industry has well the challenge that we have is really the challenge our customers have we have a an environment where the threats today are so difficult around the world the global security environment is so unpredictable and is changing so rapidly so you have a need for solutions to address that and to stay ahead of the threat and stay ahead of the adversaries at the same time we have constrained budgets and the budget pressures that we faced over the last several years and and maybe we're having to spend money on near-term getting things back up to readiness instead of investing in what we need to to address the power competitions that we have out there with our adversaries so that then in turn is a challenge for industry because if you haven't been investing along the way we've got a you know we've got to move with speed while at the same time driving costs down and while I said earlier you know we've managed through this difficult time we are faced with some challenges within the environment that we're in and the way that we contract and in the defense environment that we can't just turn on a dime and and go address the speed and and and as Secretary Madison calls the speed of relevancy those affordability and and cost initiatives so quickly when you contract with the federal government is at a cost plus or is it a fixed price typically well it's more fixed price than cost less but both I mean because in in our environment you know it's driven by how much risk there is so an early development program is usually cost plus because it's you know you're in the midst of working on a development project and it doesn't it it's it's that's where you just pay for the cost with some small margin associated with once that risk shifts over and you're now moving more into the production of the aircraft then it becomes fixed price and and presumably that risk transitions over to the contractor and you would expect to have a higher fee associated with it I assume the US defense industry being the biggest in the world produces the best products and so forth but who do you think is second best or third best or you ever see the products of the Chinese defense industry or the Russian defense industry or the Israeli defense industry or do you have any views on who else is very good in this area well you know I would say that my experience over the last you know of my career today that the global competition is very significant I mean countries around the world are taking advantage of the technological changes that are happening and when if they invest more in their modernization than we do on a on a relative basis then they're going to make more progress than we do and so I think it's important that we maintain the technological superiority that we provide our men and when with the best equipment that they can have in order to address the threat I mentioned earlier since you became the CEO your stock is up three hundred and thirty percent if I bought some stock tomorrow would I also see a very significant gain in four or five years or you think it's the prices are already so high for the defense stocks David I'm gonna advise you on stock price today I think you're really good at that but I would tell you this for our company we are always focused on creating shareholder values so just know that's our commitment and we're gonna drive the company for growth and for innovation and for sure okay well as long as you're the CEO I probably be happy to be an investor but how long might you be the CEO you you have any plans if the president states called you and said I'd like you to be Secretary of Defense or something like that would you entertain that or you're gonna stay where you are for a while well in our company I mean I'm I feel very privileged I love the work that we do a team of remarkable people that I work with that you know have the highest integrity they are so dedicated and so talented I love working at Lockheed Martin and I serve at the pleasure of the board of directors so how long I work will be up to them but today I'm really enjoying the work that I'm doing and I have no inch and stepping down for my role whenever you do step down at some point you might step down at some point 10 years 15 20 years would you consider the higher calling of private equity you know as I told you I have a passion for business I might very well consider that doing well whenever you do step down please let me know okay thank you very much

Channel: The Economic Club of Washington, D.C.

Views: 35,643

Keywords: Marillyn A Hewson, Lockheed Martin Corporation, David M. Rubenstein

Id: mOQ6CccQ4I0

Length: 40min 22sec (2422 seconds)

Published: Wed Mar 07 2018