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Lockheed CEO Sees a World of Potential

As Military Priorities Shift, Leader Eyes Partnerships

By Renae Merle
Washington Post Staff Writer
Tuesday, November 9, 2004; Page E01

The A-10 Thunderbolt II, an aging fighter jet with a bubble-shaped nose, sits on the tarmac at Lockheed Martin Corp.'s site in rural Owego, N.Y. The plane has a bandage of green tape on one side and a loose panel near the front.

"Six-ninety-nine," says Robert J. Stevens, Lockheed's chief executive, pointing at a number on the nose. "I built that! Tell me that isn't a beautiful plane."

Lockheed Martin chief executive Robert J. Stevens speaks to employees in Owego, N.Y. Stevens, who took the helm in August, had his share of experience working a shop floor. (Kevin Rivoli For The Washington Post)

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Stevens has come a long way from Fairchild Republic Co., where he helped build A-10s, nicknamed Warthogs for their ungainly appearance, more than 30 years ago. Named Lockheed's top executive in August, Stevens now presides over the biggest defense contractor in the world at a time of shifting military priorities and precarious defense budgets.

The Warthog has come a long way, too. Originally designed to destroy Soviet tanks, it is now packed with high-tech electronics provided by Bethesda-based Lockheed.

For Stevens, 52, the Warthog's evolution symbolizes Lockheed's shift from its role as just a maker of aircraft to a diversified company developing the information technology needed to wage modern warfare. The aircraft, which was to be retired a decade ago, is less important than the high-tech electronics it carries, he says. Now the Warthog is having a second life that could last an additional 20 years.

"People said at the time the A-10 was a waste of money. Now it does all kinds of things it was not intended to do," Stevens said. "There is no greater sense of security [for a soldier] than having an A-10 coming over the horizon."

Stevens faces the task of continuing Lockheed's push into high-tech defense projects, a strategy industry analysts say some competitors have been quicker to adopt, and smoothly integrating the company's disparate operations. Over the next few years he also will face the likelihood of cuts in defense spending that could slow development of large-scale programs.

Stevens's management philosophy has roots in his early experiences at Fairchild, a onetime defense giant that ran into financial trouble in the late 1980s. Stevens had worked his way up over many years from a second-shift floor supervisor to program manager. When the firm faced financial difficulties, he was forced to fire hundreds of employees. "That is an important thing for a young manager not to loose sight of," he said. "It's a defining experience."

It's an experience that helps explain Stevens's strategy at Lockheed. "The work that you do here is . . . regarded as a national resource," he recently told nearly at 1,000 employees packed onto a production floor in Syracuse, N.Y., where the company develops military radars and sensors. "In the same breath, and at the same time, Lockheed Martin is also appropriately regarded as an economic enterprise. And frankly our future is going to be determined by how well we keep these two concepts alive and balanced."

One of Stevens's chief challenges will be protecting the company's marquee programs from budget cuts. The Pentagon's budget has grown substantially since the Sept. 11, 2001, terrorist attacks, but the wars in Afghanistan and Iraq are eventually expected to start sapping money from expensive long-term projects, like Lockheed's F/A-22 Raptor and F-35 Joint Strike Fighter. "We believe the defense budget is likely to come under increasing pressure due to Iraq and the budget deficit," David Strauss, defense analyst with UBS Investment Research, said in a recent research note.

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