Lockheed Martin cuts back participation in Farnborough International Airshow
Friday, June 18, 2010
Lockheed Martin chief executive Robert J. Stevens said Thursday that the company will cut by half its participation at the Farnborough International Airshow this year and that he will skip the event as part of an effort to trim company spending.
Stevens said his decision to pass on the British trade show, traditionally a major event for the aerospace industry and the Bethesda-based contracting giant, reflects the company's commitment to closely reexamine its spending. He did not say how much the company would save by paring back its attendance.
"What I did is what I'm asking every executive and every professional in our company to do, and that is to be rigorous and demanding in evaluating how we spend our time and how we spend our customers' money," Stevens said during a breakfast meeting with reporters. "So I asked a very simple question: 'Tell me . . . exactly what the priorities are that require my participation at an air show,' recognizing that there are expenses associated with that. . . . None of the requirements that were offered to me met a threshold test that said I had to be there."
In general, Stevens said, the company -- which reported revenue of $45.2 billion in 2009 -- is healthy and will continue to invest in research and development and employee training. He said Lockheed is reducing spending to make its programs more affordable for the government.
Separately, a Pentagon review found that nine of the company's 32 divisions are not properly reporting how well they meet planned contract costs and schedules.
The process, known as earned value management, is designed to help the Defense Department track programs. Because some of Lockheed's divisions aren't meeting the Pentagon's reporting standards, the Defense Department says it can't confirm how much work has been accomplished for a given cost or how much work is left to complete, according to Shay Assad, a top Pentagon acquisition official.
Stevens said the company has shortcomings in the tools and processes it uses and is reviewing a corrective plan with the Defense Department.
If the Pentagon finds that Lockheed's plan is unacceptable or will take too long to implement, the government could withhold contract funds from the company.
Stevens said the company is committed to fixing the problem and predicted that money will not be withheld.
"I don't need to be persuaded about the value of these systems," he said. "I understand their value, and I want to get it right."