From the Post
Three months later, Lockheed Martin Corp. announced plans to lay off 19,000 workers and close 12 facilities.
In January, Lockheed Martin reported a sharp rise in 1996 profits.
On Our Site
View detailed statistics on Lockheed Martin for 1990-95.
On Lockheed Martin's Web Site
View an archive of recent speeches given by Augustine.
Augustine says Lockheed Martin will hire more than 2,000 engineers this year. Browse through a list of employment opportunities at the company.
Editor's Note: Some of these links will take you out of The Post's
Web site. To return, use the Back button on your browser.
Norman R. Augustine, chairman and chief executive of Lockheed Martin Corp.
On the occasion of the second anniversary of the merger of defense contractors Lockheed Corp. and Bethesda's Martin Marietta Corp., Augustine sat down with a group of editors and reporters at The Washington Post. Here are excerpts from that conversation:
Q. We'd like to start by asking you to talk about how it's gone—what the difficulties have been in combining these two companies. What has worked out the way you wanted? What's still difficult for you?
A.It has been an incredibly fast two years. We've learned a lot of lessons and we've consciously tried to sit down and say, 'What do you do when you try to bring large organizations together like this?' Lockheed Martin today, many people don't realize, is not just two companies, it's 17 companies.
Turns out there's great strength and diversity. One of the huge payoffs we've found has been the ability to sit down around a table with people that you would never, six years ago, have been able to get in one room, and be very candid with one another. It's been very powerful.
The bottom line is that's gone very easily. But by far the hardest has been downsizing the company. This has been agonizing. We're in the process of closing 16 million square feet of plants and we're far along unfortunately in doing that. We also of course have had just enormous layoffs—people who were really talented people who were contributing, but there just wasn't work for them to do. And that's been painful.
If I come back to Lockheed Martin today:... we now have underway a major campaign to hire young people right out of college. Our industry hadn't hired anybody in so long we hardly can find our way to a campus.
And we are going to use a totally new approach to hiring for Lockheed Martin. We have picked 42 colleges to build long-term relationships with, where ... we will do joint research projects and where we will focus our hiring. We'll hire over 2,000 engineers this year, which just is fantastic for us.
Q. Why are you doing it?
A. It's so hard to hire young people even though you know you need to when you're laying off 30-year employees. And so we just haven't hired anybody. And so we now have the task of replenishing our company and our industry with young people. Basically we're rebuilding, creating a new industry today that would be our industry 25 or 30 years from now. We really have to find the people who will make our company what it will be long term.
Q. The question of the day in Washington is campaign financing. Could we get your thoughts on whether you think there needs to be some reform, or drastic reform? And do you think that contributions from the defense industry have gotten out of hand, or are they a good investment?
A. Let me qualify by saying I don't claim to be a great expert in this area. But I'll sure share my thoughts on it. The use of the Lincoln bedroom and so on, I guess I don't find that particularly attractive. On the other hand, if the vice president has to make a call to solicit some money for his campaign, I really wouldn't expect him to go down to the corner filling station to use the telephone. On the issue of PACs [political action committees], as long as others have PACs, I want us to have the best PAC. But I would prefer there be no PACs. I think it would be preferable to not have them.
Q. Just finish that thought. Why would it be preferable not have them?
A. I think that any time you have specific groups contributing money you have to question the pressures it puts on people. I don't know that anybody ever did us a favor. The amount that we give to any one person isn't that great. But it's offset by the fact that everybody is giving too. The labor unions give far more than we do. So I'm just not sure it's a very effective way to raise money for campaigns. Also, I think we're making it awfully hard for talented people to serve in our government, and I think that's a problem we have. And I know of almost nobody I work with who I admire, in all industry, not just our company, who would even think of running for Congress. And one reason is that they just can't stand the thought of spending day in and day out saying ... 'When I get out of bed I've got to raise X dollars before I go to bed tonight.' So, it seems to me there ought to be some other way, probably using federal funds to pay for campaigns.
Q. What kind of pressures do you yourself get put under on the soft money? And how does the pitch go?
A. I would say, not a lot of pressure. People calmly ask, 'Would you help us with what we're trying to do?' But I have never had anybody suggest they would do something that they wouldn't do otherwise. I've never had anybody threaten me. It has just not been that big an issue. I'm sure we all get letters in the mail. I get those. I get telephone calls, a lot less than you would think.
Q. Any calls from Vice President Gore?
A. He hasn't called me. [Laughs.] Should I be worried about that? [Laughter.]
Q. Part of your job is presumably thinking about future national security threats to the United States and thinking about how to sell products to the government that would help deal with it. What is coming at us, in your view, that's different, and how can the country buy weapons or otherwise prepare for those threats?
A. I think one of the problems with the defense budget today, unless you're buying weapons and preparing for defense, is that we've let our expenditures get out of balance to the point where our modernization expenditures are badly neglected. We have too much force for the amount on modernization we seem to be spending.
And so you say to yourself, 'What is the world going to be like in 2020?' And my crystal ball is really fuzzy there. Also, I think backward: All of the alliances have changed just in my lifetime where countries that were once our bitter enemies became our friends and our enemies again and vice versa.
Q. Can we get back to the industry for a second. Is downsizing something we should worry about?
A. Yeah, I think that as you downsize an industry—particularly the defense industry, which I think is a more Cold War-important industry than some other industries to the nation—as you downsize it, I do think it's better to have two strong companies than six weak companies.
I also think it's better to have six strong companies than six weak companies. But of course that wasn't a choice we had. There's not enough money to have three or four strong companies. I feel there's plenty of competition out there until you go below two, which is what you're addressing. I think two is the magic number in competition. When you go below two, things fundamentally change.
Q. You talked about the advantages before of the size of the company. But a lot of other industries' companies assemble and get real big and discover it's a disadvantage. AT&T has broken up recently; Sears has done that. I wonder, will you ever get to that point, where the company just gets too big for one person to manage?
A. The point's a very legitimate one. I think that size has advantages and disadvantages. Size in its own right isn't necessarily the only answer. We competed, Lockheed and Martin Marietta separately, with Boeing for many years and McDonnell Douglas when they ranged from two to five times our size. Almost always we did very well because we picked our fights.
And so to get efficiency we sort of had to combine these companies, which brought us to larger scale. And so larger scale did make us more efficient. We said that we would reduce our costs by $2.6 million a year, every year. Most of which would go to the government, our principal customer. As a matter of fact, we're doing better than we projected.
Q. What's the bad news?
A. I forgot the bad news, I tend to do that. The bad news, of course, is that as you get bigger you can become bureaucratic and inefficient and slow and all the things that go with that.
We tried to design our companies so that we're basically a bunch of little companies with the resources of a big company. And the way we do that is we create virtual companies to go after each new opportunity. And those virtual companies are made up of people from all different parts of the corporation.
Q. You talked a little bit about your efforts in the commercial world. You've made some progress.
A. Yeah, we've made a lot of progress, and we've gone at it very deliberately and very slowly on purpose. I think you in fact have quoted me as having said that our industry's record of diversification is unblemished by success. The problem that the industry has had is in past down cycles in defense spending the answer among the academic community, you know, is diversify, do other things: 'If you're a rocket scientist surely you could sell toothpaste.' Well, it turns out it's darn hard to sell toothpaste. This time we said we'd try to do something a little bit differently. One is we've taken products that were closely related technically to the things we now build—video games, space launched vehicles, telecommunication satellites. We have said that we will work only with large customers, large corporations and governments; we're not going to try to sell to the consumers. And, thirdly, that we'll do this very slowly and deliberately.
Q. You mentioned diversity earlier and I wasn't sure if you meant regional or gender, ethnic, race.
A. That's a good question. When I used the word 'diversity' I was referring to all of the above. We're recruiting, for example, at traditionally black colleges. We also recruit around the country because we have plants around the country, so we try to recruit in areas where we have plants particularly.
We face exactly the problem you cited. We have a lot of things we're proud of. Last year the black engineer of the year in America, all corporations, was from Lockheed Martin. This year the black engineer of the year was from Lockheed Martin. Last year the Hispanic engineer of the year was from Lockheed Martin.
The difficulty is there are very few minorities studying engineering today. Women are doing better, I think we're up to about 30 percent. Overall, the number of engineers is declining in the country, particularly in electronics and computer science. They all want to be lawyers and investment bankers.
Q. And in the same area, older workers?
A. I was really saying that you really can't afford to hire young people when you're laying off longtime employees, so by and large we have not been doing that. And that's created the problem that we have of an aging work force and a gap among younger people. And so we have, in general, tried not to do that. We did have an age discrimination suit, or we do have, I guess, still, in Denver, and those are really difficult. One of the things that makes it so difficult is the rapid pace of change in technology. And you take the average college graduate who makes a third perhaps of what somebody makes who's been in the business 40 years but hasn't really devoted himself to keeping up. And that college graduate will be much more valuable to an employer in many cases. And so what you tend to do perhaps is just, not discrimination against age, you try to pick what employee will contribute the most. And if your interest is in some esoteric kind of software, the odds are it'll be a 22-year-old employee, not the one my age.
Q. One more question about your anniversary. As you look at the company that you put together from these diverse sources, what's the likelihood that you're going to find pieces that just don't fit the business that you have? And that you'll end off spinning off one or more of the 17?
A. The likelihood is very high, and we've already begun that. The most obvious example would be, we were the second-largest producer of crushed rock in America. It's a wonderful business and I would say we've never had a rock explode. But your point is exactly right, we bring nothing to it and there are others who bring more to it. We've sold it. So you put your finger on something that, as you collect these things, you get things that you really don't need.