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Interview With Norman R. Augustine,
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Go to the full transcript of the interview:
  • Part I
  • Part II
  • Part III
  • Chairman of Lockheed Martin Corp. -- Part II

    Q. How far are we away from a practical full-motion simulator for commercial aircraft? Are you all working on anything like that?

    A. Well, there are simulators today, of course as you know, that give general good motion capability. But I think the biggest shortcoming has been the imagery. And even today the pilot from an airline who has been flying one kind of aircraft for a long time, he's a qualified pilot, or she is, when they convert to another aircraft, different type of aircraft, the entire conversion process is done in the simulator. Their first flight in that new model aircraft is with passengers flying behind them.

    Q. Well, I had in mind more of the requesting of unusual altitude training and that sort of thing that is coming in now. The pilots who are going up and saying, hey, once you get past a certain envelope, you can't train properly anymore, because the simulator can't do it. It can't turn you over and roll you around.

    A. Yeah, we could build a simulator to do that, it would be very expensive and I think at that point too, the emotion becomes such a driving factor that we really can't generate very well, that I'm not sure whether we would add anything much by trying. We do have the zenith motion, but it is costly.

    Q. They do it at Disney world.

    Q. Norm, back to Europe a little bit. Is Lockheed Martin talking to some of the European defense and aerospace companies about big joint ventures or mergers? In particular, we've heard about British Aerospace. Will we ever hear about a merger of Lockheed Martin with British Aerospace? Something that would, may pace out Boeing?

    A. You know, the matter of combining with European companies is really difficult because, if you're in Europe, it's pretty clear you probably have to be a partner with either Lockheed Martin or Boeing. Whereas if you're in the United States, if you decide that you want to be a partner with British Aerospace, then the next question is well, what about GEC in Great Britain? How do you get them on board? And then, once you've done that, you say , well, what about Dassault, and Aerospatiale in France, and so on. And then what about Deutsche Aerospace in Germany? And so you have to find 43 different partners. One deal just isn't all that important. And it doesn't solve the problem. So we're trying to, the companies in this country are trying to figure out what's the formula for working together? Because it's clear that Lockheed Martin or Boeing can't afford to buy the major company in each country, even if we could figure out which one it was.

    Q. What's the problem?

    A. There are just too many of them.

    Q. No, I mean, you said dealing with one or two doesn't solve the problem.

    A. Oh, but getting your access to the market. By and large I think the countries there are starting to build walls around their countries and maybe around all of Europe. One of the puzzles, incidentally, is whether Great Britain is inside the wall or outside the wall or on top of the wall.

    Q. They certainly keep buying Boeing, hacking off Airbus.

    A. And they've bought a lot of things from us in the last few years. We've had a great deal of business in Great Britain and the UK. But politically, it's just difficult. Another thing is that to really get the benefits of mergers, in this over-capacity ridden industry that we have, particularly in Europe, you have to be prepared to close plants and consolidate to really benefit from it. And as we've learned, it's very hard to move a plant from New Jersey to California. To shut the one in New Jersey down, which we are now doing. We're doing a lot of that. But can you imagine moving the aerospace plant from Berlin to Paris? Or vice versa? And my thought had been that maybe the European industry would consolidate and build one major corporation there to compete with Boeing and Lockheed Martin, but that doesn't seem to be happening. And so, I suspect what you'll see is a whole variety of relationships of one kind or another, across the Atlantic, as well as within Europe. More that way, and there could be some equity relationships. I don't want to eliminate that. Where one company buys another. But no one of them is likely to be terribly decisive I think.

    Q. On that subject, as you begin to make these alliances on a product-by-product basis, how do you deal with the reality that the European aerospace industry engages routinely in activities, it's international markets, that are illegal in the U.S. Violations of the core practices act?

    A. That's a very major factor. Very important question to which I don't know the answer. What it says, if you're going to have any kind of a partnership that has legal connotations, which is almost anything you'll do, that has to be changed. As you know, in some countries, bribes are not only legal, they're tax deductible. I've been through that. Well, we went and complained in some cases. The government has changed the rules. It said that you could only pay bribes when you get advanced approval of the government, if they're going to be tax-deductible. We are very conscious of that, and that's a major impediment. And it's not a great impediment in the UK, but it is elsewhere. Not to name names.

    Q. The question of the day in Washington is campaign financing. And I wondered if I could get your company, get your thoughts on whether you think there needs to be some reform, or drastic reform, and what do you think that contributions to/from the defense industry have gotten out of hand, or whether they're 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. I do have some thoughts. And I'll probably offend some people at the table, but such things as you write about, the use of the Lincoln bedroom and so on, I guess I don't find 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 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. But having said that, if they're going to be legal, and others are going to have them, then I think we want to.

    Q. Just finish that thought. Why would it be preferable not to have them?

    A. I think that any time you have specific groups contributing money you have to question the pressures it puts on people. That's kind of an obvious statement. 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. Now, I also realise it takes money to campaign. And I like some form of federal financing a lot better than what we have today. Also, I guess one of the reasons why I maybe feel somewhat less than positive on the subject is, having spent ten years in government myself, 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. Do you give soft-money contributions to either of the two parties?

    A. Yeah, you get caught in the definition of soft money, but I suspect the answer is yes. For example, we contribute to some kind of a program for the convention, if that's what you mean by soft money

    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.]

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