Lockheed to halve arms-bazaar presence this year


Lockheed Martin, the Pentagon’s No. 1 supplier by sales, will halve its corporate presence at the Farnborough Air Show outside London next month as part of stepped-up cost-consciousness on behalf of its clients, chief executive Robert Stevens said.

“We are not going to look at the world the same way going forward as we looked at the world in the past,” he told reporters on Thursday at a company event to showcase big-ticket programs such as its F-35 fighter jet, new coastal combat ship and ballistic missile defences. The Farnborough show, to be held July 19 to 25 this year, alternates annually with a counterpart in Paris to become the world’s biggest arms bazaar.

Stevens said he would skip along with “many of our corporate leaders” because he could not justify the expense and he wanted to set an example for the company. Overall, Lockheed’s Farnborough participation would be slashed 50 percent, he said, citing a need to be more disciplined in setting priorities and allocating resources.
“We’re going to challenge every expense. We’re going to examine every priority,” Stevens said. “We’re going to support our customers to the fullest. We’re going to enrich our partnerships but we’re going to do it in an increasingly cost-conscious way. That’s what led us to this decision.”

Stevens said Lockheed saw the world through the same lens as U.S. Defense Secretary Robert Gates, who has launched a drive to free more than $100 billion in the coming five years from bloated Defense Department overhead to boost U.S. armed forces in the field. Earlier this year, rising costs and schedule slips led the Pentagon to restructure the F-35 program, its costliest weapons purchase at up to $382.4 billion for more than 2,400 jets through 2036.

Stevens said efforts to put the program back on track were showing “substantial progress” and voiced confidence that as many as 25 countries ultimately would fly the radar-evading F-35. It is being developed with funds from Britain and seven other countries to replace a wide range of warplanes, including Lockheed’s F-16. He projected the cost of an F-35 eventually would be comparable to the latest versions of Boeing’s F-18 SuperHornet and the F-16, assuming enough orders kicked in to capture economies of scale early on the production ramp.

He painted a picture of strong demand for Lockheed’s military hardware amid what he called increased complexity and an expanding array of security challenges. Stevens said it was clear that the resources available to meet global security demands were under tremendous stress “that is likely to continue for the foreseeable future.”

Bethesda, Maryland-based Lockheed Martin is one of the few companies to have built a permanent presence at Farnborough among the flimsier constructions that serve as catered quarters to meet, greet and fete prospective buyers. Lockheed has booked the same amount of additional floor space this year as it did during the last show, show organizers said.

Overall, the show is “sold out this year and on the same level as 2008,” said Philippa Ewart, a spokeswoman for Farnborough International, the event organizer. The presence of Boeing Co (BA.N), the Pentagon’s No. 2 supplier by sales, “will be roughly that of previous shows in recent years,” said Sean McCormack, a company representative in Washington. Northrop Grumman Corp (NOC.N), the Pentagon’s third-biggest supplier, began scaling back its presence at the Farnborough and Paris Air Shows several shows ago and continues to “seek ways to lessen costs while improving our customer interface and media relations activities,” said Randy Belote, a company spokesman.