Lockheed eyes growth drivers

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Defence contractor Lockheed Martin Corp expects progress on its F-35 Joint Strike Fighter, international sales and upgrade work for legacy fighter jets to fuel growth even as U.S. defense spending shrinks, its chief executive said.

Robert Stevens told the Reuters Aerospace and Defense Summit that Lockheed, the Pentagon’s No. 1 supplier, expects demand from other countries for older planes such as the F-16 multi-role fighter and C-130J military transport aircraft to bolster sales as the United States looks to reduce deficits, Reuters reports.
“The overall level of defense spending will have an obvious effect on the degree to which we’re able to grow the business,” Stevens said at the summit in Washington, D.C.

Still, “we have a strong core in our portfolio, and we believe we can grow that core,” Stevens added.
(For a Reuters Insider interview with Stevens, click:
link.reuters.com/puc63s )

Global weapons makers are bracing for cuts in defense spending sparked partly by this summer’s U.S. debt-ceiling deal. The U.S. Defense Department is cutting at least $350 billion from previously projected spending, and additional cuts of as much as $600 billion could kick in if Congress fails to find at least $1.2 trillion more in deficit reductions by year end.

Stevens said he hoped U.S. lawmakers assigned to a deficit reduction panel would identify cuts in discretionary and non-discretionary expenses so that additional cutbacks in defense spending won’t be necessary.

He added that reforming corporate taxes and restructuring entitlement programs such as Medicare and Social Security should also be considered.

LOCKHEED CUTS INTERNALLY

Lockheed Martin is cutting jobs and holding down its own discretionary expenses in response to global pressures. Its aeronautics and space system divisions have announced plans to cut more than 2,500 jobs this year, and the company is also offering voluntary layoffs to about 6,500 U.S. salaried workers. Lockheed has about 126,000 employees.

Stevens said Lockheed is looking to raise the proportion of international sales at the company to 20 percent in the next three to five years from 15 percent now.

While the company is hoping to get U.S. approval to sell F-16s to Taiwan, Stevens also said orders from Oman and Iraq could help extend the production line for that fighter jet.

Lockheed’s F-35 has come under criticism from some in the U.S. Congress because of cost overruns and production delays. The radar-evading fighter jet would be the costliest Pentagon weapons purchase at more than $382 billion over the next two decades for more than 2,440 aircraft.
“We think our F-35 program will continue to expand,” Stevens said. “We’re making good progress on that line.”

The United States is developing three models of the F-35 with eight international partners — Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway.