Lockheed Martin Corp expects to more than triple revenues from its emerging energy and climate change monitoring business to $1 billion by the end of 2012, a senior executive said.
Thomas Grumbly, vice president for civil and homeland security for Lockheed’s Washington operations, said Lockheed moved to expand its work on energy issues after oil prices spiked in 2006 and raised concerns about the United States’ vulnerability to energy price fluctuations.
Given strong interest in shoring up the nation’s "energy security," Lockheed is leveraging years of experience managing government research laboratories and building environmental monitoring satellites to secure a leading role in an area shaping up as one of the Pentagon’s top priorities.
The Bethesda, Maryland-based company, which already builds large solar array panels for its satellites, is focused on several key areas, including energy efficiency, alternative energy generation, and shoring up the cybersecurity and efficiency of the nation’s electricity grid.
Lockheed already makes about $100 million a year just doing energy efficiency audits for utility companies in Washington, DC, Missouri, California and other areas, Grumbly told Reuters, and its overall energy sales amount to about $300 million.
Grumbly said those sales were expected to rise to over $1 billion over the next three years.
"We have extremely good potential, and we have the plans on the books. When you look at the rates of growth that are happening, it will be soon a growth engine for the company," he said. Lockheed had total revenues of $42.7 billion in 2008.
Grumbly said Lockheed was far from a "Johnny come lately" in the energy sector, but its past activities had been largely isolated across the corporation.
Now, company officials viewed energy as an increasingly important adjacent market and were stepping up focus efforts across Lockheed’s three main corporate areas.
At this point, the company does not plan to integrate all its energy and climate monitoring activities into a single separate division, Grumbly said, adding that about 1000 of Lockheed’s 146 000 employees were working on energy issues.
In recent television and magazine advertisements, Lockheed has showcased its energy work and vowed to use the same "single-minded focus" that put a man on the moon to improve the way the United States produces energy.
For instance, Lockheed has revived a technology developed by a company engineer in the late 1960s that uses a turbine to generate electricity by harnessing the temperature difference between different layers of the ocean.
Advancements in development of lighter, but resilient materials for the aircraft industry could make it easier to build a viable system, Grumbly said. He said such a system would be particularly interesting for areas such as Hawaii or Australia, which are surrounded by large bodies of water.
Grumbly said the move to strengthen Lockheed’s presence in energy security came before analysts and defense officials began predicting more pressures on defense budgets.
But analysts say the timing is good, since it could help Lockheed weather any downturn in defense spending.
Other companies, including Boeing Co and Northrop Grumman Corp are also moving into this area, but Lockheed says its long history managing laboratories for the Department of Energy gives it an advantage of "a couple of years" over other competitors.
At the same time, the company is proceeding cautiously to avoid upsetting investors, Grumbly said.
For instance, Lockheed pulled back from one billion-dollar solar energy project in Arizona after concluding its size was too large and potentially risky to take on, he said.
He said Lockheed also carefully weighed whether to work closely with utility companies, but ultimately decided they were similar enough to Lockheed’s more traditional government clients to ensure a "reasonable probability of success."