Hewson Says Details Lacking To Qualify Impact Of Trump’s Proposed Tariffs

Lockheed Martin [LMT] Chief Marillyn Hewson said on Monday that she doesn’t have enough information about President Trump’s plans for tariffs on steel and aluminum imports to know that the impact might be on her company and its suppliers.

Hewson also said the company hasn’t had discussions with any of its foreign customers about how the new tariffs might play out in their respective countries and what it could mean for Lockheed Martin’s defense exports.

Lockheed Martin Chairman, President and CEO Marillyn Hewson

Lockheed Martin Chairman, President and CEO Marillyn Hewson

Asked by a reporter what she would say to Trump about the tariffs and potential for a trade war at the company’s annual media day in Crystal City, Va., Hewson replied, “I would just say for him to continue what he and the administration are doing and that is focusing on competition and fair trade globally. It’s really important for us as a nation to continue to look at how we can continue to be competitive around the world and at the same time, importantly, that we are also focused on our strategic partners and allies around the world to provide the global security solutions that we all need in order to work together to address global security challenges.”

Trump last week said that his administration would be crafting new policies for tariffs, 25 percent for steel and 10 percent on aluminum, with the details possibly ready this week. Government officials in allied countries immediately rejected the tariffs and warned of the possibility of trade wars with the U.S. Trump, in a tweet last Friday, said “trade wars are good, and easy to win.”

The Aerospace Industries Association (AIA), which represents the U.S. aerospace and defense industry, registered its concerns with the potential new tariffs. AIA President and CEO Eric Fanning last Friday told CNBC that the tariffs will impact “companies big and small in the aerospace and defense world,” adding that, “More importantly, we’re concerned about retaliation.” He pointed out that U.S. aerospace and defense companies run the largest trade surplus in the manufacturing sector, amounting to $86 billion annually.

On Monday AIA issued a statement saying “America’s aerospace and defense industry is deeply concerned that the anticipated tariffs on aluminum and steel will raise costs and disrupt the supply chain, putting U.S. global competitiveness at risk.” The statement also warned of a trade war that would hurt U.S. exports.

Hewson, who is chairman, president and CEO of Lockheed Martin, is a member of AIA’s executive committee. In her prepared remarks at the media day, she noted that in the past five years the company has increased its international business from 17 percent of sales to 30 percent in 2017, with further growth to come, largely driven by existing and future demand for its F-35 fighter and also from other products such as missile defense and related systems.

Hewson said her last conversations with foreign partners were at the Munich Security Conference in mid-February, where the discussions were focused on “national security requirements,” and how the company is “meeting their solutions that they need to protect their citizens.”

Hewson praised new tax laws that went into effect this year for freeing up additional cash to invest in research and development and other capital investments, as well as in workforce training and education, and charitable giving in sciences, technology, engineering and math.

Tax reform, improved potential for a new bipartisan budget deal, and key new defense programs that Lockheed Martin is well positioned for have brightened the “core growth” outlook, Hewson said. She also highlighted the company’s three policy focus areas for 2018, which are regulatory reform, acquisition reform, and public-private collaboration around workforce development for the 21st century.

Lockheed Martin has also identified four transformative technologies that will “redefine the battlespace,” Hewson said. The first is hypersonics, which could have the same impact as “stealth technology” did to the U.S. advantage, she said.

“This could forever change our ability to deter and respond to conflict, allowing warfighters to quickly address threats before an adversary may have time to react,” Hewson said.

Hypersonic refers to the ability to go faster than Mach 5.

The second technology area is lasers, which Hewson said are best suited for “high volume, low cost threats such as drones.”

The third area is artificial intelligence and machine learning to better take advantage of the massive amounts of data generated by sensors and systems in the battlespace and improve decision-making.

The final area is electronic warfare to dominate the electromagnetic spectrum for situational awareness and communications. Hewson said open architecture solutions are important here to respond to rapidly changing threats by allowing “rapid integration of new technologies.”

Hewson also said the company remains on track to get the production cost of F-35A fighters down to $80 million an aircraft by 2020, in accordance with current plans. 





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