Faced with a tight government funding environment domestically and looking to expand its international business, Lockheed Martin [LMT] said it has formed a new organization to accelerate its global sales.
Lockheed Martin will commit additional resources and bring its whole-of-team approach to the new organization, Lockheed Martin International (LMI), Marillyn Hewson, the company’s president and CEO, said on a conference call from London where the new organization will be co-headquartered. Consolidating the company’s international business efforts into one organization will allow it to better integrate its products and services across the corporation while unifying and sharpening its focus on opportunities as well as its in-country partnerships, she said.
The bottom line is the new organization is meant to help the company “accelerate growth,” she said, adding later that the company will be adding resources globally and will “double down” on the international market.
LMI’s other headquarters location will be in Northern Virginia in Reston. LMI will be led by Patrick Dewar, 52, who will report to Hewson. Dewar previously was Lockheed Martin’s senior vice president of Corporate Strategy and Business Development and held a number of positions in the company with international responsibilities, including vice president of Corporate International Business Development and the European program director for the Medium Extended Air Defense System based in Germany.
Lockheed Martin had $8 billion in sales last year to foreign customers, about 17 percent of its overall business. In the next few years, the company’s goal is to expand international sales to 20 percent of the total.
While Lockheed Martin is working to accelerate its global growth, its international sales as a percentage of overall sales could easily grow in part due to declines in its domestic business. In 2012 the company had $47.2 billion in sales, up a percent from 2011, but the forecast for 2013 is for a decline of between 3 and 6 percent to between $44.5 billion and $46 billion with expectations at the low end of the range as federal budgets in the United States remain constrained.
That Lockheed Martin is eyeing international business to soften the declines in its domestic portfolio isn’t new. Hewson said in April on the company’s first quarter earnings call that overseas growth drivers are the F-35 Joint Strike Fighter program, the F-16 multi-role fighter, C-130J transport aircraft, and missile defense programs such as the Aegis system and THAAD. The company is also touting the Navy’s Littoral Combat Ship, cyber security and information technology solutions for international business. More recently the company said it is pursuing a $1 billion opportunity to consolidate the Australian defense department’s data centers.
Lockheed Martin’s international operations currently have more than 6,000 employees, 2,000 of which are in Britain, the company’s largest foreign customer. Hewson didn’t offer much in the way of specifics around the additional resources that Lockheed Martin will commit to its international pursuits but noted that the company is “on a path to add another 400 jobs in the United Kingdom alone this year through Lockheed Martin International.”
She also said that “international customers are a priority” for her and the company’s leadership team, noting that she has visited a number of foreign customers this year such as the United Kingdom, Saudi Arabia, Israel, the United Arab Emirates and Italy, and will visit some of these and more in the coming months.
“We’ll be spending a lot of time traveling and meeting with our customers and helping them to meet their global security requirements amid very difficult and challenging budget pressures,” Hewson said.
In addition to its two headquarters locations, LMI has corporate offices in Ottawa, Riyadh, Abu Dhabi, Singapore and Canberra, and regional offices in Tel Aviv, New Delhi, Tokyo and Seoul.
Establishing LMI is also expected to be a win for its customers and overseas partners, Hewson and Dewar said. In the United Kingdom, Lockheed Martin has more than 500 suppliers on the F-35 program with $5 billion of business and this will grow going forward, Dewar said.
Dewar will be succeeded by Paul Lemmo, 47, as senior vice president for Corporate Strategy and Business Development. Lemmo, who most recently was vice president of Business Development and Strategy at the company’s Information Systems and Global Solutions segment, will also serve as a corporate officer.