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Lockheed’s CEO Stepping Down, Remains Chairman; Strike, Sequestration Effects Uncertain

Posted by Colin Clark on



CORRECTED: Fixed Effective Dates of Stevens’ Retirement

WASHINGTON: The man at the helm of the world’s biggest company, Bob Stevens, resigned today from his post as CEO and was smoothly replaced by Chris Kubasik, the company’s chief operating officer. His resignation is effective January first.

Stevens will remain chairman through 2014, to ensure a smooth transition, something he said in an early morning earnings call he thought important at a company that oversees complex programs and is subject to such long economic cycles. The company’s leadership team has worked together for 15 years, Stevens said, in a clear attempt to allay any concerns in the financial community about the handover.

Much of the call revolved around two issues: sequestration and its likely effects; the ripple effects of the three-day-old strike at Lockheed’s Fort Worth plant where the F-35 and F-16 are built. So far production appears not to have been affected.

I asked Stevens when the strike, which he said “surprised me personally,” might affect the program’s 1,300 suppliers spread across 48 states and nine countries. He offered a fine corporate answer: “It is very difficult for us to predict how long this strike action will go on…” He added that previous Lockheed strikes have lasted an average of two to three weeks. Lockheed, he said, has a “clear interest in not disrupting suppliers.”

Whether the union will take that and possible disruptions to the F-35 program into account as they mull their relations with the company is difficult to predict at this point. Since the principal point of contention seems to be Lockheed’s wish to switch workers away from a traditional pension and over to a 401K system, a move that will not affect the current workforce, there’s the potential for a protracted strike if the members really believe this is a matter of principle.

On sequestration, Stevens said the leadership was “not ready to discuss of disclose any of the details…” of the company’s planning for the possible $53 billion in mandatory defense cuts that would fall next year. He also said Lockheed has not yet seen any effect on the size or number of contracts issued.

Although every day’s defense news is full of dark budget portents, Lockheed’s finances remained strong. Net income from continuing operations rose to $665 million from $556 million a year earlier. Sales rose 6.3 percent to $11.3 billion, the company said in a statement.

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