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Lockheed, Others Turning Back to Air Shows

Jul. 12, 2014 - 04:30PM   |  
Stronger Presence: An inside view of Lockheed Martin's chalet at Farnborough in 2012. Reversing recent trends, some defense companies are upgrading their delegations to the major shows.
Stronger Presence: An inside view of Lockheed Martin's chalet at Farnborough in 2012. Reversing recent trends, some defense companies are upgrading their delegations to the major shows. (Lockheed Martin)
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WASHINGTON — For the past five years, as defense spending peaked and then slowly began to march downward, major US defense contractors, including one of the most conspicuous cutters, Lockheed Martin, had been downsizing at air shows — reducing the number of staff members, shrinking booths and chateaus, and keeping executives home.

But with companies looking outward for potential growth while the US market remains stagnant, that trend seems to be reversing. Many organizations now look at air shows as an opportunity to gather disparate sets of customers for tightly packed meetings to promote sales.

“We’re going to look at those airshows, the larger airshows, as major events that give us an oppor­tunity, that brings together a lot of delegations from around the world,” said Marilyn Hewson, CEO of Lockheed Martin, at a recent company press day.

“They’re absolutely a key part of our effort. We are growing our business internationally, and it’s a great place for us to come together with our customers and have a chance to talk about our products, our capabilities.”

Hewson will be flying to the UK for the Farnborough International Airshow, where Lockheed will show off its F-35. That’s a notable departure from her predecessor, Bob Stevens, who skipped the major shows toward the end of his tenure, and also held back his No. 2, Chris Kubasik.

“I traveled, but Bob and Chris Kubasik at the time did not,” said Pat Dewar, who heads Lockheed’s international efforts. “It was noticed.”

Dewar said that Stevens was reacting to a change in customer attitudes as the exorbitantly expensive shows of the 1990s began to feel anachronistic in the face of increased focus on value and cost savings. And the pendulum might have swung a bit too far toward austerity.

“The pendulum that Bob Stevens had to address, the pendulum swing of the customer attitudes was, ‘tell me how this fits my affordability regime,’ ” he said. “All American companies, we were overboard. The presence was large, but then so was the extravagance of that presence. Nothing that Marilyn [Hewson] said to you indicates that we’re going to be extravagant.”

Lockheed’s executives have been repeating that this new push will remain cost-effective, and that the emphasis is on customer relations. Executives are spending more time overseas to make sure that buyers get what they want when they want it, and that the equipment and services are tailored to their needs.

That’s a big part of doing business internationally, and it is something that most American companies are promoting as they try to find prospects for growth while US defense spending, long the 500-pound gorilla in the defense sector, begins to get more svelte.

“There’s continuing pressure on these companies to show where they’re going to find growth, and to show what they’re doing in those areas,” said Phil Finnegan, an analyst with the Teal Group.

“In the past few years we’ve seen a shift. There was a time when a lot of companies were talking about homeland security, healthcare IT, cyber. Some of those have worked out and some of them haven’t. It makes sense that these companies are now focused on international.”

But the international market has challenges of its own. Because buying power isn’t concentrated in any individual country, it takes an enormous amount of effort to produce big numbers in aggregate.

“Ultimately, the problem that these companies face is that the markets they are going after are much smaller than the US defense market,” Finnegan said.

Here’s where the shows come in. Delegations from around the world gather at air shows such as Farnborough, and getting senior executives into meetings is much easier in the close confines of an individual airfield. And companies are shaking off their past downsizing and putting their executives back on planes. ■


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