Saturday, September 11, 2010
Executive layoffs at Boeing, Lockheed Martin signal tough times ahead
Posted by John McHale
Boeing and Lockheed Martin leaders call it re-aligning, focusing on core competencies, better positioning for the future, empowering the younger generation, yadda, yadda, yadda... but what they really mean is that the Obama Administration's next Department of Defense budget is likely to be a lot smaller than in years past and the big primes want to hoard their cash now by eliminating high-level executive salaries -- about 600 in the case of Lockheed Martin.
I'd heard rumblings in my travels this summer from defense electronics suppliers that there could be trouble in the defense market. These recent announcements from behemoths -- Lockheed Martin and Boeing -- are probably only the beginning. It's not that hardware and software solutions won't be needed it's just that there will be fewer opportunities.
The growth areas will continue to be unmanned systems and electro-optics for unmanned and other intelligence, surveillance, and reconnaissance platforms. Electro-optical companies should still see steady growth. A sign of this might be the recent acquisition of electro-optical systems and multispectral sensors specialist OASYS Technology LLC in Manchester, N.H., by BAE Systems.
As one system integrator told me at the AUVSI unmanned systems show this summer in Denver "we know there will be unmanned platforms getting funding, but guessing the right one will be the trick."
Do not fear Lockheed Martin and Boeing are not in trouble and they are still cash cows, but they are letting go of some experienced good people and that is unfortunate to say the least.
This reminds me of something someone once told me when there were layoffs at a publishing company I'm somewhat familiar with. A long-time manager was let go not due to cause or because his property was performing poorly, but rather to maintain the property as a cash cow -- that at the end of the day it's all about maintaining cash cowness.
I hope that someday I find my own cash cowness...