LockMar Buyouts Keep Heat On

The world's largest defense company is squeezing the sponge again, declaring a new plan to slash the ranks of directors and vice presidents.

"We're taking bold and responsible action to address the new reality of our business environment consistent with our customers' need to improve efficiency and deliver additional savings," Lockheed Martin Chairman and CEO Bob Stevens said in a press statement. "Our customers are facing increasing demands with constrained resources, and they're relying on us to give them the very best value within these constraints. This was clearly expressed by our top U.S. Department of Defense leadership in the recent announcement of major cost savings and productivity initiatives."

For the genesis of all this, see Defense Secretary Robert Gates speech at the Eisenhower Library and the ensuing declaration by Undersecretary of Defense for acquisition, technology and logistics Ash Carter that he was acting to ensure productivity gains in hopes of ensuring the Pentagon can continue to increase weapons buying by 2 percent or more each year for the foreseeable future.

As the company noted, this is the latest in a series of moves aimed at "lowering costs to keep pace with evolving customer realities," otherwise known as shrinking budgets resulting from the global financial crisis.

You can be sure that Joint Strike Fighter's international customers will be watching all this with bated breath, wondering how it will affect their pricing and the political salability of their participation in the program.

The latest move comes after a major business reorganization, sale of two units and major reduction to its participation at air shows such as Farnborough. Senior Lockheed types have until Feb. 1 next year to leave the company under the buyout program.

Obviously, some high fliers will expand their grasp on company business. And Lockheed says the resultant "streamlining is expected to provide more immediate, direct communications within the corporation and with its customers." That is a laudable goal, but a bureaucracy as extensive as is Lockheed's will find it challenging to actually reduce numbers and improve communication without causing friction that will actually worsen communications, at least in the short term.