The Strategic Imperative of Partnership

Remarks By Robert J. Stevens
Chairman, President & CEO,
Lockheed Martin Corporation
Lockheed Martin Media Dinner
London, England - 07/16/2006

Welcome, everyone!  We’re honored to have you here.

It’s hard to be here and not have some thoughts “Churchillian...”

Winston Churchill once said, “My idea of a good dinner is first to have good food… then [to] discuss good food… and after this good food has been elaborately discussed, to discuss a good topic – with myself as the chief conversationalist.” 

We’ll depart in two ways:  the evening will be structured to broaden the conversation ... and, more critically ... you don’t want to eat a meal I planned or prepared.

The history buffs in the audience may know that the first Farnborough Air Show was held in 1948 (Hendon 1920-1937 / Radlett 1946-1948) – just as the Cold War got under way.  That was the year of the Berlin Blockade, and the airlift that saved West Berliners.

Well, obviously, the Cold War is behind us now.  And yet, demand for military capabilities is growing.  Because the relatively static Cold War confrontation was replaced not by peace but by a host of unpredictable, dynamic, complex, global threats.  And, as a result, the list of things governments must do has grown

Governments still have to be equipped to meet combat capabilities.  But they also have to be prepared for stability operations… peacekeeping missions… and out-of-area deployments – where the front lines are ill defined and the battlespace can be anywhere and everywhere. 

They still have to worry about the prospect of traditional state-on-state conflict.  But they must also confront the threats of terrorism… proliferation… and pandemic disease – in a world where danger may not only arrive on the tip of a long-range missile, but in a backpack, a shipping container, or on the wings of a migrating bird.  Governments must also ensure their armed forces can respond to humanitarian crises – as the tragic litany of natural disasters we have seen in recent years has made clear.  And they must do it all with military forces that are much smaller than they were when the Berlin Wall came down in 1989.   

These are tough challenges… but we believe that responsible governments understand their obligation to meet them.  That’s one reason why we think the U.S. defense budget will keep growing to some degree -- no matter who sits in the Oval Office, or which party controls the Congress.  We predict defense spending in the UK and Continental Europe will stay modest by comparison… but we still see strong future potential in these markets, as nations become more selective about priorities, and as they seek to maintain interoperability with the U.S. military.  That’s certainly been our experience with the F-35 Joint Strike Fighter – and we’re also seeing growing interest in network-enabled capability… next-generation command and control systems, air and missile defense systems, and advanced integrated training systems, among others. 

But there’s another important corollary to the new security equation, beyond the need for sustained long-term investment.  Today, in a world where defense requirements are growing faster than resources, partnerships have become a strategic imperative, for governments and industry alike.  The reasons are clear.

First, partnerships help us sustain innovation.  No single company has all the ideas or all the answers.  No firm has a monopoly on talent.  But when we combine our respective strengths to develop new generations of technology, we can offer governments more capability at greater efficiency.  And that’s as true for the United States as it is for other countries.

Second, partnerships bolster trust and goodwill among allies and friends – especially partnerships built around vital interests like security.  Our nations can draw on that reserve of common cause to tackle a host of common challenges – and help ensure that transatlantic unity doesn’t fray at the very time we need it most.

Finally, partnerships are a necessary response to the modern threat environment.  Terrorists are networked and working across borders.  The civilized world must do the same – not only a responsibility that falls on our governments, but also on the companies that will supply the systems and technologies that enable them to prevail.

That’s why, since the last Farnborough Air Show in 2004, Lockheed Martin has invested significantly in the UK – doubling our footprint, to more than 1,500 UK citizens on UK soil.  We’ve largely focused our acquisitions on companies that bolster our network-enabled capabilities. 

With our British industry partners, we’ve won important new business to provide long-term support for the Merlin helicopter and Hercules transport fleets, and are developing the information technology infrastructure that will enable the British Army to manage its fleet of wheeled and tracked vehicles.  We’ve opened a new System Design and Integration Facility at Havant, which will play a crucial role in developing advanced concepts for helicopter mission systems.

We’ve also established a lab at Farnborough we call SWIFT – a state-of-the-art Software Integration Facility and Technology Centre, where we can run detailed, real-time experiments in a network-enabled environment – to help our customers solve complex problems in areas such as surveillance and reconnaissance… intelligence… mission management… situational awareness… and battlefield visualization.  In addition, SWIFT enables the UK to access technologies in the United States… and helps develop “joint” systems and operations.

We’ve also continued our longstanding collaboration with British companies -- such as BAE SYSTEMS… Rolls-Royce… Smiths Aerospace… Serco,…GKN…and Marshall Aerospace.

And as our company looks at the scope of our engagement in Britain, we think it’s strongly aligned with the objectives of the UK’s Defence Industrial Strategy – objectives like creating indigenous capabilities, especially in the high-priority area of systems integration… improving the UK’s logistics excellence… and forging effective partnerships. 

Through endeavors such as the JSF… Merlin…… Atomic Weapons Establishment… and many others, we’ve established a clear track record of performance in partnership with British government and industry… and we believe it positions us well as we compete for new business.

Across the Channel, Lockheed Martin is doing business in virtually every country in Continental Europe.  Soon, we’ll deliver Poland’s first F-16s.  The MEADS air and missile defense program with Germany and Italy is performing well.  Together with Navantia, we continue our effort to integrate the Aegis combat system on frigates for Spain, Norway, and potentially other customers around the world. 

And we’re “walking the transatlantic cooperation talk”– helping EADS gain a role in the U.S. Coast Guard’s Deepwater program… and using the Italian Fincantieri design for the U.S. Navy’s Littoral Combat Ship.  The LCS program also involves many, many other partners from this side of the Atlantic.  We’re also proud of our work with British and Italian industry leaders through our partnership with AgustaWestland-Bell on the team we are leading to build the VH-71 helicopters that will fly the President of the United States. 

As we look at new partnership opportunities across the globe, India is clearly a nation we think we can build a lasting relationship with.  I believe that the emerging U.S.-India strategic relationship is critical to U.S. national interests.

The U.S.-India Civil Nuclear Initiative is, today, at the center of this strategic relationship, and I am pleased to see a balanced and bipartisan bill making its way through Congress.  The Civil Nuclear Initiative is a key prerequisite to a growing bilateral defense relationship which is important for U.S. national security interests, potential defense trade opportunities, increasing partnerships, and enhanced interoperability between India and U.S. military forces.

And of course, we’re especially excited about the F-35 Joint Strike Fighter.  There is no other military aircraft program of its significance anywhere in the world – not only because of its technological superiority, but also its multinational roots and outstanding global potential.  The F-35 is one of only two 5TH Generation (highly advanced) fighters in the world.  For completeness, the other happens to be the F-22.

The F-35 JSF team includes the governments of the United States, the UK, Italy, The Netherlands, Turkey, Canada, Australia, Denmark and Norway, and the industries of all those countries.  Together, we inaugurated the first aircraft just nine days ago. 

The first F-35 Joint Strike Fighter will take to the skies later this year.  And the partner governments are scheduled to sign the production, sustainment and follow-on development M.O.U. in December – paving the way for production to start on potentially thousands of aircraft over the next three or four decades.

With so many program milestones, you might think 2006 was the year of the JSF.  But we think the JSF partnership model also points the way for decades to come.  It taps into a global supply chain in a way that is unprecedented for a military aircraft program:  Companies must earn their way onto the team by providing best value, but once they’re on board they will be a part of every JSF built – as long as they continue to perform on cost, schedule, and quality.

So it’s good for business.  But it’s good for national and collective security, too – because by working together to build this stealthy… supportable… affordable aircraft, we’re also building a stronger, more cohesive industrial base to protect the interests of the United States, its allies, and all who believe in freedom and democracy. 

And yet, as successful as we think the F-35 experience has been thus far, we remain focused on the government policy on trade and technology transfer. 

The fundamental question is whether the U.S. and European governments will remain committed to an open business model with transatlantic partnerships, or whether they’ll revert to narrow nationalist models with protected and subsidized industries.  (We’ve had this discussion before.)

It’s encouraging to see the United Kingdom’s continued strong commitment to an open marketplace.  As a result, the UK gets good value for money and access to the best of global technology -- while creating significant industrial benefits at home.  But we are concerned that elsewhere within the European Union, and in the United States, the impulse toward protectionism may be gathering support.

Protectionist policies may be well intentioned, but they can’t succeed long-term – and leading firms on both sides of the Atlantic understand this very well. 
The fact is, the global marketplace offers capabilities not present in our domestic arenas – and wider opportunities than any of us can hope to secure at home.  That’s why Lockheed Martin applauds ongoing efforts to make the U.S. and European marketplaces even more competitive and open. 

Beyond trade policy, if governments are to realize the full value of international partnerships, they must also reform technology transfer regulations.  We cannot let rogue regimes or terrorists obtain critical technologies.  We know that.  But the current system takes an excessive toll on allies’ resources, patience, and goodwill – and actually risks constraining us from working together to develop the best defenses against common foes.  The recent agreement between President Bush and Prime Minister Blair on F-35 technology transfer is a welcome, important, and positive step.  Now, it’s time to build on that momentum. 

Lockheed Martin believes it ought to be possible for the United States and allied governments to develop a policy that facilitates technology transfer … while ensuring appropriate safeguards to keep advanced technology from falling into the wrong hands. 

We’re confident the Bush Administration and Congress understand this issue’s importance, and that they’re beginning to take the necessary steps to achieve those reforms.  And we’ll continue to do our part to advocate for change, so transatlantic partnerships and defense cooperation can flourish to their fullest potential.  Because when Lockheed Martin says, “partnerships make a world of difference,” it’s not just a catchy slogan – it’s at the core of our beliefs, our vision, and our values. 

Getting partnerships right is the key to doing right by the people we serve – generating more military capability at lower cost… fueling the fires of innovation that set our industry apart… and enabling allies to face down the threats of the future as they have in the past. 

We look forward to deepening and expanding our ties with industry partners in the United Kingdom, Continental Europe, and beyond. 

Thank you very much.

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