Global Partners Building Global Security

Remarks By Robert J. Stevens at the
Paris Air Show Media Dinner
Chairman, President and Chief Executive Officer,
Lockheed Martin Corporation
Le Bourget, France - 06/14/2009

MR. STEVENS: Thank you. That is very kind of you. It is nice to see you all. First, let me start by thanking you for sharing this evening with us. You know, our senior leaders are assembled here with you.

As Ron said, the evening is on the record for us. But it is really one of the best events for us at the Air Show, because it is a pretty rare opportunity for us to have you all gathered together and get to hear the global view that you offer us, in addition to us telling you a little bit about our company.

So thanks very much for joining us, and enjoy the conversation this evening.
Our thoughts this year are very much on the need for global partnerships and that are absolutely essential for building global security. We have long advanced the view that the global security environment is really not getting more simple. It is getting more complex, with many interrelated parts that are moving much more rapidly, resulting in persistent and diverse challenges as the definition of global security evolves.

And what we would like to do tonight is to describe for you why we hold these views, how we see the global security environment expanding, and define what global security means to us.

If we look back in time, it was 46 years ago this week that President Kennedy first announced talks on a limited test ban treaty, because at that time nuclear weapons posed the most dominant threat to the planet, and there was recognition that some action needed to be taken with some urgency to change direction, to constrain their development, to contain their expansion.

And yet today the threat of nuclear proliferation not only persists, but is arguably more evident than ever, as North Korea tests its nuclear arsenal, and works on systems that could be construed as delivery vehicles, as Iran pursues a nuclear program in what appears to be an expression of national will, and as mounting instability in Pakistan raises real fears that the country's most dangerous weapons will fall into the most dangerous hands.

In 1963 when President Kennedy first discussed the treaty, acts of terrorism were not daily events. But in 2008, the State Department reported 11,770 acts of terrorism, causing more than 54,000 casualties and more than 15,000 deaths. Criminal gangs today, including those engaged in piracy, have grown in scale and sophistication and are now organized much like multi-national enterprises.

Consider this: Somali pirates get weapons from Yemen and seed money from global sources. They hijack ships registered in Europe and the Bahamas. The conduct their negotiations in English, and the ransom payments flow through Lebanon. According to the International Maritime Bureau, there were 111 such incidents last year off the east coast of Somalia and in the Gulf of Aden, 42 of which were successful. And there have been more attempts this year than all the events last year.

Al Qaeda remains alive and well and is a now a decentralized franchise operation, a brand name, and a set of operating procedures. That means that we may well be working to uncover an al Qaeda plot that al Qaeda leaders don't know about.

We think we saw a manifestation of this in the Mumbai attack last November. Attackers carried GPS cell phones along with guns and grenades and used Google Earth to scout their locations. Planning took place in Pakistan, and in Spain, and in Texas. Gunmen operated in autonomous two-man teams, each one with a mission kept secret from the others. And the resulting violence was both more coordinated and more random than previous attacks.

Border disputes between countries with varying claims on territory are as old as humankind, and have traditionally been met with a conventional military response. And we have seen some initiatives to build up conventional forces around the globe.

But in August of 2008, quite beyond the traditional or conventional, just a few hours after Russian tanks crossed the border into Georgia, civilian hackers were directed to the website StopGeorgia.ru, and, working largely from home computers, crippled the Georgia government.

In May of 2007, in a similar fashion, the government of Estonia was brought to a standstill. Network penetration, data exfiltration, distributed denial-of-service attacks, embedding malware, all of these techniques are becoming common practices designed to compromise or corrupt our information environment. Because of events like these and others, from now forward, we are compelled to consider the impact of information operations and the prospect that cyberspace is a potential battle space.

And even as we meet here tonight in Paris, the World Health officials continue to measure the progress of the H1N1 virus. In less than seven weeks from the first reported case, the disease has now been confirmed in more than 30,000 people in 74 countries, including 73 cases here in France. And there have been 145 deaths reported worldwide.

The evolution of viruses like this is not new news. In the Great Influenza of 1918, 50 million people died; in 1957, two million; and in 1968, one million. And there is something we know about viruses that is a scientific fact, and that is that viruses mutate.

So I will ask one question, and only one, of you tonight, highly rhetorically. How satisfied are you that the organizations that you are affiliated with have a comprehensive response of pandemic evolution? Or, for that matter, have you had this discussion with your families? From the very real prospect that someday in the future this evolution might occur.

Compounding all of these security concerns -- nuclear proliferation, conventional arms buildup, terrorism, piracy, cyber security, and information operations, and a response to a pandemic are two indisputably global phenomena: the growing concern over the quality and sustainability of our planet's environment in conjunction with the worst economic contraction since the Great Depression.

We see evidence with each passing day that the growing population of our planet is placing new demands on already scarce resources, like food and water and energy. Typically, in the past, the consequences of this kind of instability have been viewed through the prism of disaster relief or development assistance, with individual programs tailored to individual circumstances.

But as we contemplate the sustained suffering of the people of Darfur, or many other regions of the world, or the quality of the air we breathe or the water that we drink, or the future of the Arctic North, or the legacy that we are going to leave behind to our children's children, it is increasingly clear that the stewardship implications of resource and climate issues are broadly geopolitical and must be more prominent on our global security agenda. And none of these conditions is helped by global economic insecurity.

We associate ourselves fully with observations offered by U.S. Director of National Intelligence, Dennis Blair, who described the deteriorating global economy as America's primary near-term security concern, not only because of the very real pain it is inflicting on our citizens and people around the world, but because prolonged economic recession increases the risk of instability, which in the words of Admiral Blair, can loosen the fragile hold that many developing countries have on law and order.

Today's humanitarian or economic challenges could morph into tomorrow's security crises, with mass migration, the spreading of disease, civil unrest, or even armed conflict. We believe this interconnectedness among issues that drive the global security environment is something the Obama administration understands very well.
That is why Secretary Clinton describes the three pillars of U.S. foreign policy as defense, diplomacy, and development, and why Secretary of Defense Robert Gates has repeatedly argued that the challenges the United States faces today cannot be dealt with by military means alone. They require whole-of-government approaches.

We share this broader view of global security. We have embedded its principles into our strategy more than four years ago, and took actions to shape our portfolio accordingly, because our goal is to provide our government customers with tools that support their missions, and enable them to provide true security, not just for defense, meaning the prevention or response to military attack, but broader human issues impacting the prosperity, safety, well-being and advancement of people around the globe.

The fact is, our fates and fortunes are linked as peoples, as countries, and as regions. So at Lockheed Martin we recognize that global security is human security, which comes down to the basics people depend on in their daily lives -- access to fresh water and a clean environment, the availability of essential health care, the building and maintenance of crucial infrastructure, the efficient and effective delivery of government services, security of energy supplies, and, most importantly, strong institutional mechanisms for stability and peace.

In all these areas and more, we remain focused closely on what our customers are confronting, so we can align their needs with our experience and expertise. Beyond those capabilities so readily attributed to our company, like airplanes and missiles and spacecraft, we have been building strength in other important areas as well.

We have been the largest information technology provider to the U.S. Government now for more than a decade and a half. We help protect the information technology infrastructure on which our governments and our societies depend, helping customers safeguard their systems from attack, and keeping their systems up and running even if an attack is underway.

We have experience that can add value to discussions about how we use the energy resources we now have, and explore new sources of alternative energy, from energy efficiency programs for utility companies and the Federal Government, to concepts for ocean thermal and solar powerplants to harness reliable, renewable energy.

We offer technologies for safe and secure transportation, cargo tracking, and port and border security, helping customers detect whether a container has been breached by unauthorized personnel or the temperature inside exceeds acceptable levels for a perishable good or a hazardous material in a world where millions of freight containers arrive at international ports each year.

And Lockheed Martin employees can be found in some of the world's most challenging environments, working alongside host country and other partners to build and strengthen institutional capacity for stability and peace. From constructing camps for peacekeepers in Africa, to providing election observers to the Organization for Security and Cooperation in Europe, to assisting in rule of law activities in Afghanistan, we are proud to be playing a role in building partnership capacity and contributing to stabilization efforts across the globe.

Now, as important as it has been for us to redefine what global security means by highlighting these illustrations for you, it is equally critical to reestablish how global security challenges are best met. To meet the demands that we face together, we must work together. And that means global markets must remain open, and global partnerships must remain healthy and mutually beneficial.

For years our strategy has been built on this foundation. Our conviction and ability have been reflected in programs like the NATO Standard F-16 selected now by 25 countries to fill critical needs, the C-130 that has been in service for more than 50 years and is experiencing a genuine resurgence in demand, and the Joint Strike Fighters that we believe will set the standard for the next half century.

The partnerships that have been defined by these programs and others have been built on the principles of mutual respect, full and fair value, and performance excellence. During times of economic contraction and stress, which certainly describe the times we are in now, there is an understandable desire for countries to look inward to protect companies and to protect markets.

But as tempting as protectionism might be, it is a counterproductive response, distorting markets and dislocating trade flows that, in the long run, hurts customers, companies, and taxpayers alike.

As my friend and colleague Allan Cook, who is Chairman of the Aerospace and Defense Industries Association of Europe, recently said, and I will quote him here, "This is no time to promote a 'European fortress' or 'Buy America' campaign. Such measures would lead, at a minimum, to expensive and inefficient purchases and, at worst, to prolonging the downturn."

That is why we were very encouraged by the European Commission's Directive on Defense Procurement issued earlier this year, which seeks to introduce more competition into the European market, and pleased that the European Parliament did not include protectionist provisions or require reciprocity in defense trade in the final legislation.

While the Commission was focused on the internal European market, we believe greater transparency and openness in European defense procurement can also lead to a greater deepening of transatlantic links, and we hope that national parliaments will adopt the European legislation in that spirit. Of course, an open, integrated transatlantic marketplace requires a two-way street, and Lockheed Martin has been promoting this course of action for years.

We recently announced our partnership with Eurocopter to offer a version of the EC-145 helicopter to the United States Army. Our company is facilitating the acquisition of the CN-235 maritime patrol aircraft for the United States Coast Guard.

We are providing the Aegis naval combat system in a partnership with shipbuilder Navantia of Spain, an effort that has generated additional business for both sides as we expanded the partnership to include Kongsberg of Norway, and now we will be working with Australia on their new Air Warfare Destroyer.

And our Littoral Combat Ship includes components from a global supply chain that can constitute a significant percentage of this incredible vessel's content. This ship can make a zero-radius turn, turn fully loaded at 30 knots in the span of three ship lengths, and reach speeds of more than 40 knots in less than two minutes. I know this personally because I have been on board this ship. It is truly remarkable.

And I will make a promise to you this evening. If any get onboard this ship, and stand on the front of the vessel at 50 miles an hour, I guarantee you will believe it is a time machine, because even with the slightest of headwinds you will look 20 years younger. (Laughter.) You will look fantastic, and you will have a wonderful day on a ship.

Our international cooperative development programs continue to perform strongly as well. The Medium Extended Air Defense System we are developing with our German and Italian partners is proceeding well, and the three partner governments remain committed to delivering this capability to NATO in the coming years. MEADS will use our PAC-3 missile, for which we are seeing significant international demand. And our flagship international cooperative program, the F-35 Joint Strike Fighter, is on track.

2009 is shaping up to be a year of firsts for the program, with the first vertical landing of our production F-35B short takeoff and vertical landing variant. Our first flight of the carrier variant we are targeting toward the end of the year, the first training aircraft delivered to the United States Air Force, and the first F-35 production orders from our British and Dutch partners.

We are also encouraged by positive developments with our Norwegian, Italian, and Australian partners on this program, and by President Obama's support for the U.S. Government buy of 30 aircraft in the 2010 budget, and the reaffirmation of the desire to purchase 2,443 airplanes for the United States Government.

We are moving aircraft off the assembly line at a rate of about one a month, and that pace will continue to accelerate, supporting thousands of advanced technology jobs in the United States, and in our partner nations as well.

We will also keep validating the F-35's highly sophisticated systems software and hardware by adding to the more than 1,100 hours of avionics flight testing and 115,000 hours of laboratory testing already completed. These network-enabled systems underpin not only the F-35's superiority in the skies, but also its surveillance, monitoring, information-sharing, and cooperative engagement capabilities, all of which will be highly relevant in the 21st century challenges that we face.

We are excited about what lies ahead, and our commitment to our customers here is absolutely unwavering, because, especially in turbulent times like these, ours is a business of fundamentals -- performance excellence, superior value, unquestionable integrity.

In our view, the world's security challenges are not going away. They aren't getting any less complicated, and their volume and their consequences are rising. At a time of global economic stress, the resources available to meet challenges are constrained, and that means execution and affordability are more important than ever. And understanding how our customers define value, and making sure we provide it each time, every time, is more critical to us than ever.

I am confident we are going to meet these future challenges. The principal reason for my confidence is in this room with you this evening. I believe we have the finest leadership in the aerospace defense industry today, and this leadership represents 147,000 of the best professionals you could ever hope to work with, and we look forward to meeting future challenges.

With that, let me open the floor for your questions, and please feel free to direct the most difficult questions you have to any of my colleagues. (Laughter.)

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