Lockheed Martin 1996 Annual Report Download - page 7

"In 1996, we made impressive
progress on our corporate-wide
consolidation plans."
Loral's electronics and systems inte-
gration businesses represent an especially
strong complement to the rest of Lockheed
Martin. Electronics not only drives much
of the growth in the commercial market-
place but also accounts for 45 percent of
the Defense Department acquisition
budget — up from only five percent at the
end of World War II. The systems integra-
tion area also gives us outstanding growth
opportunities — with an expanding number
of civil government and commercial appli-
cations. Areas expected to grow in the rel-
atively near term include command,
control, communications and intelligence;
simulation and training; federal govern-
ment outsourcing of information systems
and services; advanced air traffic control
systems; and space-related electronics.
The markets served by the former Loral
businesses, combined with the synergies
and efficiencies created with heritage
Lockheed Martin operations, have
improved our outlook for long-term top-
line and bottom-line growth, as well as
cash flow.
Consolidation on Track
Business combinations, although much
publicized, merely assure a position at the
starting gate on the fast track of reengi-
neering. The really tough challenge
is the timely implementation of consolida-
tion and restructuring activities following
a merger or acquisition. Our overarching
objectives have been to eliminate duplica-
tion, close unneeded facilities, institute
best practices, capitalize on economies of
scale, generate synergy and, generally,
maximize efficiencies. It's a difficult and
often painful process — definitely not for
the timid. But it's critical to reducing
costs, enhancing competitiveness, acceler-
ating growth and creating more jobs — all
of which ultimately benefit customers,
employees, U.S. taxpayers and, of course,
our shareholders.
In 1996, we made impressive
progress on our corporate-wide consolida-
tion plans. We reorganized three sectors,
closed a number of unneeded facilities,
relocated and combined some major
programs, and unfortunately announced
the elimination of a net 1,600 jobs in
connection with this reorganization.
The latter item was the most difficult,
and some critics of our industry used it
as an opportunity, once again, to fire
superficial charges and slogans like
"payoffs for layoffs."
Everyone is of course, entitled to
their own opinions. But no one is entitled
to their own facts. The facts in this case
are that major layoffs in this industry are
driven by declines in the defense budget
and would probably have been much
greater if not for restructuring actions
that, quite literally, let companies like
Lockheed Martin grow while budgets
shrink. We also did the best we could to
cushion the blow for those dedicated and
able individuals whose jobs were affected.
For example, many employees were
offered transfers to other parts of
Lockheed Martin where their skills were
in demand — and for those who were laid
off, we provided severance packages, job
relocation assistance and various other
means of support. And, as noted earlier,
due to the enhanced competitiveness and
synergies realized from consolidation,
we have won major new programs and
begun hiring, and rehiring, in a number
of important areas.
Speaking of Winning...
The synergism (a very descriptive, if
sometimes over-used, word from the
Greek, sunergos, which means "working
together") gained from Lockheed Martin's
Photograph, left to right:
Vance D. Coffman
President and Chief Operating Officer
Norman R. Augustine
Chairman and Chief Executive Officer
Daniel M. Tellep
Chairman (1995 -1996) and Director