Marillyn Hewson, Chairman and CEO of the nation’s biggest defense contractor, today announced immediate steps the company is taking to assist its workforce, customers and communities in coping with the spreading viral pandemic.
Acknowledging that the campaign to contain COVID-19, the respiratory disease caused by coronavirus, will be a long-term effort, Hewson said Lockheed Martin will be guided by three priorities.
First, it will continue protecting the health of workers and their families, a process that began weeks ago. Second, it will continue delivering defense products to its customers. Third, it will assist communities and the federal government in dealing with what Hewson described as a national crisis.
The commitment to continue production stands in stark contrast to the pattern in some other industries. For instance, nearly all of the automobile assembly plants in the U.S. have slowed or stopped production. However, pursuant to Pentagon direction, Lockheed is working to sustain output of its military products.
Lockheed Martin Chairman & CEO Marillyn Hewson is posturing her company to support federal efforts … [+]
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To ensure that production of defense-critical items does not falter, the company is advancing $50 million to small and medium-size companies in its supply chain whose businesses may be threatened by the pandemic.
It is also donating millions of dollars to non-profit organizations engaged in COVID-19 relief, and establishing a disaster relief fund to assist company employees and retirees who are hardest hit by the pandemic.
Perhaps most importantly, Lockheed Martin is continuing to recruit and hire technical talent at a time when millions of Americans are filing for unemployment benefits. The hiring process has shifted to the use of virtual technology so that it can progress without risking spread of the virus.
Beyond those steps, Lockheed Martin is also making its engineering and other technical staff available to assist government at all levels in addressing the crisis; donating use of its corporate aircraft and vehicle fleet for tasks such as delivery of medical supplies; and opening its facilities for activities like testing and logistical support of healthcare.
Companies like Lockheed Martin that are focused mainly on military production are in an unusual position in the coronavirus crisis because the government is their principal customer. They are more insulated from deteriorating business conditions in commercial markets, but they are also subject to federal mandates concerning how they manage their business.
Because processes are already well established for channeling funds from the government to military contractors, there are fewer uncertainties associated with sustaining economic activity than in the case of, say, commercial air carriers. Some airlines will need a federal bailout to avert bankruptcy if the coronavirus pandemic persists, but the impact on the economy will be muted as long as passengers elect not to fly.
The defense industry, in contrast, will continue channeling money to its workforce and surrounding communities in the process of meeting federal commitments. CEO Hewson’s decision to spend company funds on shoring up endangered subcontractors is essential to ensuring this dynamic does not break down.
From its earliest days, the Trump Administration has treated the defense sector as an integral feature of the nation’s industrial base, a major exporter and source of jobs. In the current pandemic, that role bulks larger because defense continues to operate even as other industrial sectors falter.
Thus, sustaining cashflow to the defense sector has an economic benefit that is even more apparent today than it would be in normal times. It looks like defense is one of the few sectors that will hold up well in the coronavirus crisis, and help resist forces driving the national economy into recession.
Lockheed Martin contributes to my think tank and is a consulting client.
