On September 9, 2013, Lockheed Martin announced that has revamped its A21000 satellite platform with a number of significant enhancements to the design architecture and manufacturing process. The update allows satellite operators catalog-to-order solutions for common parts, subsystems, and components. This allows a more tailored approach to a customer’s (mainly the government’s) needs.
As most of you know, Lockheed Martin is a company that relies mainly on government contracting and government procurement. It designs, researches, develops, and manufactures satellites, space vehicles, combat aircraft, missile defense systems, aeronautics, and intelligence systems. Obviously, most of these services and products are out of the scope and use of everyday consumers, thus reliance on government contracting.
The contracts run into the billions. At the beginning of this year, Lockheed locked in contracts for Patriot Missiles and information systems adding up to $271 million, but with the government tightening its belt, is that kind of funding sustainable?
Recently, Lockheed Martin laid off 114 employees in Salina, Kansas, which was part of a nationwide layoff of 367 employees. The lay-offs were due to uncertain program funding, a delay in contract awards, and an increasingly competitive market. Lockheed needed to figure out a way to market and develop themselves in a way that, if the department of defense slashes its budget, they won’t take huge hits or losses.
“We literally are transforming our business, engineering and production processes. Across-the-board benefits enable A2100 production at lower cost, risk and reduced cycle time, which yields shorter time-to-orbit and quicker time-to-revenue generation for commercial customers.” – Linda Reiners, president of Lockheed Martin Commercial Ventures
This is an indicator of a massive business strategy shift. Certainly, laying off employees makes a company leaner, but changing the way manufacturing, production, and designing takes place in the company more accurately indicates a leaner, more efficient Lockheed Martin for the future.
Truly, Lockheed Martin Commercial Launch Services (LMCLS), which is a wholly-owned subsidiary of Lockheed Martin, has been awarded a contract by the Secretaria de Commuicaciones y Transportes, a government agency in Mexico. Lockheed Martin will provide commercial launch services for Mexico’s Morelos-3 communications satellite (MEXSAT-2). The satellite will be launched from the Cape Canaveral Air Force Station in Florida in 2015.
This is promising for Lockheed Martin because they are showing less reliance on the U.S. government, and are marketing themselves for opportunities elsewhere. In 2012, Lockheed Martin’s sales to government accounted for 82% of its total sales. Only 17% went to foreign governments. I would expect that percentage to be higher in 2013 and even higher come 2014. That is good news for the company since budget cuts from the U.S. government are becoming more and more frequent.
Lockheed Martin, with its reliance on government contracts – especially from the Department of Defense – is at the whim of budget fluctuations. Their diversification into doing business with the Mexican government and other countries will increase so that they are less reliant on the U.S. government alone.
In March, Lockheed Martin invested $3 million to develop liquefied natural gas tanks for storage and transportation. This is a move away from their usual aeronautics/space/missile investments and developments. Especially with the increase in importance of natural gas on a global scale this development in their business is an indicator that Lockheed Martin is making smart, long-term marketing and investment decisions that will keep Lockheed as a viable option for more than just the A&D Industry.
Lockheed is also going after huge ambitious goals like nuclear fusion reactors that can be manufactured in factories. Nuclear fusion reactors are definitely a part of the future of energy consumption and power sources. This is a bit of long-shot, however. There is a good chance that Lockheed Martin will not be able to meet their goal of manufacturing nuclear fusion reactors on a larger-scale than is currently possible. But this business risk shows that they are willing to try the seemingly impossible for the sake of the common good.
There is a world demand for clean water, which is only going to increase. Lockheed Martin is also investing in supplying that demand with a product called Perforene. This carbon membrane (graphene) is only one-atom thick. Its function is to filter salt from water through perforations that are about a nanometer in size. This also points directly to the newest trends in government procurement.
Filtering salt water into fresh water takes an incredible amount of energy. According to Lockheed Martin, Perforene will reduce the energy required by 100 times than what is needed for other filtration systems. While the filter is still being developed, it could potentially severely reduce the cost of filtering water when it is in such high demand. This is yet another example of Lockheed Martin diversifying their business investments to include huge, relevant, and truly helpful and needed products.
Marketing Strategies Lockheed Martin is Using to Succeed