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00:00You think that women can run defense companies better than men where they can run all companies by the men. I would just say David it's a team sport isn't it isn't all about me. Donald Trump sent out a tweet saying that your biggest product the F 35 was too expensive. I personally engaged my team engaged to have a chance to have a dialogue with him. What's so unique about the EV 35. It is the most advanced fighter in the world. You were recently voted the 22nd second most powerful woman in the entire world. I get a note from my brother that said well why was Oprah higher than you or something like that but it doesn't look back. Would you fix your tie please. Well people wouldn't recognize me if my tie was fixed but stay with us . All right . I don't consider myself a journalist and nobody else would consider myself a journalist. I began to take on the life of being an interviewer even though I have a day job running a private equity firm. How do you define leadership . What is it that makes somebody tick since you've been the CEO the stock has gone up roughly three hundred and thirty percent. The market capitalization is up roughly 280 percent . Another company that you compete with General Dynamics has a female CEO as well and their stock is up about 250 percent since she became the CEO. That's Phoebe noble Kovac. You think that women can run defense companies better than men or they can run all companies by the we're going to have the audience. How many women are out there clapping but David I would just say David it's a team sport isn't it isn't all about me. On the performance of our company I'm really proud about what our team has been able to accomplish over the last five six years I mean my six years when you walk into the shareholders meetings and they give you a standing ovation. It must be pretty happy to have some happy shareholders. Yes but they always you know they always keep a beat on us to make sure that we're constantly creating value. So it's it's what have you done for me lately. So. During the transition of the president the United States Donald Trump sent out a tweet saying that your biggest product the F 35 was too expensive. And I think you were out of the country at the time. I was I was in Israel where we were delivering their first two EV thirty fives . So what was your reaction to the press United States tweeting that you were charging the U.S. government too much. Well first of all we needed to get those aircraft delivered. And you know one of the most interesting thing was that Prime Minister Netanyahu was at that event and he asked me about the fact that our new president was going to get a better price on those aircraft and you know maybe we should get a rebate on the ones that we were delivering. So that presented a bit of a challenge . But you know we you know what was important was to recognize what our president elect was communicating when he was trying to communicate to the American people that he was going to be that he was going to get good deals on the equipment that he purchased and that he's going to increase defense spending but he's going to make sure that he's spent the taxpayer's dollar wisely. And so we I personally engaged my team engaged and have a chance to have a dialogue with him. So you did give him a little discount. We drove the price down. Yes we got know we got the deal done and we did it in an accelerated fashion and we and he definitely had an influence on that. Now since he's been president the defense budget is now higher than it's ever been . I think over when you count everything over 700 billion dollars annually. So is this a great time to be a defense company CEO . Well let me just put it in perspective for you we're certainly encouraged by the fact that that our country is now spending more on defense. But if you just sort of look back over the last few years as we're playing catch up in a large way I mean certainly want to maintain our technological superiority over our adversaries or over the potential adversaries. What it's meant for industry is that we manage through that downturn just like any well managed company. But we didn't invest to the level that we would have in terms of innovation in terms of other areas of the business because we were in a down cycle now with the EV cycle. It's time for us to really bring forth the innovations and continue to spend the efforts that we had to align with the priorities of our customers. So do you need a security clearance. And how long does it take to get one of those. Well you know 60000 of our employees have security clearances so it's a very important element of our business I personally have to have certain we have some sensitive and classified information that I need to be briefed on. So I have the appropriate clearance associated with that. So let me talk about your background. You grew up in Kansas and your father died when you were 9 years old and you had four siblings. And how did your mother support five children. Well it was tough frankly. I mean my father was he was within department the army . And my mother was the at home mom with five children. And it knocked the props out of you know what was we were we were not you know we were average family but set us back a lot. But I give great credit to my mother who raised five children on her own and she just passed away a couple years ago at 97. So I mean an incredibly long life that she had and and she was from our. She she was from Alabama. But she taught us the value of a dollar. You know we had to learn how to economize at a very young age she'd send us in to pay the power bill the electric bill. She just got her kids out said you've got to learn how to do these things because you've got to be it taught me to be very self-reliant. I would say well I was told that she used to say to you go to the grocery store Here's five dollars and bring back seven dollars of groceries. Yes that's true. That's very true. So I learned how to economize. So I learned early out of economize. Yes. So you went to University of Alabama and did you get a scholarship but you didn't have to work. Oh no I didn't have a scholarship. I worked nights. I worked on what is called the graveyard shift so to speak from 11:00 at night 7:00 in the morning and then I went to class from eight to one or two and then I'd sleep. Then once I had a date and then I go right back to work and without sleeping because you can do that when you're 18 or 19 years old. But yes I worked full time paid my own way through school finished in three and a half years . And and you know do you do what you do in which you have to do so. So after you graduated say I want to be the CEO of Lockheed Martin. What did you say. No I started looking for a job and I took a job as an economist here in Washington with the Bureau labor statistics out of out of college. They were in the midst of redoing the Producer Price Index. It was a good job for a grad student to come in and so I actually started my career here . Four years later we look for the next position and I interviewed at several companies one of which was Lockheed in Marietta Georgia and started there as a senior industrial engineer. So when you went to Marietta Georgia you worked your way up you had I think twenty two different leadership positions so you must have been moving around a lot. There was a period of about 13 years I 18 months and I was promoted to supervisor in industrial engineering and then about the two year mark I was put on a general management development program and great credit to sponsor that and then he put me forward for the program so I spent two years rotating around the company and then the two years I was a manager overall of our production estimating and budgets. Now at one point your husband was unemployed and he got a job interview with a company and what company was that . How you surprise me a bit. He his company went out of business and so he was out looking for a job. We had a five month old baby so we were very much hoping he'd find a job and it was a tough labor market at the time that he came home one day and he said OK I got a job and I said where and he said I'm lucky. And you're like Oh sorry. I said what why. My my company you know that it just turned out he went to work in the finance department we didn't really cross paths I was in I was running industrial engineering by that time but it's interesting for about five years he retired from Lockheed after five years. So you have given him a lot of credit for what you've been able to achieve because you might describe if he retired he took on the role that you know many people would say a woman might have normally taken under the wife and he took on that traditional role. Is that fair to say. Yes I say you're retired. I mean our kids were three and six two boys and we moved from Marietta Georgia to Fort Worth Texas because my job moved. And so at that time. You know you don't how stressful it is to have a couple of young children at home. And so I said why do we try you working from home for a year. And we just never change the model. So he became the at home dad you know he was the coach he was the scout leader he was the one on the field trips and he managed that because I travel a lot in my job and we were maybe a new age family back then and the way that we worked but it worked for us and today our kids are in their 20s and they're off doing their thing and he's. But when I said he retired he basically was that fired remark he got he got a retirement check from Lockheed Martin not long ago. So. So he was five years away. So I guess he's happy with a shareholder performance as well. Yeah he is. Plus a lot of money to pay the marine one because you've got to have all kinds of security things in there . That's right. You know it's based on this estimate too which is a great commercial helicopter if you're interested in a helicopter. David I would suggest that you may get something good and get a good deal to get discounted by two or something . We can we can do it now let's talk a moment about the product I mentioned earlier their fighter jets. Now I've known for a long time there's an f 14 15 F 18. There was an F 22. And then you'd come up with something called the F 35. What happened between 22 and 35 . Well the fact is that aircraft are not numbered by Lockheed Martin. I mean they're the U.S. government determines what what the number is. So an F standing for a fighter a B for a bomber you know that the terminology is kind of general and usually it is sequential. We had we won the contract with with our x 35 which was was the experimental you named him with an X or Y if they were experimental or a prototype. So we had named our offering in this competition but when they announced the winner Lockheed was the winner. And and the secretary the Air Force said the F 35 and we were all shocked because we thought I was going to be the F twenty three. So once he named it that's what number it became. You don't want to tell him he made a mistake . I guess it seems somewhat of a contract. But so in the history of our country this is the biggest defense contract ever . Tens of billions of dollars I assume. Why is it cost that much to make these planes and what's so great about this plane . What's so unique about the F 35 35 a which is your conventional variant of the aircraft was priced at ninety four point three million dollars and we're on a path to drive that down to 80 million dollars by 2020. Think about that. You know you think about if you fly maybe you fly Gulfstream or something I think about one occasion for that. And think about that. Think about the most sophisticated jet fighter in the world that might cost 80 million dollars. I mean that's pretty remarkable in my mind it is. It is the most advanced fighter in the world. So it is basically a force multiplier. It's a fabulous aircraft and I don't have to tell you that talk to some of the pilots that fly in the S.R. 71 was a very famous plane that I think now is in the air and space museum at the Smithsonian. It went at I think six times the speed of sound or something like that three times very high. There was a rumor there was a rumor in the defense press somewhere that you're making an Assad 72. So can you tell us right now is that true. You know we are working on hypersonic sound hypersonic X would be something over a mock five. We're doing work in that technology and it's important technology. So that's probably all I'm going to say about it . OK. All right. Let's talk a moment about artificial intelligence presumably that's going to be very important for defense contractors as it is for other companies. Well that's a very important area that we're investing in. We think our customers are looking for solutions and to use that technology . But in artificial intelligence you can think about. We're working on a helicopter that will be unmanned. So that's an operating unmanned helicopter an unmanned helicopter. We have other unmanned vehicles that we have that autonomy and using the artificial intelligence for actually flying helicopters price for the unmanned drones so unmanned helicopter. That's that sounds pretty novel but even in the cockpit of our our aircraft you know it's very using the artificial intelligence by fusing commercial information in such a way that the pilot doesn't have to. You can't. The human mind just can't move at the same speed as what you can get through that computing power and so they can make the right decisions to deal with the situation . And we have we have such things as collision avoidance. So even on our EV 16th and we'll be putting this on our f 35 we have technology there through artificial intelligence that if a pilot doesn't realize that they're about ready to hit the ground this aircraft will take control and avoid we've already saved six pilots lives with that type of technology. So that's just a few examples of how we apply the artificial intelligence now one of your other products is a helicopter you bought Sikorsky helicopter from United Technologies. Why did you buy it. And are they making the Marine One which is the president's helicopter and how much has that cost here end of the prices aren't they why. I was trying to get him. I mean I'm always negotiating for a good deal. See. OK. All right. Well first of all yes we buy it because it's been doing business with them for over 40 years. And so when the opportunity came up we took the opportunity to buy the company great integration into our company. It brings a Blackhawk helicopter brings us CHF 53 K helicopter for the Marine Corps. And as you mentioned the Marine One I'm happy to say that that program is on schedule and on cost in producing that thing but it costs a lot of it cost a lot of money to make marine one because you've got to have all kinds of security things in there. Yes. So it's not something you can sell in any other country I assume. So you only make one twenty three and you're gonna make something like this . That's right. And when are they going to be available. I think it's 20 19 or so that they'll pay for so. But I was going to mentioned a to union no it's based on this estimate 2 which is a great commercial helicopter if you're interested in a helicopter . David I would suggest. I mean you know they're only around you know 35 40 million dollars. I mean I'm sure you could do that. Gotcha. Maybe maybe get something good and get a good deal to get discounted by two or something. Well you can we can do it. You know when you started out where you often the only woman in the room at the get lucky I was. But after that one ship contributing in your part of the team it was no longer a factor. You were recently voted the 22nd most powerful woman in the entire world. What did you say I should be higher. Or did you say I should be. That's pretty high. I get a note from my brother that said well why was Oprah higher than you or something like that. It doesn't look what's it like to be the CEO of our nation's largest defense contractor. You get about 70 percent of your revenue I think from the U.S. government. You know how much your time you have to spend with the U.S. government how do you spend your time let's say in a typical week percentage time. I would say somewhere between 60 to 70 percent of my time is with the strategy the business the customers and engagement around the world traveling around the world on the on the customer side of the business because it's important in my role to be out meeting with not only our congressional leaders and our government leaders to make sure we're aligned with what their needs are and their priorities. But I travel a lot outside of the United States 30 percent of our businesses outside of the United States with governments around the world. You were recently voted the 22nd most powerful woman in the entire world not just business but everything. So when you saw that did you say I should be higher. Or did you say I should be. That's pretty high. I mean how does it feel to be the 20 second most powerful female on the entire planet up three point six million women. You know I don't focus on it that much David. I mean I get a note from my brother that said well why was Oprah higher than you or something like that but it doesn't look bad. You know that's not something I'm focused there's lots of list. I mean it really comes down to having the privilege of leading a national asset and a company that's doing someone most important and interesting work in the world. When you started out where you often the only woman in the room at the Lucky I was. And so was that intimidating or was it kind of thing where you said I can show them I'm better than them. The men. You know I think is like any team you come into you have to establish your credibility. Recognizing that I was a different gender so maybe the first moment I was different in that sense but after that once you're contributing and you're part of the team it was no longer a factor for me at least through my career. But I'll tell you is really positive is that today 22 percent of our leaders are women 24 25 percent of our workforce are women. So the pipeline of women it's no longer the only there's only one woman in the room. We have many women leaders in the room. And it's you know we've come a long way on the pipeline back 35 years ago there weren't as many women coming out of engineering and other professions to come into the workforce just as the case was for a customer. But you look at our customer day look at our military services how many women are involved how many men and women that women are in uniform and and in leadership positions. It's just the pipeline issue and we're always working on that pipeline to get more women right. And what do you do for relaxation. Are you an exercise person or your traveler sports or what I'd like to play golf my husband and I'd like to get out and play some golf as relaxation like to travel . I mean our family gets together and travels. I travel a lot for the job probably 40 50 percent of my time I travel on a business travel. But one of the things we really enjoy is getting together as a family and to travel and I try to create some fun travel that our kids will find as long as mom and dad pays for it. It's fun. They'll come. Some people say that the higher a handicap of a CEO the better the stock will perform . If it's a low handicap that means the CEO is spending too much time playing golf. So you're not going to ask my handicap are you. I assume we are. What you're handicap your are you. Not a scratch golfer. No way. No no I don't play enough for that . OK. And today it sounds must be pretty low so if you can beat your husband. Is he better than you or no. Well he's better than me. But you know I always remind him that there's the average for women and there's the average for men and so long as I can. And if he has a close putt you just give it to him or just like that. So today what is the biggest challenge the U.S. defense industry has. Well the challenge that we have is really the challenge our customers have. We have a an environment where the threats today are so difficult around the world the global security environment is so unpredictable and is changing so rapidly. So you have the need for solutions to address that and to stay ahead of its threat and stay ahead of the adversaries at the same time. We have constrained budgets and the budget pressures that we faced over the last several years and maybe we're having to spend money on near-term getting things back up to readiness instead of investing in what we need to do to address the power competitions that we have out there with our adversaries. So that then in turn is a challenge for industry because if you haven't been investing along the way we've got a you know we've got to move with speed while at the same time driving costs down. And what about cyber warfare . That must be an important part of your business. How do you make certain that our enemies around the world aren't trying to get your secrets. I can't. I mean they are trying to get our secrets. I mean this is a constant threat that a company like ours and many countries companies have in the US of other countries trying to get our secrets and we take it very seriously because we know that we are a target and government customers are a target. So we have we've invested a lot in the technologies that to protect that. But I think it's a constant . You know these these threats are advanced and they're asymmetric and they're constantly changing and it's it's really important for us to stay on top of that and keep investing in it . I mentioned earlier since you became the CEO your stock is up . If I bought some stock tomorrow would I also see a very significant gain in four or five years or you think it's that prices are already so high for the defense stocks. Well David I'm not going to advise you on the stock price today. I think you're really good at that but I would tell you this for our company we are always focused on creating shareholder value. So just No that's our commitment and we're going to drive the company for growth and for innovation and for share. Well as long as you're the CEO I'd probably be happy to be an investor . But how long might you be the CEO. Do you have any plans at the present I'd say it's called you and said I'd like you to be secretary of defense or something like that. Would you entertain that or you're going to stay where you are for a while. Well our company I mean I'm I feel very privileged I love the work that we do a team of remarkable people that I work with. You I have the highest integrity . They're so dedicated and so talented. I love working at Lockheed Martin and I serve at the pleasure of the board of directors. So how long I work will be up to them but today I'm really enjoying the work that I'm doing and I have no intention of stepping down from my role. Whenever you do step down at some point you might step down at some point 10 years 15 20 years. Would you consider the higher calling a private equity now as I told you I have a passion for business I might very well consider doing well. Whenever you do step down please let me know. OK thank you very much. Thank you .

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The David Rubenstein Show: Marillyn Hewson

Lockheed Martin CEO Marillyn Hewson talks about working her way through college, becoming chief executive of one of the world's largest defense contractors, the state-of-the-art F-35 fighter jet and buying Sikorsky. She speaks with David Rubenstein on "The David Rubenstein Show: Peer-to-Peer Conversations." (Source: Bloomberg)

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