{"id":33815,"date":"2020-08-17T08:25:00","date_gmt":"2020-08-17T08:25:00","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2020\/08\/17\/when-the-challenge-of-coronavirus-becomes-a-catalyst-to-change\/"},"modified":"2026-08-07T22:44:57","modified_gmt":"2026-08-07T22:44:57","slug":"when-the-challenge-of-coronavirus-becomes-a-catalyst-to-change","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/opinion\/2020\/08\/17\/when-the-challenge-of-coronavirus-becomes-a-catalyst-to-change\/","title":{"rendered":"When the challenge of coronavirus becomes a catalyst to change"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">One way to understand how the United States\u2019 largest defense companies are responding to <a href=\"https:\/\/www.defensenews.com\/coronavirus\/\" target=_blank>the coronavirus pandemic<\/a> is to listen to what their leaders said on the most recent round of earnings calls.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consider this anecdote from General Dynamics.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Phebe Novakovic, the company\u2019s chief executive, told analysts in late July that when COVID-19 struck, \u201cour classified customers closed their sites to all but mission-essential employees. This impacted revenue and earnings and will continue to do so. Some of IT services\u2019 highest-margin programs have come to a hard stop because of COVID-19.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/people.defensenews.com\/top-100\/\" target=_blank><b>Click here to see the Defense News Top 100 list.<\/b><\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Novakovic described the pandemic as a time of \u201csignificant uncertainty.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That story was not unusual.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">David Calhoun, Boeing\u2019s CEO, described this as \u201ca historically dynamic and challenging time.\u201d Greg Hayes, Raytheon Technologies\u2019 top executive, opened his second-quarter call by stating: \u201cAs everyone knows, these last several months have been incredibly challenging.\u201d And Bill Brown, the CEO of L3Harris, said: \u201cThe pandemic has challenged us all to find new ways of working effectively.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To be clear, defense contractors have lost roughly 20 percent of their value in the last six months, by tracking exchange-traded funds. That\u2019s the worst run for publicly traded companies in at least a decade.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So what to make of this?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">James Taiclet, Lockheed Martin\u2019s new leader, said his philosophy is that there may be \u201can opportunity for us if there is a downturn, we\u2019re going to look at the silver linings that may be there.\u201d He was talking about mergers and acquisitions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But defense companies of all sizes should look for another opportunity: a reason to operate differently, not an excuse to get back to basics. Leaders should reexamine how to embrace new talent, how to effectively telework, and how to add new equipment or partnerships with unexpected sources.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Military leaders for years have said they value agility. Now they will get to watch firsthand who changes, who is prepared for the long term, who adapts and who merely talks about adapting. These \u201cchallenges\u201d can give acquisition officials a reason to reward agility.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But back to the earnings calls. Officials hinted about what may happen next, before we \u2014 fingers crossed \u2014 enter a post-pandemic world. Lockheed\u2019s Kenneth Possenriede, the company\u2019s chief financial officer, said that while solicitations may be slower getting out the door, final deadlines have not changed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Brown at L3Harris said: \u201cWe believe that the heightened threat environment will drive the trajectory of U.S military spending regardless of the election.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Novakovic seconded that notion. \u201cThere\u2019s a general consensus that the threat has not dissipated,\u201d she said. \u201cIn fact, arguably some of our potential adversaries have raised additional questions. \u2026 We\u2019ll see going forward, but [I\u2019m] not hearing a lot at the grassroots level on &#8230; any pending defense cuts.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The threat may not have changed. Nor may the business of defense. Yet.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But it\u2019s impossible to ignore that almost everything else has.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Military leaders for years have said they value agility. Now they will get to watch firsthand which firms are prepared for the long term, who adapts and who merely talks about adapting.<\/p>\n","protected":false},"author":7,"featured_media":2955,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":17,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[9,160,162,67,12,36,17,25],"tags":[],"coauthors":[3399],"class_list":["post-33815","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-coronavirus","category-daily-news-roundup","category-digital-show-daily","category-editorial","category-industry","category-newsletters","category-opinion","category-top-100"],"acf":{"subheadline":"","legacy_arc_id":"ASJ27YY34ZFEBNYUMDI4PGL2YA","arc_canonical_url":"\/opinion\/2020\/08\/17\/when-the-challenge-of-coronavirus-becomes-a-catalyst-to-change\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>When the challenge of coronavirus becomes a catalyst to change - Defense News<\/title>\n<meta name=\"description\" content=\"Military leaders for years have said they value agility. 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