| PALMDALE, Calif.
PALMDALE, Calif. Dec 10 Lockheed Martin Corp
, the Pentagon's No. 1 weapons supplier, has rarely felt
the need to blow its horn about its secrecy-shrouded crown jewel
- until now.
"Skunk Works," Lockheed's business for developing weapons
outside the company's main chain of command, is starting to lift
the veil in a sign of fierce pressure to win new orders and
protect its brand as military budgets shrink.
The pride of Lockheed, Skunk Works has been celebrated since
it developed the first jet fighter in 143 days during World War
Two to battle the Nazis. But its logo was kept off buildings and
employees were barred from saying where they worked.
Now, the company has published a glossy brochure with a
10-point "Skunk Works 2015" agenda focused on keeping costs
down, working closely with government, and building prototypes.
Its officials are meeting in small groups with all 3,300
employees, or "Skunks" as they are known, to underscore the
importance of staying competitive.
Over the past year Skunk Works has invited a few journalists
to its most secure facilities, including Palmdale, a site in the
high desert 60 miles (100 km) from Los Angeles, where new
products range from next-generation unmanned systems to a
hypersonic aircraft twice as fast as its Blackbird SR-71 spy
plane that could fly across country in just over an hour.
Most of the 100 buildings and 3 million square feet of floor
space at the site are off-limits, and photography and audio
recordings are strictly forbidden, but a tour last month offered
a glimpse of some projects.
In one building, Lockheed is using the world's largest
gantry machine and 3-D printing to build aircraft. Across
campus, Lockheed has a giant airship that could deliver cargo to
remote areas, and a compact nuclear fusion reactor that could
revolutionize power generation.
The decision to go public with Skunk Works, albeit modestly,
reflects the unprecedented pressures Lockheed faces from tight
budgets, nimble smaller competitors and shareholders who prefer
dividends and share buybacks to long-term projects.
Challenging Skunk Works are such newcomers as Space
Exploration Technologies Corp, or SpaceX, which operate more
like commercial firms than legacy weapons makers. Their costs
are lower due to a younger staff - the average age of SpaceX's
engineers is 27, while Lockheed expects half its employees to
retire in the next five years - and their ability to leverage
Defense consultant Jim McAleese said Skunk Works needed to
win orders and cut costs given lower profits in the aeronautics
division, where margins fell by about 10 percent last quarter.
Aeronautics sales fell 6 percent to $14.1 billion last year.
Skunk Works has survived over the years because it is not
only an advanced research arm, but also makes money by managing
a few signature programs, including the F-22 stealth fighter and
other classified programs, general manager Rob Weiss told
Reuters. He gave no numbers.
Bucking an industry trend, Lockheed is boosting internal R&D
spending by 5 percent this year after a 13 percent increase to
$697 million in 2013, its highest percentage of sales ever, CEO
Marillyn Hewson told analysts in October. She said the rate
would rise again in 2015.
The Skunk Works outlook could dim if Lockheed loses out on
the few big programs up for grabs: a new bomber, a carrier-based
drone, and a new Air Force training jet, analysts say.
Skunk Works officials say they also need to be more open to
strategic partnerships, such as those it has with GenCorp
unit Aerojet Rocketdyne and Boeing Co, and new business
models, such as fee-for-service deals.
Pentagon officials often say they see Lockheed's Skunk Works
and Boeing Co's Phantom Works as models for rapid development of
weapons and ensuring U.S. military superiority.
Deputy Vice President Steve Justice, who has 30 years with
Skunk Works, said its historical focus on speed and
affordability was more relevant than ever given the tough budget
climate. The proof, he said, came in recent requests from the
Navy and others that want to set up similar groups.
(Reporting by Andrea Shalal; Editing by Howard Goller)