US aerospace companies have seldom seen better market conditions than in 2012. There is much talk of spending cuts on the military, but the reality is the base defence budget has never been higher - at least until the "fiscal cliff" expires. Business jet sales have not recovered to pre-2009 levels, but galloping production rates in the commercial aviation sector have more than compensated for any weaknesses elsewhere.
Yet, many US-based chief executives seem not to be revelling in the industry's hard-won prosperity. The announced intention of Spirit AeroSystems chief Jeff Turner to step down early in 2013 is only the latest example of a leadership change at the highest levels of the US aerospace and defence industry.
The chief executive churn started in June with the unexpected resignation of Jim Albaugh. Jim McNerney is Boeing's chairman and chief, but Albaugh has headed either Boeing's defence or commercial sectors for a decade. At Lockheed Martin, Bob Stevens is departing in a process that has grown complicated. His appointed heir, Chris Kubasik, had to step down after admitting an improper relationship with another Lockheed employee.
The result is one of the most significant leadership transitions in the US aerospace industry in more than a decade, and it comes at a pivotal moment. Today's industry leaders face the certainty of a declining defence budget, a structural change requiring different management skills than the kind exercised in relative prosperity.
On the civil side, booming output and complex supply chains create their own management pressures. No company was more exposed to such risks than Spirit, and the $590 million write-down recorded in the third quarter offers a glimpse of the potential pitfalls.
Leadership turnover can be traumatic, but also a sign of a healthy industry. Change at the top appears to be occurring more rapidly across Fortune 500 companies. A study earlier this year by The Conference Board found that the tenure of chief executives in 2011 declined by a year compared with the 10-year average. Perhaps boards are getting tougher, learning from the financial crisis that their accountability role cannot be ignored. Another healthy sign is the ascension of Marillyn Hewson (above) to the CEO suite at Lockheed's headquarters, becoming the first woman to lead one of the big-five aerospace and defence contractors in the USA. As she is rightly welcomed, she should also be warned. For her, like the rest of her chief executive colleagues, the job is harder and riskier than ever.
(This first appeared as a leader in the 27 November 2012 issue of Flight International)
Leave a comment