Closing Bell - Manifest Space: World's Top Weapons Maker Doubles Down on Space with Lockheed Martin Space EVP Robert Lightfoot 4/20/23

Episode Date: April 20, 2023

Lockheed Martin’s $11 billion Space division is exploring new frontiers as former NASA Acting Administrator Robert Lightfoot looks to spur innovation - and rapidly.  Morgan speaks with Lightfoot from the Space Symposium as Lockheed Martin stands up its new Ignite unit, bets big on the moon, and continues to compete for multibillion dollar government contracts. Plus, they discuss the company's latest earnings results, opportunity in the startup space and reports of the possible sale of Lockheed Martin & Boeing's joint venture, United Launch Alliance. For more Manifest Space, listen and follow here: https://link.chtbl.com/manifestspace

Igniting innovation. That's the push Lockheed Martin's making with its new Ignite unit. A Skunk Works-like team tasked with rapidly realizing new space technologies. We've got several missions that we do for the government. We have several partners that we work with. But what they're looking for is they're looking for us to be innovative because of the threat vector that's out there. They're looking for us to go fast, faster than we may have in the past. And really, how do we transform ourselves after six decades of operating a certain way? Ignite is the brainchild of Robert Lightfoot, the executive vice president of Lockheed Martin Space and a former acting administrator of NASA.

He oversees the entire space portfolio for the top weapons maker, a more than $11 billion business last year that continues to grow, with sales jumping 16% last quarter, contributing to an earning speed. I spoke with Lightfoot at the Space Symposium, a big industry conference where Lockheed announced the successful demonstration of its new tech-to-service satellites on orbit. On this episode, we discuss Ignite, as well as the company's big bet on the moon. I'm Morgan Brennan, and this is Manifest Space. Robert Lightfoot of Lockheed Martin,

thank you so much for joining me today. I'm thrilled to speak with you. So we're here at the Space Symposium, one of the biggest space conferences of the year. Your message or what you're planning to share about Lockheed Martin specifically here at this event. Yeah, for Lockheed Martin, space is pretty simple for us. It's about innovation, speed, and transformation. I mean, it's that simple.

We've got several missions that we do for the government. We have several partners that we work with. But what they're looking for is they're looking for us to be innovative because of the threat vector that's out there. They're looking for us to go faster than we may have in the past and really how do we transform ourselves after six decades of operating a certain way into this new operating model that our customers are really demanding us to be.

So how do you do that? Well, it's pretty simple. Well, not simple. Maybe I should say it's a pretty interesting process you deal with. For us, it's technology demonstrations and pathfinders is one of our major things. We've set up an innovation cell that we call Ignite. It's our rapid capabilities organization specifically to go fast, change the dynamic, the way we're looking at things. From that organization, we'll deliver technology demonstrations and prototypes and even some pathfinders that we'll talk about this week while we're here that allow us to demonstrate to the customer a certain technical maturity that they don't have to necessarily pay for.

We get to a certain point and then when we offer it to them, they don't have to buy the risk. We've brought the risk down from that standpoint. And we do it fast we've got you know small teams that are I would just say very innovative very agile and they're bringing the stuff to bear again in a Pathfinder way so that when it becomes a program of record in the future which is the larger mission we've already retired a lot of the risks that they may have that we may have had in the past so when we talk about doing it fast and I realize every project is going to be

a little bit different, but how fast? Well, it depends. It depends on what risk posture we're willing to accept. There's several of the missions that we do where the risk posture really doesn't accept a fact. We want to be right. And again, depending on what that mission is, if you think about some of the missions we do for national security space, they've got to be right.

There are some others where we can demonstrate some technology, get it on orbit fast, so that we can see, okay, how is it going to operate in that regime, and then bring it back, learn from that, bring it back and place it into the next mission set coming forward. So it really depends. An example, we went from authority to proceed to available for launch in about two years on a satellite bus that used to take us about five. Wow. So it's a good example of how our teams have thought a little differently than normal. Now, we'll fly it. We'll see. We obviously did some things differently. And we'll see how many of those things we can bring back into the total picture, the total enterprise as we go forward. And, of course, Ignite is something that I think you had been testing for a number of months,

and then you stood up in a more meaningful way. Correct. Actually, just recently, right, in the last couple of weeks? Yeah, the last couple of months we rolled it out. Okay. It's really our innovation. What we found, Morgan, was we had several innovation, pockets of innovation in the organization, and it became important to bring them all together so they could even learn from each other.

And now we have a debate or discussion inside the company. We'll say, okay, does that belong in Ignite? And so we make a very conscious decision to put it over there and let that team go with the processes they've put in place. So pretty excited about what it's doing for us, I think. How does it speak to, I guess, this burgeoning commercial space economy that we're seeing really take root in a meaningful way now? Well, I think part of that is it has enabled this thinking, this way of thinking, the commercial space.

Our workforce is looking for this. Our workforce really wants that opportunity. You can come in and work on a program that's been decades in place. Think GPS. Think the GPS system. We built the GPS system today. It's a decades-long program. It's going to be a decades-long program. We do innovation there.

The customer allows us to do some innovation. But some of our workforce really wants to work on the real leading-edge activities. What can they go do to move us forward in some other areas? So some of our workforce is coming in demanding, hey, I want to be in this innovation cell and want to go do that. So I think that's kind of the spur or the ignition, no pun intended, that allows us to go do these things is the workforce wants to do it. We need to do it, we need to do it, and the customer's demand and that speed and really that retiring the technical risk get to your technical maturity faster.

I guess where do you see the biggest opportunities? We've got these buckets of military space, civil space, and then commercial space, and I realize that the relationship between all three is maybe becoming more amorphous, if you will. So what do some of those future opportunities look like in terms of the Lockheed portfolio? between all three is maybe becoming more amorphous, if you will. So what do some of those future opportunities look like in terms of the Lockheed portfolio?

And I know you got a lot going on. Oh yeah, I think for us it's just making sure we're following along with our customer with what the threat space is. Threats are changing, and that's what causes the opportunities to change. I mean, we're putting together systems that we probably didn't even think about doing five years ago because of the threat space. What are some examples? Well think about this

SCA transport layer. That's an example of putting a proliferated set of satellites in low earth orbit. That allows us to you know monitor from low earth orbit where we haven't before. That system provides resiliency. It wasn't even a thought five years ago. We used to build the bespoke systems, and we still do, the bespoke systems that National Security needs. So, our change is being able to do all those. How do we build these architectures, what I'll call hybrid architectures, where you're in low Earth orbit, you're in mediumarth orbit, and you're in geo.

And then our team even does stuff around the moon. So we've got all the, no pun intended, we've got all the space covered, and it allows us to actually, we just have to make sure we're thinking and have to be interoperable. Our big thing is to make it interoperable. You want these all talking to each other. If you build them in a stovepipe, you're not thinking that. And so that's one of the big things we're working on is the interoperability between all of these systems and what we may be able to do with them.

The moon piece of the puzzle. Lockheed's been really doubling down on lunar activity, lunar investment, lunar possibilities, even stood up a subsidiary recently, Crescent. I guess walk me through how big those possibilities are. Well, I think we think they're very big, right? We'd love to be your architecture or your infrastructure on the moon. Think about power. Think about communications. Think about all the things you're going to need when we actually establish a presence on the moon, a permanent presence. Our experience in the background we have allows us first to

start with communications that's what Crescent's doing with parsec super excited about that it's a new model new business model for us as a corporation and we're really excited about what it could do if we can build the comms then you build the power then you build the all the effort there are things you would need on the moon first the better thing about it is it's even transportable to Mars if we go that way, right? So you've got to take these systems and you can slowly become the infrastructure folks. You know, we need power here. We need water.

We need all the things we can do. So if we can get on the ground level of infrastructure, that's something we think. And we want to sell it as a service. We don't want to, you know, this is part of our other way of thinking, new business models, is how can you sell that as a service? Not make, you know, let's put the communication birds up and you pay by the day, pay by the hour for using the communications from there. Which I think is really fascinating.

It sort of speaks to this newer business model that's been more meaningfully adapted in recent years at NASA, for example, where I know you were the acting administrator. So I'm sure you have some insights on both sides where this is concerned. But this idea of getting away from cost plus contracts and getting more towards putting in that initial investment as a company and then, as you said, offering as a service. What does that mean in terms of the future business model? I think it's going to be a little of both.

I think we're going to be in a hybrid model for a long time, especially when it comes to space. As capabilities become more, I'll just say commoditized. It's hard to say that about space. For somebody that's been in space my whole career, I can't imagine something being, quote, commoditized in space. However, we're getting to that point. Think about what launches happen.

Think about now some of the satellites you can buy your data from the satellites. That's just going to keep going, but we're still going to have the need for the bespoke systems that really, think about a James Webb, think about where we, you know, Joaquin Martin built the NIRCAM for James Webb. That's a bespoke system. That's not a, you're going to sell that as a service necessarily, at least not today. But you could get to a point where Earth science data, where data for the moon, could become data that you buy as a service if you're actually there and need that kind of data. So I think it's going to be a hybrid for a little bit of time. But I do believe the as-a-service model has really changed and opened up in the last decade.

Like you said, when I was at NASA we kind of started this with cargo to the space station as kind of the first one out the gate. And there's ways to do it. I think if you look at the U.S. government in all their sectors, they're starting to look at that as a good opportunity, a good way to get skin in the game from industry, but also it solves a lot of their problems that they may have up front. Yeah, and I would imagine it would lower the costs for taxpayers as well at a time where something like the budget and the deficit are very much in focus.

You have Orion as well, which is the capsule is going to take humans back towards the moon, to the moon, around the moon. Are we going to do that next year? I know NASA says we're on track for 2024. We sure are pushing for it. That's our plan. We had a very successful Artemis I mission. I don't think it could have gone any better from a standpoint of as a first test flight for us. I was in Denver with our team, and we were in a huge gymnasium with every generation, you know, our employees, but they brought their kids, they brought their parents.

And if you had seen the emotion from just that one, I mean, I know this was all over the United States, but from just that one gymnasium, the kids and everybody cheering when the parachutes opened and we splashed down, it was just an exciting event, right? But it was also 25 and a half days of making sure that we got to that point. And so very successful mission for us, which gave us great confidence going into this next one that we think we can get there. So pretty excited about that opportunity. And NASA just announced the crew last week. So now we know who's going. And really talking about putting a human face on it. It puts a human face when you see the crew members

that you know are going to be flying in your capsule as you go forward. Yeah, it's pretty exciting. Starlab, though, the commercialization of low Earth orbit, space stations, I guess walk me through those opportunities and what that's going to look like in terms of Earth activity in the not too distant future? Well, I mean, the goal obviously is to change the dynamic of access to space, right? How can we get people to space that maybe don't have the opportunity to go to space today? And so you got to have a destination. It's one thing to ride to space and come home in the same

flight. The other thing is how do we create these destinations? They can be done for science. They can be done for tourism. there's all sorts of opportunities out there. If we can, again, if you're changing the equation of how do we get to space. So Launch has changed that equation. We've got more launch capability than we probably had in a while. So again, how do you make it more accessible from a lower standpoint? So for us, the way we're looking at it at Lockheed Martin is we'll partner with those

folks bring our decades of experience to help them as they do the more marketing the more how do I how do I go create that market frankly, going forward. So we're the kind of the backbone, the infrastructure that comes with them to help them get this done. Yeah. The Artemis moon lander, that's what you're partnered with, with Blue Origin and Boeing. Yes, that's correct. Yeah. I guess expectations around the timing of that.

Yeah, I haven't heard lately where NASA is, so we're just kind of waiting. We've submitted our proposal with what Blue has from that standpoint, and we're just waiting at this point. And so you're standing up subsidiaries. You've got this Ignite situation going on. Also making investments into a number of startups and new space companies. Where do you see the opportunities there and what does that mean in terms of partnerships

versus doing stuff internally? Yes, one of our strategies is that we think we should partner with folks, and the reason is basically speed. I have the capability to do just about anything. I mean, you look at Lockheed Martin. We are a very large company, lots of capability, amazing engineers, but sometimes I don't have the time to develop whatever it is.

So we're looking at any number of entities that are starting up, whether they're microchips, lasers, sensors, different things that we would normally do. If they're head office, why not partner with them? And so we have a Lockheed Martin Ventures that Chris Moran runs, and he's got a nice process for going through with $400 million fund that we have at the corporate level. And so we in space leverage that as much as we can. And the goal here is not to, I mean, I want to help them. I want to help them be successful, and I want them to be a partner for me to help me be successful in the missions that I'm trying to get done.

So it's, I mean, I've been to a couple conferences lately. You know, almost every time I go, there's new booths, new people. You're, where are these, where'd they come from? And so it's a chance for them to help us get our mission done, but also for us to really kind of help buoy the industrial base for the country if we partner with them from that standpoint. So to me, it's a huge opportunity, and we've been using it as much as we can on several of our missions that we've been working on. Are there certain types of capabilities that are emerging right now that you look at and

you say, wow, I wasn't expecting this even just a couple of years ago, but now that it's here, we want to work with this. I think in the AI area, artificial intelligence and machine learning, we're paying attention very closely there because you can imagine we bring down an unbelievable amount of data from space. How do we start looking at that data in a way that we can kind of turn it into intelligence instead of just raw data? And there's a lot of companies out there that are looking at that,

and we're partnering with several of them already. And so there's an opportunity for us to do that. There's also the opportunity in some of the manufacturing areas that we're seeing some people come in with some new ideas. I would call additive manufacturing the next-gen additive manufacturing, not just this additive manufacturing, that allows us to do things faster as well. Okay, a couple more questions for you. First is Australia's first sovereign military satellite program. We saw a big

award, largest ever defense space contract for that country. How does it speak to, I guess, the democratization of access to space and capabilities in space? Yeah, for us, it's a great opportunity to take some of our capabilities internationally. I think that the opportunity there for us is we have connectivity because we build the systems for the U as well. So that allows the allies to have a better interoperability themselves as they look at it. But I do think you're seeing more and more nations want a space-based capability. They want their sovereign capability. So the other part for us is we've been able to go into those countries and partner with

sovereign capabilities, indigenous, whatever they have, to actually do part of the work with us. So we don't look at it as we're coming in and delivering you something. We're working with them together to help build up their capabilities in their own countries, and we're finding that to be really important for them but also important for us because, again, we're all in a battle for workforce, we're all in a battle for supply chain, and that just helps us all, frankly, as an overall view. SpaceX's Starship poised for its first orbital launch. How closely are you watching that?

Oh, everybody's watching that. I mean, I think it's a great opportunity for us to, if they're successful or when they're successful, that's going to change the dynamic of launch. You think about how large that capability is, and so we're looking at how we would leverage that capability for some of the things we're trying to do in the future. United Launch Alliance joint venture between Boeing and Lockheed Martin. There's been some reports that it could be on the sail block but in general looking at that, looking at development of Vulcan, how does that fit

into the portfolio and everything you're doing? Yeah so Vulcan is another great capability that we leverage constantly. We leverage Atlas. Think about Atlas and Delta and we'll be leveraging Delta for, I mean Vulcan is another great capability that we leverage constantly. I mean, we leverage Atlas. Think about Atlas and Delta, and we'll be leveraging Delta for, I mean, Vulcan for our future missions as well. The customers are looking at that constantly, and that's the way the government buys their vehicles. Great. Lockheed just put out earnings. Space is one of those areas that continues to grow. How to think about that, just from an investor standpoint,

the growth opportunities around space, given everything we've just talked about? I think space is, we're looking at all sorts of opportunities to grow, right? And the way we're looking at it is, we've talked about it internationally. There's domestic opportunity for us just on the missions that we're already doing

to continue those missions. And then there's opportunity for us, we build a lot of things. These are things that we can actually we believe sell not the whole mission but the pieces of the mission that we're doing and we have in this so there's a productization effort we're working on as well which is part of the reason we're doing some of these prototypes and pathfinders and demonstration missions is to prove that those things can be offered. So think of you think about a startup that doesn't have the whole infrastructure

and the whole ecosystem they need to create their system. We've been building these things for six decades, and if we can be at a good market price, why not come to us and partner with us, and we'll provide you that capability. So that's another opportunity for us, we think, going forward. All right. Robert Lightfoot, thanks so much for joining me today. Thanks, Morgan. Appreciate it. That does it for this episode of Manifest Space.

Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.