Lockheed Martin's Larry Lawson chosen to lead Spirit past supply-chain bottleneck
Spirit AeroSystems, commercial aviation's biggest independent airframe maker, is tapping the talents of an executive who made his mark in high-profile defense programs with the selection of Larry A. Lawson as its president and CEO.
Lawson, who was executive vice president ofAeronautics, will take Spirit's leadership reins April 6. He succeeds Jeff Turner, 60, who remains on Spirit's board.
An electrical engineer by training, Lawson is leaving a Lockheed business unit with $14.9 billion in revenues and 26,000 employees for one with $5.4 billion in revenues and 16,000 employees, 11,000 at its home base in Wichita.
“We believe his appointment will create additional investor confidence in [Spirit's] prospects,” says Jefferies aerospace analyst Howard A. Rubel. At Bank of America Merrill Lynch, Ronald J. Epstein cited a resume filled with “impressive work experience” but questioned how well Lawson will fit into the business environment of commercial aerospace. “In defense, cost overruns . . . have been the modus operandi in recent years,” Epstein says. “Defense contractors do not generally take as much capital risk as their commercial counterparts.”
After's 2005 spinoff and its 2006 initial public offering, Turner led Spirit in an aggressive expansion of its business base. It now builds airframe structures for 's , and programs; Gulfstream's G280 and G650; the and as well as 's CH-53K for the U.S. Marines.
Spirit has added factories in Scotland, Malaysia and France, plus new facilities in the U.S., most notably a 500,000-sq.-ft. plant in Kinston, N.C., for the A350.
But the expansion has come at a price. Last year, Spirit reported a $645 million charge on development programs and an 82% drop in net income.
By December, Airbus CEO Fabrice Bregier was voicing dissatisfaction with Spirit's performance on the A350. Early this month, Airbus dispatched a team of engineers to Kinston to work through production lags on the center fuselage. The factory also builds the aircraft's fixed leading edge and front spar.
On March 15, four days before Lawson's appointment was announced, Airbus officials were sidestepping rumors that the company was considering buying out Spirit's Saint Nazaire assembly facility in France to keep it from becoming an A350 bottleneck. Kinston ships composite fuselage panels to Saint Nazaire for assembly before they are sent to Toulouse.
Airbus says it “works constantly with all of its suppliers, offering them support to avoid any critical delay on the A350 program. The discussions with Spirit fit in this context.”
For its part, Spirit says, “we don't speculate on any business transactions that have not been announced, and we don't have anything to announce at this time.”
To this drama, Lawson brings a well-regarded reputation in high-rate aerostructures manufacturing, says Rubel. It's one of “fostering good relations with large, sophisticated customers.”
As theprogram manager, Lawson negotiated key production contracts with the U.S. Air Force. He leaves during a time of transition for the , with a greater emphasis on program execution and less on selling the fighter within the U.S. and abroad. The Pentagon has been critical of overhead at Lockheed and, specifically, how those costs affect the Aeronautics unit's programs.
With Lockheed Martin tapping Marillyn Hewson as CEO, Lawson is moving on at a relatively young age—55—to tackle the challenges of a CEO at Spirit.
Spirit is not the first commercial aircraft maker to look for management from a defense expert. Boeing, struggling with a chronically late 787 supply chain in the late 2000s, tapped its own defense unit for Jim Albaugh as CEO at Commercial Airplanes and Pat Shanahan as the 787 general manager.
And Airbus is not the first prime contractor to consider taking over an operation from a supplier. During the time it was realigning its 787 management team in Seattle, Boeing also struggled with two key suppliers that were overwhelmed with having to manage a purpose-built fuselage integration factory in North Charleston, S.C. So Boeing bought Alenia and Vought out of that operation to save the 787 program.
Name: Larry A. Lawson
Education: Bachelor of Science in electrical engineering from Lawrence Technological University; Master of Science in electrical engineering from the University of Missouri; graduate of Harvard Business School Advanced Management Program; Massachusetts Institute of Technology Seminar XXI Fellow.
Career: Joined Lockheed Martin in 1986 after starting his career at McDonnell Douglas as a flight control engineer on the. Was vice president of business development at Lockheed Martin Electronic Systems when he was asked to become executive VP/general manager of the F-22 program at Lockheed Martin Aeronautics in 2004. In 2010, assumed those same roles as head of the F-35. In April 2012, named executive VP of the Lockheed Martin Aeronautics business unit. On April 6, he becomes president/CEO of Spirit AeroSystems.