People: EXECUTIVE SUITE
CAN THIS FARM BOY KEEP LOCKHEED IN ORBIT?
New CEO Vance Coffman has to make Norm Augustine's far-flung acquisitions mesh
The education of Vance D. Coffman has been swift and thorough in recent years. Five years ago, he recalls that he still "felt a tug at the pit of my stomach" when dealing with Russian businessmen. The occasion: meeting at the posh Baltschug Kempinksi Hotel, across the river from the Kremlin, to develop a joint Russian-Lockheed rocket program. "Can we trust the people we're dealing with?" Coffman wondered.
A good question for a man who has spent much of his career in the shadowy world of classified military programs. These days, however, Coffman, the 53-year-old CEO of Lockheed Martin Corp. and successor to Norman R. Augustine, has long since gotten over such post-cold-war jitters. Now, the down-to-earth executive has bigger issues to ponder: He's redirecting the $30 billion maker of satellites, rockets, and jet fighters into a new array of commercial ventures. In five years, Coffman hopes 40% of earnings will come from the commercial side, up from less than 20% today.
When he took over as CEO on Aug. 1, Coffman was a little-known, inside-operations guy whose days in the classified world taught him not to say more than he needed to. Now he must follow the charismatic Augustine, a master dealmaker at the center of the big defense-industry consolidation of the 1990s. To succeed, Coffman--an engineer by training--must transform himself into an outspoken strategist and public cheerleader. "He made his name operating at deck level," says one Lockheed Martin insider. "Now, he's operating at 25,000 feet, following a guy who operated at 50,000 feet."
For all his dealmaking, however, Augustine handed over a collection of businesses that resembles a defense industry archaeological dig. Through the $5 billion merger of his Martin Marietta Corp. with Lockheed and the $9 billion purchase of Loral's and others' defense assets, sales have grown to $30 billion from $6 billion in 1992. And early this year, Augustine oversaw the proposed $11.3 billion purchase of Northrop Grumman Corp.
COST OVERRUN. Now it will be up to the quietly focused Coffman to get the far-flung pieces working together smoothly as he squeezes out better performance. He's got his work cut out for him: Analyst Paul H. Nisbet of JSA Research Inc. expects 1997 earnings to be flat, at $1.3 billion, on sales up 7.4%, to $28.9 billion. To boost sales and profits, Coffman is charging into high-growth businesses in such areas as commercial space, information services, and telecommunications. But the diversification strategy has its risks. Merrill Lynch & Co. recently cut its 1997 earnings estimate, in part because Lockheed's CalComp Technology unit is having problems with an ink-jet plotter it developed for architectural drawings.
At the same time, Coffman must contend with other problems. He must prove to Washington that the company's potentially lucrative antimissile defense program is worth its $10.3 billion price tag--despite four flubbed intercepts out of four tests so far. Then there is Pit No.9 at the Idaho National Engineering & Environmental Laboratory, a disastrous nuclear waste cleanup contract. Lockheed Martin already has exceeded the $200 million fixed-price contract by $57 million. Coffman concedes that these are high-profile problems but insists they represent only a handful of the "10,000 contracts in this corporation."
Raised on a modest 160-acre corn and soybean farm in Winthrop, Iowa (population 750), Coffman spent his earliest days learning the value of hard work and discipline. From the age of 5, he and his three brothers milked the family cows at 6 a.m. each day. First, Coffman's parents put him in charge of just one cow. By age 10, he was in charge of five. The early-hour milking sessions gave Coffman a taste of capitalism: The money the boys brought in paid for the family groceries. When Coffman was 9, he bought his first horse with $125 earned from plowing a neighbor's field.
Today, Coffman remains a product of his Midwestern roots: friendly, straightforward, and no-frills. Coffman met his wife of 31 years, Arlene, when they were in high school. And long after learning the art of wrangling as a boy, Coffman still likes to ride at an annual rodeo in Wyoming for aerospace execs known as the Conquistadores del Cielo. "If you met him in a Wal-Mart store, you wouldn't know he's the CEO of one of the largest companies in the world," says Aerospace Industries Assn. President Don Fuqua. "He has never forgotten where he's from."
By his high school years, Coffman could see there wasn't much of a future on the family farm. So he plowed into schoolwork instead, encouraged by his mother, a grade-school teacher, and his father, who completed three years of a college chemical-engineering degree. Coffman gravitated toward science in an age when the Sputnik launch and ensuing space race attracted droves of promising young men to engineering. "I had a keen interest in aerospace," he says. "I wanted to know why things happen the way they do."
Hailing from Winthrop, however, Coffman found it wasn't so easy. It took him five years to graduate from Iowa State University because his tiny high school had offered no calculus classes. To pay his college tuition, Coffman worked every summer, including a stint at Edwards Air Force Base, helping on the legendary X-15 rocket plane--featured in the book and movie The Right Stuff. Later, he jumped at the opportunity to work at Lockheed, which also bankrolled his graduate school studies at Stanford University. There, he earned a PhD in aeronautics and astronautics in 1973.
At Lockheed, Coffman was soon considered a rising star. Says Hugh J. Dougherty, his first boss: "Vance was always ambitious." While other engineers focused on technical issues, Coffman read management books to broaden his knowledge. The effort paid off: Coffman quickly rose to program manager of several classified projects for the supersecret National Reconnaissance Office, which designs U.S. spy satellites.
There, his blend of technical knowhow and managerial skill set him apart. Coffman, for instance, developed a breakthrough method that used the position of distant stars to help stabilize satellites. "Vance ran programs that were on the cutting edge of technology, and he pulled them off," says John N. McMahon, a former CIA deputy director who, as president of Lockheed Missiles & Space Co., was Coffman's boss.
TOUGH CALLS. Coffman also exhibited a knack for getting complex projects completed on time. Through the years, that talent caught the eye of higher-ups. At board meetings, Lockheed Chairman and CEO Daniel M. Tellep "always identified Vance as one of the coming stars," says former Secretary of State Warren M. Christopher, a former Lockheed director.
During the late 1980s and early 1990s, Coffman was instrumental in moving Lockheed into fast-growing telecommunications businesses, such as a partnership with Motorola Corp. to build the Iridium satellite phone service. By 1992, Tellep moved Coffman up to headquarters, giving him a newly created post of executive vice-president.
Coffman proved himself a quick study who was able to make the tough calls. After the 1995 Lockheed Martin Marietta merger, he played a critical behind-the-scenes role in implementing the mergers and consolidations. It was Coffman's decision, for example, to close two of Lockheed's four missile plants. Once Coffman made up his mind, there was no swaying him, even though he was pelted with questions at an emotional meeting. "Many others would have become frustrated or, worse yet, angry," says Augustine, who is likely to step down from his position as chairman in 1998. "He never did."
These days, Coffman is focusing much of his energies on the new growth businesses, such as a promising joint venture with Russian rocket maker Khrunichev Enterprise. Already, a deal to combine the powerful and cheap Russian Proton rocket with the launch knowhow of Lockheed has snared 50% of the annual $2.2 billion global launch market and a $2 billion order backlog.
It's all a long way away from the farm in Iowa and the days of Sputnik. Now Coffman feels just fine sitting around a Moscow hotel room talking potential deals with a roomful of Russians. These days, he's more likely to be toasting with a glass of vodka than worrying about the pit of his stomach.By Stan Crock in Bethesda, Md.Return to top