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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  December 24, 2018 10:00pm-10:31pm EST

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women can runhat defense companies better than men or all companies better than men? [laughter] >> i would just say it is a team sport. it isn't all about me. david: donald trump sent out a tweet saying the f-35 was too expensive. >> my team engaged to have a dialogue with him. it is the most advanced fighter in the world. david: you were voted the 22nd most powerful woman in the world. >> cai get a note from my brother who said why was oprah higher than you? >> can you fix your type please -- tie please?
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meid: people would recognize if my tie was fixed, but ok. just leave it this way. alright. ♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? david: since you have been the up the stock has gone roughly 330% the market capitalization is up roughly 280%. another country that you keep up with that compete with, general dynamics has a female ceo and their stock is up 250% since they became -- [applause] do you think women can
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run defense companies better than men or all companies better than men? [laughter] [applause] looking at the audience and how many women are out there clapping. [cheers] i would just say, it is a team sport. it isn't all about me on the performance of our company. i have been proud of what our team has accomplished. >> when you walk into the shareholders meetings, do you get standing ovations? marillyn: shareholders, but they always keep a beat on its to make sure we are creating value. what have you done for me lately? ,avid: during the transition the president of the united states sent out a tweet saying your biggest product, the f-35, was too expensive and i think you were out of the country at the time?
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marillyn: i was in israel where we were delivering their first two f-35's. david: what was your reaction that you were charging the u.s. government too much? marillyn: first, we needed to get the aircraft delivered and one of the most interesting things was that prime minister andnyahu was at that event asked me about the fact that our new president was going to get a better price on the aircraft and maybe he should get a rebate on the ones we were delivering. [laughter] marillyn: that presented a bit of a challenge, but what was was to recognize what our president-elect was communicating. he was trying to communicate to the american people he was going to get good deal on the equipment he purchased and was going to increase defense spending, but- spend the taxpayers dollar wisely. my team engaged and had a chance to have a dialogue with him. david: so you did give a discount?
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marillyn: we drove the price down. we got the deal done in an accelerated fashion and he definitely had an influence on that. david: the defense budget is now higher than it is ever been. annually, solion is this a great time to be a defense company ceo? marillyn: let me put it in perspective. we are encouraged by the fact that our country is now spending more on defense, but if you look back over the last few years, we are playing catch-up in a large way. we want to maintain our technological superiority over potential adversaries. for industry, we managed that downturn like any well-managed we didn't invest at the level we would have in terms of areas of the business because we were in a down cycle. now, with the up cycle, it is time for us to really bring forth the innovations and continue to spend the efforts with the priorities of our
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customers. david: do you need a security clearance and how long does it take to get one of those? [laughter] marillyn: 60,000 employees have security clearances. we have information that i need to be briefed on, so i have the appropriate clearance associated with that. kansas andgrew up in your father died when you were nine years old, and you have food -- you had four siblings. how did your mother provide for five children? marillyn: my father was with the department of the army and my mother was the at home mom with five children and it knocked the props out of -- we were an average family, but it set us back a lot. i give great credit to my mother, who raised five children on her own and she just passed
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away a couple years ago at 97. incredible life that she had [applause] david: she was from alabama? marillyn: she was from alabama but taught is the value of a dollar. we had to learn how to economize at a young age, pay the power bill, the electric bill. you have to learn how to do these things. it taught me to be self-reliant. david: i was told she used to say to you, go to the grocery store. here is five dollars and bring back seven dollars of groceries. marillyn: that's true. that's very true. i learned early. david: you went to the university of alabama, did you get a scholarship? you didn't have to work? marillyn: oh no, i didn't have a scholarship. i worked nights. i worked on what was called the graveyard shift from 11:00 at night to 7:00 in the morning, then i went to class from 8:00 to 1:00 or 2:00, then i would sleep, unless i had a date, then i would go back to work without sleeping, because you can do that when you are 18 years old
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or 19 years old. i worked full-time, paid my way through school, finished in 3.5 years and, you know, you do what you had to do. david: ok. so, after you graduated, did you say i want to be the ceo of lockheed martin, or what did you say? [laughter] marillyn: no, i started looking for a job. i took a job as an economist here in washington with the bureau of labour statistics out of college. they were in the midst of redoing the producer price index. it was a good job for a grad student to come in. i actually started my career here. four years later, i interviewed at several companies, one of which was lockheed in marietta, georgia. i started there as a senior industrial engineer. david: so when you went to marietta, georgia, you worked your way up. you had, i think, 22 different leadership positions, so you must have been moving around a lot. marillyn: i was in marietta for about 13 years. 18 months in, i was promoted to supervisor in industrial engineering. about the two-year mark, i was
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put on a general management development program, and great credit to a sponsor that, he put me forward for the program. so i spent two years rotating around the company, and at the end of the two years, i was manager over all of our production estimating and budgets. david: now at one point, your husband was unemployed. he got a job interview with a company, and what company was that? marillyn: he surprised me a bit. his company went out of business, and so he was out looking for a job. we had a five-month-old baby, so we were very much hoping he would find a job. it was a tough labor market at the time. he came home one day and said ok, i got a job. i said, where? he said at lockheed. i said, what? sorry. why my company? he said it just turned out. he went to work in the finance department. we did not really cross paths. i was running industrial engineering by that time. but it is interesting, for about five years, he retired from lockheed after five years.
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david: so you have given him a lot of credit for what you have been able to achieve. because you describe that after he retired, he took on a roll -- he took on a role that many people would have said a woman normally took on, a wife, would taken on that traditional role. is that fair to say? marillyn: i say he retired. our kids were three and six, two boys. we moved from marietta, georgia to fort worth, texas, because my job moved us. at the time -- you know how stressful it is to have young children at home. i said, why don't we try you working from home for a year? we just never changed the model. he became the at-home dad, the coach, the scout leader, went on the field trips, and he managed that because i travel a lot. we were maybe a new age family back then in the way that we worked, but it worked for us, and today our kids are in their 20's, and they are off doing their thing. when i said he retired, he basically, at that five-year mark, he got a retirement check
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from lockheed martin not long ago. so, five years, right? david: so i guess he is happy with the shareholder performance as well. [laughter] marillyn: yes, he is. david: it costs a lot of money to make marine one because you have to have all kinds of security things in there. marillyn: that is right. it is based on s-92, which is a great commercial helicopter. if you are interested in a helicopter, david, i suggest you look at it. david: i guess i could get a good deal. do i get a discount if you buy two or something? [laughter] marillyn: we can do a deal. ♪
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[roar of jet engine]
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david: now let's talk a moment about the product i mentioned earlier, your fighter jets. i have known for long time there is an f-14, f-15, f-18, f-22, and then you had come up with something called the f-35. what happened between 22 and 35? [laughter] marillyn: well, the fact is that aircraft are not numbered by lockheed martin. the u.s. government determines what the number is. so an "f" standing for fighter, "b" for bomber, that terminology is kind of general, and usually it is sequential. we won the contract with our x-35, which was the experimental -- you name them with an "x" or "y" if they are experimental or a prototype. so we had named our offering in this competition, but when they announced the winner, lockheed was the winner, and the secretary of the air force said, "the f-35," and we were all shocked because we thought was
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going to be the f-23. so once he named it, that is what number it became. david: you didn't want to tell him he made a mistake i guess since he awarded the contract. [laughter] david: in the history of our country, this is the biggest defense contract ever, tens of billions of dollars, i assume. why does it cost that much to make these planes, and what is so great about this plane? what is so unique about the f-35? marillyn: the f-35a, which is your conventional variant of the aircraft, was priced at $94.3 million, and we are on a path to drive that down to $80 million by 2020. think about that. you think about if you fly, maybe you fly a gulfstream or something like that, think about what you paid for that -- [laughter] david: occasionally. ok. marillyn: think about the most sophisticated jet fighter in the world that might cost $80 million. i mean, that is pretty remarkable in my mind. it is the most advanced fighter in the world, so it is basically a force multiplier.
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it is a fabulous aircraft. i don't have to tell you that. talk to some of the pilots who fly it. david: the sr-71 was a famous plane that i think now in the air and space museum in the smithsonian. it went six times the speed of sound or something like that. marillyn: three times. david: very high. [laughter] david: there was a rumor in the defense press somewhere that you are making an sr-72. so can you tell us right now, is that true? [laughter] marillyn: you know, we are working on hypersonics, and hypersonics would be something over mach 5. we are doing work on that technology, and it is important technology, so that's probably all i am going to say about it. david: ok. [applause] david: all right. ok. let's talk a moment about artificial intelligence. presumably that will be very important for defense contractors as it is for other companies. marillyn: it is an important area we are investing in. we think our customers are looking for solutions to use that technology, but in
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artificial intelligence, you can think about -- we are working on a helicopter that will be unmanned. so that is an opportunity. david: an unmanned helicopter? marillyn: an unmanned helicopter. we have other unmanned vehicles that we have that we will use autonomy and artificial intelligence for the actual flying. david: what is the price for the unmanned? [laughter] david: that sounds pretty novel. marillyn: but even in the cockpit of our aircraft, they are using artificial intelligence by fusing information in such a way that the pilot doesn't have to -- the human mind cannot move at the same speed as what you can get through that computing power, so they can make the right decisions to deal with the situation, and we have such things as collision avoidance, so even on our f-16's, and we will put this on our f-35, we have technology through artificial intelligence that if a pilot doesn't realize that they are not ready to hit the ground, this aircraft will take control and avoid. we have already saved six pilots' lives with that type of technology. that's just a few examples of
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how we apply the artificial intelligence.
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david: what is it like to be the ceo of our nation's largest defense contractor? you get about 70% of your revenue, i think, from the u.s. government. you know, how much of your time do you have to spend with the u.s. government? how do you spend your time, in a typical week, percentage time?
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marillyn: i would say somewhere between 60% to 70% of my time is with strategy, the business, the customers, and engagement around the world, traveling around the world on the customer side of the business because it is important in my role to be out meeting with not only our congressional leaders and our government leaders to make sure we are aligned with what their needs are and their priorities, but i travel a lot outside of the united states. 30% of our business is outside the united states with governments around the world. david: you were recently voted the 22nd most powerful woman in the entire world, not just business, but everything. when you saw that, did you say, i should be higher? [laughter] david: or did you say that is pretty high? and how does it feel to be the 22nd most powerful female on the entire planet of 3.6 billion women? marillyn: you know, i don't focus on it that much, david. [laughter] marillyn: i got a note from my brother that said, well why was oprah higher than you or something like that. [laughter] david: ok.
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marillyn: but that is not something that i focus on. there are lots of lists. it really comes down to having the privilege of leading a national asset and a company that is doing some of the most important and interesting work in the world. david: when you started out, were you often the only woman in the room at lockheed? marillyn: i was. yes. david: so was that intimidating or was it the kind of thing were you can show them i am better than them, the men? marillyn: you know, i think it is like any team you come into. you have to establish your credibility, recognizing that i was a different gender, so maybe the first moment i was different in that sense, but after that, once you are contributing and part of the team, it was no longer a factor, at least for me and through my career. but what i would tell you, what is really positive is that today 22% of our leaders are women, 24%, 25% of the workforce is women, so the pipeline is there is no longer only one woman in the room. we have many women leaders in the room, and we have come a
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long way on the pipeline. back 35 years ago, there weren't as many women coming out of engineering and other professions to come into the workforce, just as the case was for our customer. you look at our customer, our military services, how many women are involved, how many men and women are in uniform and in leadership positions, it is just a pipeline issue. we are always working on the pipeline to get more women. david: right. and what you do for relaxation? -- what do you do for relaxation? are you an exercise person, a traveler, sports? marillyn: i like to get out and play some golf. my husband and i like to get out and play some golf for relaxation. i like to travel. our family gets together and travels. i travel lots on the job. probably 40%, 50% of the time, i travel on business travel, but one of the things we enjoy is getting together as a family to travel. i always try to create some fun travel that our kids will find and as long as mom and dad pay for it, and it is fun, they will come. [laughter] david: some say the higher the handicap of the ceo, the better the stock will perform.
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if it is a low handicap, that means the ceo is spending too much time playing golf. so -- marillyn: you are not going to ask me for my handicap, are you, david? david: i assume your handicap is -- you are not a scratch golfer? marillyn: no way. i don't play enough for that. david: ok. [laughter] david: today -- it sounds like it must be pretty low. you can beat your husband, or is he better than you? marillyn: he is better than me, but i always remind him there is the average for women and the average for men. and so as long as i can -- david: ok, and if he has a close putt, do you give it to them, or you make him -- [laughter] david: so today, what is the biggest challenge the u.s. defense industry has? marillyn: the challenge we have is really the challenge our customers have. we have an environment where the threats today are so difficult around the world. the global security environment is so unpredictable and is
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changing so rapidly, so you have a need for solutions to address that and to stay ahead of the threat and stay ahead of the adversaries. at the same time, we have constrained budgets, and the budget pressures we have faced the last several years, and maybe we are having to spend money near-term getting things back up to readiness instead of investing in what we need to to address the power competitions we have out there with our adversaries, so that, then in turn is a challenge for industry, because if you have not been investing along the way, we have to move with speed while at the same time driving costs down. david: and what about cyber warfare? that must be an important part of your business now. how do you make certain that our enemies around the world are not trying to get your secrets? marillyn: they can't -- i mean, they are trying to get our secrets. this is a constant threat that a company like ours and many companies have in the u.s., of other countries trying to get at our secrets. we take it very seriously because we know that we are a
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target, and government customers are a target, so we have invested a lot in the technology to protect that, but it is a constant. these threats are advanced, and they are asymmetric, and they are constantly changing. it is really important for us to stay on top of that and keep investing in it. david: i mentioned earlier, since you became the ceo, your stock is up. if i bought some stock tomorrow, would i also see a very significant gain in four years or five years? or you think the prices are already so high for the defense stocks? marillyn: david, i am not going to advise you on stock price today. [laughter] marillyn: i think you are really good at that. but i would tell you this, for our company, we are always focused on creating shareholder value. just know that is our commitment and we are going to drive the company for growth and for innovation and for shareholder value. david: ok. as long as you are the ceo, i would be happy to be an investor. how long might you be the ceo? [laughter] david: do you have any plans?
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if the president of the united states called you and said i would like you to be secretary of defense or something like that, would you entertain that, or are you going to stay where you are for a while? marillyn: in our company, i feel very privileged. i love the work that we do. i have a team of remarkable people that i work with. they have the highest integrity. they are so dedicated and so talented. i love working at lockheed martin, and i serve at the pleasure of the board of directors, so how long i work will be up to them. but today, i am really enjoying the work i am doing and have no intention of stepping down from my role. david: right. whenever you do step down at some point, you might step down at some point, 10 years, 15 years, 20 years, would you consider the higher calling of private equity? [laughter] marillyn: you know, as i told you, i have a passion for business. i might very well consider that, david. david: well, whenever you do step down, please let me know. marillyn: ok. david: i will be happy to talk to you. thank you very much. marillyn: thank you. [applause] ♪
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>> george herbert walker bush asked you to help him with his campaign. >> i said that's a great idea except i don't know anything about politics and number two, i'm a democrat. carter.arrow lead to was it difficult to prepare reagan for the base? your job was to go around and get the coalition put together. what was the reason you were so successful? >> lucky. >> would you fix your tie please? david:


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