The LM CEO Marillyn Hewson leveled the boom, she’s going to breakout IS&GS (non-Govt IT), and Missile and Fire control services.
Why because the rent is just too darn high. Now I say that tongue and cheek, but it is true. In her last webcast (Internal to LM employees) she said that “we” LM get paid a premium for our engineering services. These businesses (service company) don’t necessarily build things, they serve as a body shop giving expertise on a variety of programs or services. Have an aircraft in IRAQ that needs parts and personnel to maintain in? Have some snipers that need to be trained? Got some healthcare work to do, records to control? Services company will do that…
Sadly services doesn’t fit with the price model that Marillyn wants for LM. She wants the company to charge a premium to Govts around the world. Need 500 Hellfire missiles we can do it and it will cost you xxxxx millions.
Often during this cycle she repeated that the services business is losing contracts because it gets underbid by 2% or so. The Govt which has never really cared about quality takes the lowest bid and executes the contract with the competitor. Therefore one would think perhaps it would be better to lower the rates inside of LM, but no this isn’t what is going to happen. Instead it is easier to sell off the “unprofitable” divisions. To her credit she did say possibly “spin-up” a new company, but lets be honest if she does that it’ll be ISGS spun up/out and the pieces of MFC-Services that are left (she’s spinning Aegis, C-130, and DCGS into other business areas with MST getting the lion’s share of programs) will be sold off.
One needs to ask the question why is the “rent” too damn high in LM? First reason if they were to seriously gut the “Joe Cleveland EBS” organization and do a “Neutron Jack” on management (corporate and business units) they would have to drop their prices and profit margin on major programs can't do that... nope gotta charge a business unit $300/per hour for an EBS security engineer...
Their solution is to put 17,000 people possibly in the unemployment line/in another company, or into an early retirement.
“Well you could move in LM”, banish the thought.
The instituted a freeze on ISGS and MFC-Services personnel you can’t move inside to another program or business unit in LM unless blessed by the magical HR person at the top of corporate chain. Because the value of the employee is the value in a service - Sondra Barbour relayed (not those exact words.)
Unless of course you are enterprise business solutions (EBS) that provides IT services and gouges the business units that actually make money… then you can move to another IT job in LM you are not affected in the slightest. Cheers lets keep those 3x times paid (the fair market rate) oracle admins and security people employed and let them make the remaining Business areas unprofitable.
The end of this is LM will become pretty much an engineering /production firm. Charging exorbitant rates of the Govts of the world… while they hang their loyal 17,000+ employees out to dry.
Bravo LM gotta please the share-holders.