Corporate Night, Phebe Novakovic, Executive Vice President - Marine Systems

Speaking at the Mystic Marriott 
    

    November’s EBMA meeting, Corporate Night, was held at the Mystic Marriott on Wednesday November 17, 2010.  Phebe Novakovic, GD Executive Vice President, Marine Systems, was the guest speaker Ms. Novakovic used a PowerPoint presentation to illustrate EB’s place in the corporation.  She briefed EBMA members as to where GD and EB have been in the recent past and where she expects to see them going in the future. Along the way she explained how EB’s commitment to excellence has been adopted and put to good use by the other business units. At the conclusion of her prepared remarks, she volunteered to answer members’ questions. 

    But before her presentation began, EBMA President, Joe Rossi welcomed guests and members to the meeting.  He recognized retirees in attendance before previewing upcoming association events including the kids’ and adults’ Christmas parties (noting that a limited number of discounted rooms will be available at the GMI for members that evening). The annual Toys for Kids drive will begin shortly, he noted.  Volunteers are still needed for that activity.  He then thanked the hosts, Bob and Betsy Peterson (D330) and praised Rich Clipinger and Judy Bogue for their invaluable service on behalf of the association.  He also thanked photographer Mike Tsao and EBMA Web editor, Anthony Kargul.  Tom Meisenzahl (D626) then led the Pledge and Tom Lee (D462) recited the prayer. 

     After dinner, Joe turned to pressing association business by announcing ground rules surrounding next Spring’s EBMA officer elections.  He explained the nomination process and time frame and took the opportunity to thank the officers whose terms are expiring. He then introduced John Casey and the current graduating class of the Certified Managers Program.  This is the 15^th class, he noted, and so far 135 employees have graduated from the program.  He assisted John Casey in handing out the diplomas.  John Casey then thanked Joe and Judy Bogue for making this event possible.  He then introduced the guest speaker, his boss, Phebe Novakovic.  Ms. Novakovic, he said, is currently responsible for three of the nation’s most advanced and capable shipyards.  She once worked for the CIA, he quipped, but don’t expect to see any of that information in tonight’s presentation.  The audience greeted their boss with enthusiastic applause.  

    Ms. Novakovic thanked John Casey for his kind introduction, noting that the last time she’d presented at EB the Yankees and Red Sox were playing a playoff game which, she said, may have had a dampening effect on attendance.  She noted that neither team would be playing this night.  She also promised that her remarks would be brief.  She would be looking at the EB/GD relationship in the Nick Chabria era including Marine Group performance and the relationship between business units. 

     She projected a series of charts showing GD and Marine group statistics.  She compared sales and profits before and after Nick Chabria took over.  There has been a tremendous amount of growth evident in the Chabria era, she noted.  Each of today’s business units is larger that all of GD was in 1997, she said.  The number of employees grew from 29K to 91K.  GD’s business is more divergent; all of the business units are showing consistent performance.  GD stock had a 390% total return in this period as opposed to the S&P average of 12% annual growth.  She talked about the dip in price associated with Gulfstream after 9/11 as well as “the confluence of events in 2008” leading to a “triple hit” pullback in the stock market.  She noted that she expects Gulfstream, with two new, advanced jet models on the horizon, will be a driver of GD’s future gains as the aerospace sector of the market returns to fiscal health.

     Land Systems has an expanded line of tracked vehicles, ammunition and ordinance, she said.  Their sales were $10B last year; earnings were $1.2B. Land Systems and EB are the foundation of GD, she said.  Much of the corporate culture and value systems came directly from these two business units.  That symbiosis even extends to improved manufacturing processes.  EB workers would feel right at home in Gulfstream’s manufacturing areas, she said, because they were heavily influenced by EB’s manufacturing improvements.  The IS&T business unit has a solid business model supporting IT infrastructure throughout the Department of Defense and Armed Forces, she noted. They also work with the intelligence community both here in the US and in Great Brittan.

     The Marine group currently has a huge backlog, she said, and GD is investing heavily in its shipyard manufacturing capability.  Its goal is to enable lower cost, higher quality manufacturing processes.  “Opportunities in this area far outweigh the risks,” she said.  GD customers, she said, understand the benefits of its high value-added approach to engineering and manufacturing challenges.  In comparison, she said, Newport News Shipyard, with a different philosophy, is at the opposite end of the performance spectrum.  Facing an era of inevitable defense cuts, she noted, GD business units are well positioned to maintain business share.  “But we must continue to perform well on the backlog,” she said.

      She then offered to take questions from the audience and several members quizzed her on the effects of diminished defense spending on general dynamics and Electric Boat. She also talked about the White House’s disparaging remarks regarding private jets, thereby undermining Gulfstream orders.  Finally, Joe Rossi returned to the podium to announce a generous gift to be made to the Gemma Moran Food Bank in Ms. Novakovic’s honor.  She thanked the association in a heartfelt manner and her departure was accompanied by a warm round of applause.  A motion to adjourn was made and seconded.  EBMA members headed to the parking lot with a new perspective of EB’s place in the GD corporate solar system.

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