26 mars 2021 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
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21 octobre 2018 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
CEO Q&A: L3’s Chris Kubasik and Harris’s Bill Brown
BY MARCUS WEISGERBER
Soon after the companies announced plans to form the world's 7th-largest defense firm, the CEOs rang up for a joint interview.
On Sunday, just after L3 Technologies and Harris Corp. announced their planned merger next year, I chatted with CEOs Chris Kubasik and Bill Brown about their plans to form L3 Harris Technologies, which would be the world's 7th-largest defense firm. Here are some excerpts.
Q. How did this come together?
Brown: Chris and I have known each other for a number of years here, and a lot of it started more socially, not from a business perspective. We work in the same space as complimentary businesses, complementary portfolios. Same [main] customer. You know we realized, given where we stack up in the defence hierarchy, this would be a great potential combination. We've been discussing it through the balance of this calendar year. [It] really picked up steam in the summer and were able to bring it forward here towards middle October.
Q. Why a merger rather than an acquisition by one partner?
Kubasik: Both companies are quite strong, and we're both on an upswing, and we looked at all the different stakeholders from the customers, the shareholders and the employees. And in our relative size and market value, a merger vehicle seems to be the absolute right way to go here. True partnership, as you've probably seen. 50/50 board. Bill and I have our leadership laid out clearly. It's absolutely the right way to do this. We're quite proud that we're able to pull it off. And I think it's the best way to serve all the stakeholders.
Q. Bill is going to be CEO until a transition to Chris in a couple of years. How will that work? And what happens to L3's New York office if the headquarters moves to Florida?
Brown: The combination in bringing these two great companies together is going to take a lot of work. So Chris and I will partner on this, in leading the company [and] clearly doing a lot of the integration. We're going to chair the integration committee together. I'll have responsibility for the enterprise functions, and Chris will keep an eye on the ball in what we do operationally in the business segments making sure that through to the integration we don't miss a beat in our growth agenda, meeting expectations of customers, delivering on programs. It's going to be a shared partnership in bringing the companies together.
Kubasik: On a combined basis, we have several thousand employees in the state of New York, a lot in Rochester, of course Long Island and the surrounding areas. We got to do to what we believe is best for the business. When you look at the Space Coast of Florida, the 7,000 or so employees and infrastructure in the Melbourne area, it's an easy decision. We'll be transitioning from the headquarters from New York and taking the best of the best and moving to Florida. At some point the Manhattan office will either be significantly scaled down or ultimately closed.
Q. Will the combined company divest or combine overlapping sectors?
Bill Brown: Very high and complimentary portfolios. So we see very, very, very little overlap.
Q. L3 has been on an acquisition spree in recent years. Should we expect more, perhaps in the maritime sphere?
Kubasik: Job one is going to be the integration for the first couple years, so there will be very, very few, if any, acquisitions the first couple of years. They would have to be a once-in-a-lifetime opportunity. We're going to focus first and foremost on integrating this company. Once we get this integrated, which is a three-year program, we'll update and modify the strategy as appropriate.
Correction: An earlier version of this article misstated the proposed merged company's rank by revenue among global defense firms.
This Q&A is part of the weekly Global Business Brief newsletter by Marcus Weisgerber. Find the rest of this week's issue here,and subscribe to get it in your inbox, here.
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Security and defence cooperation: EU will enhance its capacity to act as a security provider, its strategic autonomy, and its ability to cooperate with partners
Today, foreign affairs ministers and defence ministers discussed the implementation of the EU Global Strategy in the area of security and defence. The Council then adopted conclusions which highlight the significant progress in strengthening cooperation in the area of security and defence and provide further guidance on next steps. Permanent structured cooperation (PESCO) The Council adopted today a common set of governance rules for projects within the PESCO framework. The sequencing of the more binding commitments undertaken by member states participating in PESCO is expected to be defined through a Council recommendation, in principle in July 2018. An updated list of PESCO projects and their participants, including a second wave of projects, is expected by November 2018. The general conditions for third state participation in PESCO projects are expected to be set out in a Council decision in principle also in November. Capability development plan and coordinated annual review on defence (CARD) The Council approved the progress catalogue 2018, which provides a military assessment of the prioritised capability shortfalls and high impact capability goals to be achieved in a phased approach. It forms a key contribution to the EU capability development priorities. These priorities are recognised by the Council as a key reference for both member states' and EU defence capability development initiatives. The aim of CARD, for which a trial run is being conducted by the European Defence Agency, is to establish a process which will provide a better overview of national defence spending plans. This would make it easier to address European capability shortfalls and identify new collaborative opportunities, ensuring the most effective and coherent use of defence spending plans. European defence fund The European Defence Fund is one of the key security and defence initiatives by the Commission, reaffirmed in its proposal for the future multiannual financial framework (2021-2027), with a proposed envelope of €13 billion. The European Defence Fund aims to foster innovation and allow economies of scale in defence research and in the industrial development phase by supporting collaborative projects in line with capability priorities identified by Member States within the CFSP framework. This will strengthen the competitiveness of the Union's defence industry. Under the current financial framework, with the same objectives, the European Defence Industrial Development Programme (EDIDP) was agreed by the representatives of the co-legislators on 22 May 2018. The Council welcomes this agreement. The EDIDP should aim at incentivising collaborative development programmes in line with defence capability priorities commonly agreed by EU member states, in particular in the context of the capability development plan. European peace facility The High Representative for Foreign Affairs and Security Policy proposed the creation of a European Peace Facility in the context of the future multiannual financial framework, an off-EU budget fund devoted to security and defence. The aim of the facility would be: funding the common costs of military operations under the Common Security and Defence Policy (currently covered by the Athena mechanism); contributing to the financing of military peace support operations led by other international actors (currently covered by, for example, the African Peace Facility); and providing support to third states' armed forces to prevent conflicts, build peace and strengthen international security. The Council takes note of the proposal and invites the relevant Council preparatory bodies to take the work forward and present concrete recommendations on the proposed facility. Military mobility The aim of improving military mobility is to address those obstacles which hinder the movement of military equipment and personnel across the EU. The High Representative and the Commission presented a joint communication on improving military mobility in the EU on 10 November 2017 and an action plan on 28 March 2018. The Council welcomes this action plan and calls for its swift implementation. As a first step in this direction, the Council approves the overarching high-level part of the military requirements for military mobility within and beyond the EU. The Council also stresses that improvement in military mobility can only be achieved with the full involvement and commitment of all member states, fully respecting their national sovereignty. The conclusions also touch on other strands of work in the field of EU security and defence, including strengthening civilian CSDP, developing a more strategic approach for EU partnerships on security and defence with third countries, and increasing resilience and bolstering capabilities to counter hybrid threats, including further developing the EU's strategic communication approach together with member states. Background On 14 November 2016, the Council adopted conclusions on implementing the EU Global Strategy in the area of security and defence. These conclusions set out three strategic priorities in this regard: responding to external conflicts and crises, building the capacities of partners, and protecting the European Union and its citizens. Since then, the EU has significantly increased its efforts in the area of security and defence. Progress was noted and further guidance provided through Council conclusions on 6 March 2017, on 18 May 2017 and 13 November 2017. Council conclusions on strengthening civilian Common Security and Defence Policy (CSDP) were adopted on 28 May 2018. At the same time, the EU has also increased its cooperation with NATO, on the basis of the joint declaration on EU-NATO cooperation signed by the President of the European Council, the President of the European Commission and NATO Secretary-General on 8 July 2016 in the margins of the Warsaw summit. http://www.consilium.europa.eu/en/press/press-releases/2018/06/25/security-and-defence-cooperation-eu-will-enhance-its-capacity-to-act-as-a-security-provider-its-strategic-autonomy-and-its-ability-to-cooperate-with-partners/