More changes coming for BAE Systems

In light of the collapse of the BAE Systems-EADS merger, Marjorie Censor’s Oct. 11 article on BAE’s Linda Hudson is particularly insightful.

Censor followed Hudson to New Orleans, where she gathered top executives from the U.S. branch of the U.K. company, and told them to prepare for change.

The question now that the deal has collapsed is what kind of change will come.

There has been speculation that a failed deal would mean BAE would will be broken up and sold in pieces. But even if that doesn’t happen, the defense industry is in the midst of a retrenching, that sees several of the big players from Lockheed Martin on down selling units, laying off workers and otherwise trying to squeeze out any extra costs.

One quote from Hudson that I found particularly insightful deals with the efforts she has made since becoming CEO in 2009 to integrate the cultures and systems BAE had collected through a series of acquisitions.

“What we found a few years ago was that we had [multiple] payroll systems, we had numerous benefits systems, we had different vacation policies scattered throughout the company,” she told Censor.

But here is my favorite part: “All that’s well and good when you have more business than you know what to do with — which was kind of the last 10 years — but when you’re trying to run an efficient, effective enterprise, that’s just not the appropriate way to do things.”

I’m sure executives all around the government market nodded their head in agreement when they read that. It used to be so easy, didn’t it? I’m not sure anyone realized at the time how good things were.

But that’s over now and the last two years have been a time of contraction for many companies, particularly in the defense arena.

Whether BAE is in play as an acquisition and/or break up target remains to be seen, but Hudson couldn’t be more right than to focus her troops and have them prepare for change. BAE isn't alone in facing a rapidly evolving market.

I also want to commend Censor for incorporating Hudson’s personal story of handling discrimination as a woman rising through the ranks of the defense industry. Hopefully, with the success of Hudson and two other Lindas – Gooden at Lockheed Martin and Mills at Northrop Grumman – the path is a little clearer for other women today.

Posted by Nick Wakeman on Oct 12, 2012 at 11:30 AM