The market may go up and down, but General Dynamics banks on staying relevant as a key to its success.
In a time of sagging government spending and rapid shifts in the technology landscape, officials at General Dynamics Corp. are stressing the critical importance of staying relevant as a key to success.
A case in point is the big defense contractor’s recently announced plan to acquire IPWireless, a San Francisco-based wireless equipment maker and a pioneer in the fast-growing 3G and 4G wireless markets. General Dynamics officials expect to complete the purchase in this year’s third quarter.
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The IPWireless acquisition will open potential new avenues of business in the government market, in homeland security, public safety and warfighter support, said Gerard DeMuro, executive vice president of the company’s Information Systems and Technology division.
“IPWireless is a leader in scalable solutions that we think are a perfect fit for the first responder and public safety markets and for our traditional defense customers,” DeMuro said. “Think about the use of Android-type devices in the battlefield. Think about a dedicated, highly secure, always available 4G network for first responders that has the capacity to push not just voice but high-bandwidth applications, [such as] fingerprint IDs, situational awareness, and command and control maps.”
The IPWireless buy and General Dynamics’ acquisition last summer of Vangent Inc., which expanded the company’s reach into the vibrant health information technology market, demonstrate to its customers that “our portfolio is relevant to both their near-term and future needs,” DeMuro contended. “It’s all directed at maintaining that relevance.”
General Dynamics bolstered its civilian-agency portfolio in April with a contract worth up to $363 million over ten years from the Federal Aviation Administration for next-generation air traffic control radios.
On the systems integration front, General Dynamics continues to support the Navy’s Littoral Combat Ship program, providing shipboard control systems for everything from valves and motors to weapon systems, DeMuro said. “That’s a very big deal for us, staying in the systems integration area,” he said.
Despite impending cuts in spending, the defense sector remains a “very large, very significant market on the services and IT side,” DeMuro said. “It is still the largest defense budget in the world. So there is great opportunity there. We think there are some segments that are likely to continue to grow, notwithstanding the overall projected decline in the budget.”
The company also sees opportunities ahead in the cybersecurity area. “Cybersecurity is ubiquitous now in every device and in every network that we build or architect and design,” DeMuro said. “That’s a key competency we have…so while the customer may delay some spending on a tactical level, month to month or quarter to quarter, over the long haul, systems have to keep evolving as the threat evolves.”
DeMuro said that General Dynamics understands the challenges its government customers face in setting IT priorities in a constrained budget environment. “That’s why we’re really focused on maintaining our execution on existing programs,” he said. “Today you have to ensure that you don’t provide any opportunity for someone to come in and assert that a program is not performing or will not meet its requirements and allow that to be used as justification for making one of these very difficult priority decisions.”
The company also is undergoing a changeover to a new president and chief operating officer, Phebe Novakovic, who was promoted from within the company’s executive ranks. As president and COO, Novakovic will report to chairman and chief executive officer Jay Johnson and oversee each of General Dynamics’ four business groups.
DeMuro described this executive transition as routine. “It’s just part of a very orderly transition process,” he said. “I don’t know that I would expect any change in our behavior or execution for our customers or shareholders. Nothing out of the ordinary.”