20131025_091415Last week, Exelis CEO and President David F. Melcher was the guest of honor at the ACG October monthly meeting, where he took some time to discuss the history of Exelis, and how it has helped shape the company into what it is today.

Mr. Melcher has served in the United States Army with distinction for 32 years and has had more than 25 years of defense community experience in program management, strategy development and finance.

Before diving into what makes Exelis a defense and aerospace company with a unique value proposition, Mr. Melcher recounted the company’s long history. Parent company ITT (International Telephone & Telegraph) was founded by Sosthenes Behn in 1920 as a telephone and telegraph provider who also manufactured some of the equipment used in that industry.

After the start of WWII, ITT entered the defense industry, specializing in radars and radio communications. In 1959, Harold Geneen, also known as the builder of the biggest conglomerate in the United States, was appointed as CEO. By the time he left in the late 70s, the company had become the fifth largest employer in the world.

The company’s first split didn’t occur until 1995, when it split into three separate public companies. Defense spending was experiencing a big downturn, but after much deliberation, it was decided that the defense business had more potential than the automotive business, which was ultimately sold. According to Melcher, “several years later, the remnants of that automotive business were practically out of business, so it turned out to be the right decision.”

In 2011, ITT split once again into three companies:

–          ITT Corporation – an industrial products company

–          Xylem – a water development, production, movement, and filtration company

–          ITT Exelis – a defense and aerospace company

Commenting on the company’s continued success, Mr. Melcher addressed Exelis’ diversified portfolio of products and services, and how that has helped set the company apart: “Exelis is probably the most diversified mid-cap defense company that you’ll find in the marketplace; most are focused on singularities. We tend to cross a lot of domains. We’re not a platform provider, we don’t tend to rise or fall on any one platform in the inventory, be it an aircraft, or a ship or a combat vehicle. We tend to put capabilities on all of them, and we have a very large install base of capability today, which in this environment, is extremely important.”

Seeing as how the political environment has recently been in a state of flux, Mr. Melcher addressed the recent government shutdown and how it affected the company: “The political environment is not necessarily good for the nation and it’s not necessarily good with our allies. With a business like ours, we try to stay very much in tune with what’s happening on the hill and try to make sure that people understand the impacts to a company like ours, and there were some.”

He directly addressed the audience by claiming, “I’m sure many of you in the room here had some impacts to your company as a result of the shutdown. It may be small since it was over in 16 days, but there were impacts.”

As to what the company is currently doing to remain competitive and weather the storm of government uncertainty, Mr. Melcher highlighted the importance of diversification, and cutting costs to better align them with the coming environment, “so for us that means looking at our footprint and reducing it.” The company has also been repositioned towards products and services that have been termed “strategic growth platforms.” These are seen as the inexorable needs of the future, no matter what the budget level is.

The address concluded with Mr. Melcher expressing his gratitude to our service men and women, as well as how proud he is to be working in an industry where he can play a role in keeping service members safe.

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