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GENERAL DYNAMICS' CEO OUTLINES PROGRAM TO CREATE VALUE AND ENSURE COMPANY'S CONTINUED INDUSTRY LEADERSHIP

 FALLS CHURCH, Va., July 15 /PRNewswire/ -- At a meeting of General Dynamics' key managers held today, President and Chief Executive Officer James R. Mellor set forth his objectives for the company and a four- point program to achieve those objectives. Defining his two primary objectives as, first, to create additional value for the company's customers, employees and shareholders, and, second, to ensure that General Dynamics continues its leadership role in the defense industry, Mellor charged the company's key managers with redefining how a defense business should be operated in the post-Cold War environment.
 "The key to continued success at General Dynamics is recognizing that defense budget declines are both structural and accelerating, and managing your business to adapt to this fundamental change," Mellor said. "You must break with past industry paradigms that defense is a low-risk, volume-oriented business in which management of costs, risks and liabilities is of secondary concern. Our customers are facing ongoing budget pressures. It is to our advantage to help them effectively respond to these pressures by becoming their lowest cost, highest value supplier. If we are to serve our customers, employees and shareholders well in the face of rapidly shrinking markets, we must focus on affordability, productivity, and financial strength through tight controls on costs, risks and liabilities."
 Mellor charged key management with implementing an integrated, four- point program designed to achieve the dual objectives of value creation and industry leadership:
 1. Pursue a Tightly Focused, Fact-based Business Strategy -- Noting that General Dynamics was in the midst of its annual review of individual business strategies, Mellor said, "I expect you to base your future business strategies on absolute realism, and to continually review those strategies in light of our rapidly changing environment."
 2. Re-engineer the Cost Structure of Each Business -- "I expect you to consider every cost in your business invalid unless it can be proven to support your strategy," Mellor said. "Essential costs will then be reassembled into a highly efficient framework designed to deliver best value to customers, shareholders and employees."
 3. Aggressively Extract and Prevent Risk And Liabilities -- "By reducing or eliminating existing risk and liabilities, we protect and preserve our hard-won financial strength and improve your ability to deliver our current backlog efficiently and profitably," Mellor said. "By aggressively managing risks and liabilities associated with future business, you will ensure the continued viability and profitability of the critical elements of America's Defense Industrial Base under General Dynamics' stewardship."
 4. Rigorously Discipline New Investments -- "Given the massive overcapacity in this industry and the rapidly declining number of new programs being funded by our customers, we must ensure new investment clearly furthers your business strategy, contributes to improving your cost structure, and reduces the overall level of risk and liability in your backlog," Mellor said.
 Mellor characterized his four-point program as having a "Value Multiplier" effect on General Dynamics. "Just as our military customers seek a 'force multiplier' in response to shrinking budgets, we must seek a 'value multiplier' to guide our operating behavior in response to shrinking markets," Mellor said. "General Dynamics must orient itself towards value in everything it does, including our approach to new business. We must break with the defense industry's preoccupation with volume for its own sake, and focus on high quality, consistent earnings and positive cash flows. This is a logical extension of the value- driven strategy General Dynamics has followed over the past 2-1/2 years."
 Mellor said his "Value Multiplier" program will accelerate the removal of underutilized assets from General Dynamics' continuing operations, and he restated management's commitment to constructively redeploy excess assets through their rightful owners -- the company's shareholders. "I am convinced that this is the most efficient means of converting surplus defense assets to other segments of our nation's economy," Mellor said.
 "I firmly believe this strategy generates the greatest value for customers, employees and shareholders during a time of dramatic contraction in the defense marketplace," Mellor said. "In addition, it provides General Dynamics with maximum flexibility to respond appropriately to future market conditions."
 -0- 7/15/93
 /CONTACT: Alvin Spivak of General Dynamics, 703-876-3190/
 (GD)


CO: General Dynamics Corporation ST: Virginia IN: ARO SU:

IH-TW -- DC029 -- 2137 07/15/93 15:47 EDT
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Date:Jul 15, 1993
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