Cross & Crescent

In 1996, General Dynamics finished with $3.6 billion in revenue, three operating businesses, and about 23,000 employees. Ten years later, the company exceeds $21 billion in revenue, has four business groups with 16 operating businesses, and consists of more than 72,000 employees.

During this time of enormous growth and acquisition, one thing remained constant: Nicholas Chabraja (Northwestern 1964) was serving as chief executive officer and chairman of the board.

Ranked 100th on the 2006 Fortune 500 listing, General Dynamics is a clear market leader in business aviation and aircraft services, land and amphibious combat systems, mission-critical information systems and technologies, and shipbuilding and marine systems.

During the past decade of the company’s success, Chabraja, 63, and his management team have applied their collective “experience and insight to recognize and act on change to build their position in the defense and technology business sectors,” he says.

Career Foreshadowing

In 1960, Chabraja began his collegiate career at Northwestern University in Evanston, Illinois, studying political science, a choice that in many ways foreshadowed where his career would ultimately take him.

“For a Midwestern guy who didn’t want to go to the East or West Coast, Northwestern was the Midwestern university with the strongest reputation that also participated in big-time athletics,” Chabraja said. “And it was reasonably close to home,” as he was born and raised in Gary, Indiana.

Upon graduating in 1964, Chabraja was accepted and attended Northwestern University’s Law School where he earned his law degree in 1967.

After law school, Chabraja was immediately considered by many to be an exceptional legal talent, quickly passing the bar in both Indiana and Illinois. Shortly thereafter, he accepted a position with Jenner & Block, a prestigious Chicago law firm that also had offices in Washington, D.C.

At Jenner & Block, Chabraja eventually became a senior partner, where he helped manage General Dynamics’ legal affairs for more than 20 years. Originally living in Lake Forest, Illinois, a Chicago suburb, Chabraja’s duties required him to spend more and more time in Washington, D.C.

From Defense to Offense

By the end of the 1980s, times were tough for defense contractors and General Dynamics was losing revenue. Then chairman and CEO Bill Anders, a former astronaut, had to make some tough decisions to sell several of the company’s divisions, including those making F-16 jets (to Lockheed) and Tomahawk missiles (to Hughes).

By 1993, General Dynamics had only two divisions left: Electric Boat, which made nuclear submarines, and Land Systems, which made M1 tanks.

Anders was succeeded by John H. Mellor in early 1994, and Chabraja soon became General Dynamics’ executive vice president. In that role, he began pushing for a new approach: one of expansion instead of selling off the company’s last divisions. His new role also required him to move near Washington, D.C., and he settled in a suburb in northern Virginia.

Chabraja became vice chairman in 1996, and when Mellor retired he became chairman of the board and chief executive officer.

Room to Grow

Chabraja’s mission became finding available companies at bargain prices that could benefit from improved management, as well as companies that would diversify General Dynamics’ activities and help smooth business-cycle fluctuations.

One of the most significant Chabraja-led acquisitions was the 1999 purchase of business-jet manufacturer Gulfstream Aerospace Corporation, for $4.8 billion. After the purchase, Chabraja reduced the size of the company’s management and initiated a program of cutting expenses and expanding its product line. By 2002, Gulfstream accounted for 40 percent of General Dynamics’ profits.

Since 1997, when Chabraja took over leadership of General Dynamics, the company has acquired and successfully integrated 40 businesses, including three in 2005.

“I spend a lot of time on capital allocation and deployment questions,” Chabraja says when asked about a typical day. “That means there’s nothing average about one of my days. If I’m in the middle of a transaction, it can be consuming; but when it’s over, I surface again to do other things.”

Chabraja spends a fair amount of time with customers, making sure relationships are on solid footing. These include frequent visits to The Pentagon, U.S. Department of Defense, and U.S. Congress. “It’s a multi-faceted customer,” he explains.

In 2005, 64 percent of the company’s net sales were to the U.S. government; 17 percent were to U.S. commercial customers; 14 percent were directly to international defense customers; and, the remaining 5 percent were to international commercial customers.

Chabraja credits his management team and employees for much of the company’s success. “We have very good people, wonderful leaders. The best staff I’m aware of in America,” he says.

Another highlight Chabraja’s proud of are the results the company has generated for its shareholders. Over the last decade the company has repurchased $1.2 billion of company shares and returned $1.8 billion in quarterly dividends to shareholders.

“The tremendous growth in the market capitalization of this company — from $4 billion to about $27-28 billion — is one of our primary achievements,” he says. “I’m also very proud of the institution, being a Fortune 100 company, and being broadly diversified.”

Today, General Dynamics is readily known worldwide as a leading aerospace and defense company with major operations in Austria, Canada, Germany, Spain, Switzerland, United Kingdom, and the United States. Headquartered in Falls Church, Virginia, its four major business segments are: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems.

Early Leadership Training

Chabraja was first introduced to Lambda Chi Alpha during his freshmen year at Northwestern when he went through fall rush in 1960. The primary factor that influenced him to join Lambda Chi Alpha was the quality of men he met there.

“I just met a bunch of guys I really liked and decided to pledge,” he recalls. “I made a number of fine friends that have lasted a lifetime.”

“The chapter consisted of about 70 active members. It was a wonderful place, a happy place,” he recalls fondly.

Chabraja keeps up with the Northwestern chapter’s current activities through its alumni newsletter. He also is involved with the chapter’s alumni board that “is in gestation stages with respect to a fundraising campaign to revitalize the chapter house physically,” he says.

During his college days, Chabraja served as the chapter’s membership recruitment chairman and also was an associate leader during initiation week. He attributes these early leadership opportunities as having a big influence on his future endeavors as a leader, as well as the humbling experience of learning from his mistakes.

These early opportunities helped shape Chabraja’s leadership style and later influenced how he handled the challenging and changing times at General Dynamics.

“General Dynamics has been a story of managing change,” he says. “It’s been a story of enormous growth, of acquisitions, and all about the allocation and deployment of capital. It’s been a fascinating ride.”