Raytheon

Last updated: 
2002

Raytheon Company

website:http://www.raytheon.com


1.OVERVIEW

 


 

'Raytheon: Aspiring to be the most admired defense and aerospace systems supplier through world-class people and technology.'[1]

 

1.1 Industry Area

 

Raytheon produces military and commercial electronic systems and business and special mission aircraft. The company's 2001 revenues came from electronic systems (46%); command, control, communication and information systems (21%); aircraft (14%); technical services (11%); aircraft integration systems (6%); commercial electronics (2%).[2]

1.2 Market Share / Importance:

 

Raytheon is the 4th largest US defence contractor, after Boeing, Lockheed Martin, and Northrop Grumman.[3] The company is often labelled as America's third largest aerospace company. Raytheon is ranked no. 119 in the 2002 FORTUNE 500 list of America's largest corporations.[4] The company is the world's largest missile-maker.[5]

Raytheon claims to be 'a global leader in defence and government electronics, business and special mission aviation[6], as well as in areas of weapons manufacture such as air-air missile systems.'[7] In 2000, the company employed 87,200 employees worldwide and had revenues equalling $16.9 billion.

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1.3 History

 

The Beginning The American Appliance Company was started up in 1922 to make artificially cooled radiators. This was a commercial failure however and instead the company moved into making radio tubes under the brand name Raytheon. By 1925 it had also changed its company name to Raytheon, literally, ‘light of the gods’.[8] The company remained in the growing radio tube market until the onset of the Second World War. At this time the company expanded its operations, becoming the leading western manufacturer of radar systems and establishing the field of missile guidance systems.[9] After the war Raytheon kept up its close association with the military into the 60’s.

Expansion and Diversification In the mid-60’s 83% of Raytheon’s business came from the US government.[10] Deciding to diversify, the company established an aircraft division, an energy services division and an appliances division among others. In 1967 Raytheon produced the first reliable countertop microwave oven and it also manufactured the first electronic depth sounder. Due to its diversification by 1990 the US government accounted for only half of Raytheon's sales. (However, according to Hoover's Online Business Information, the US government currently accounts for about 70% of sales).[11]

In 1967 Raytheon was awarded the contract to develop the US armies surface to air missile. Nine years later the ‘Patriot’ entered full-scale production9. In the 1980’s Congress almost cancelled funding due to its high cost ($1.1 million a missile) and because it was thought to be inaccurate against the latest soviet missiles such as the SS-20[12]. (1/10 the size and 10 times as fast as Iraqi scuds). It was not until the Gulf War in 1991 that patriots were first used in combat, without much success (see Corporate Crimes). In February 1991 George Bush travelled to Raytheon’s Andover plant in Massachusetts to thank his ‘friend’, retiring chairman Tom Phillips for building what he called the ‘scud busters’[13]

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Recent History Raytheon streamlined in the 1990’s, getting rid of its publishing, laundry and home appliances sectors amongst others. In 2000 it also sold its large construction subsidiary. It acquired a number of businesses in the defence and electronics industry, culminating in the 1997 merger with Hughes Electronics, a $9.5 billion transaction. President Bush's plans to step up national security spending boosted Raytheon's profits.[14]

However, Raytheon has suffered a number of setbacks in recent years. Funding for the Space-Based Infrared System Low (SBIRS-Low), a satellite surveillance and targeting system that Raytheon has worked on with TRW (TRW is a company that provides the defence industry with technology and services), has been held up by Congress due to repeated cost overruns and schedule slippages and funding has also been scaled back for Raytheon’s Joint Standoff Weapon system (JSOW), a precision-guided "glider" bomb designed to hit targets from as far as 40 miles away. Also, in late 2001, the Pentagon’s Missile Defense Agency (MDA) announced that it was cancelling the $9 billion Navy Area Defense (NAD) program, a short-range missile defence system that was to use interceptors based on the Raytheon standard missile. However, this did come with a $300 million contract termination fee paid by the US taxpayer and split between Raytheon and the other 3 top contractors on the project.

War profits These setbacks for the company have been more than compensated for by the overall rise in Raytheon’s business since September 11th, including a 26% rise in stock prices. In early 2002, the firm also received a $1.2 billion multi-year contract to provide over 200 T-6A "Texan" training aircraft to the Air Force and Navy. This was despite criticisms just six weeks earlier by the Pentagon’s Office of Independent Testing and Evaluation that there were serious performance problems in the T-6A program.[15]

The expansion of NATO to countries like Poland, Hungary and the Czech republic is also good news for the company. New members are required to spend at least 3% of their budget on NATO compatible military spending. This will inevitably result in contracts for the big arms companies and Raytheon is poised to receive a sizable chunk of the estimated $35 billion[16] that will have been spent between 1998 and 2008.[17]

Raytheon’s official history can be found at http://www.raytheon.com/about/history.htm, where their World War II radars are credited as ‘making the Germans feel for the first time like the hunted not the hunters’; their microwaves ‘ put women on the way to avoiding laborious house chores’ and the Patriot missile is credited with ‘changing the course of the [Gulf] War’!10

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1.4 Products

Raytheon produces a huge range of products and services, including many well-known products such as Cruise, Patriot and Sidewinder missiles. In addition, Raytheon produces the world's leading cruise missile, the Tomahawk. The US Navy describes the Tomahawk (which has a price tag of $500,000[18]) as their 'weapon of choice'.[19] Raytheon also produces the AIM-65 Maverick, an air-to-surface missile that the company describes as 'the most widely used precision guided munition in the free world. . . integrated on virtually every fighter aircraft in the free world'.[20]

For a full list of Raytheon's products see their web page: http://www.raytheon.com/products

Online Sales To take advantage of the opportunities opened up by the Internet, Raytheon, Boeing, Lockheed Martin and BAE Systems agreed to form an online exchange for sales totalling billions of pounds a year. Everything from aircraft and weapons to data services is available on the new exchange.[21]

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References [1] 'About Raytheon', Raytheon home page: http://www.raytheon.com/about/index.htm accessed 16 April 2002

[2] Raytheon News Release, 23 January 2002: http://www.prnewswire.com/cgi-bin/micro_stories.pl?ACCT=149999&TICK=RTN&STORY=/www/story/01-23-2002/0001654074&EDATE=Jan+23,+2002 (source: PRNewswire), accessed 16 April 2002

[3] Raytheon Profile, Hoover's Online Business Information: http://www.hoovers.com/co/capsule/1/0,2163,11261,00.html accessed 16 April 2002

[4] 2002 FORTUNE 500, http://www.fortune.com/lists/F500/index.html accessed 16 April 2002

[5] 'European missile giant formed', BBC News, 27 April 2001, BBC web site: http://news.bbc.co.uk/hi/english/business/newsid_1238000/1238846.stm accessed 17 April 2002

[6] Raytheon home page: http://www.raytheon.com/about/index.htm accessed 16 April 2002

[7] Press Archive EADS, European Aeronautic Defence and Space Company web-site: http://www.eads.net/eads/en/index.htm?/xml/intl/press/archiv/foundingpartners/casa2000/20000jun_1.xml&press accessed 16 April 2002

[8] Company website: www.raytheon.com/about/early.htm accessed 16 April 2002

[9] Corporate Profile: 'The Patriots by Raytheon', by Jim Donahue, web-site: www.essential.org/monitor/hyper/issues/1991/03/mm0391_10.html accessed 16 April 2002

[10] Ibid

[11] Brief company overview, by Hoover's Online Business Information, web-site: http://www.hoovers.com/co/capsule/1/0,2163,11261,00.html accessed 16 April 2002

9 Company website: www.raytheon.com/about/tech.htm accessed 16 April 2002

[12] Corporate Profile: 'The Patriots by Raytheon', by Jim Donahue, web-site: http://www.essential.org/monitor/hyper/issues/1991/03/mm0391_10.html accessed 16 April 2002

[13] Ibid

[14] 'European missile giant formed', BBC News, 27 April 2001, BBC web site: http://news.bbc.co.uk/hi/english/business/newsid_1238000/1238846.stm accessed 17 April 2002

[15] 'Raytheon Profile', Reviewing Nuclear Proliferation, Reaching Critical Will web-site: www.reachingcriticalwill.org/dd/ray.html accessed 17 April 2002

[16] William D. Hartung (May, 1998), NATO Boondoggle, The Progressive

[17] 'Future of a Delusion', The Progressive Comment, The Progressive Magazine, at: http://www.progressive.org/comment9906.htm accessed 17 April 2002

10 Company website, www.raytheon.com/about/history.htm accessed 17 April 2002

[18] 'Cruise Missiles "Made in Brazil"', BBC News, 4 September 2001, BBC website: http://news.bbc.co.uk/hi/english/business/newsid_1525000/1525374.stm accessed 17 April 2002

[19]'United States Tomahawkä Cruise Missile Program', Strike Weapons and Unmanned Aviation, web-site: www.strikenet.js.mil/pao/tomhis.doc accessed 17 April 2002

[20] Raytheon web-site: http://www.raytheon.com/es/esproducts/dssmav/dssmav.htm accessed 17 April 2002

[21] Read more: http://news.bbc.co.uk/hi/english/business/newsid_694000/694049.stm ('Aerospace industry reaps internet benefits', BBC News, 28 March 2000)

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