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Raytheon keeps riding the wave of US spending

By Alan Dron

Just when will the behemoth that is the US defence budget start to shrink? That’s a question for which Tom Culligan would like to have an answer, but he’s not unduly upset that he’s got it wrong until now.
“We’ve been fearlessly predicting to our le

aders in the company that the bow wave of spending will come to an end,” says Culligan, Raytheon International’s executive vice-president for business development. “All waves crash at some point. However, we’ve predicted that for several years in a row.”

The unpredictable element has been the series of supplemental budgets passed by the US Congress to cope with the intense tempo of operations in Iraq and Afghanistan. While Culligan and his colleagues do believe that these supplementals will diminish, it is difficult to predict when; the current ‘surge’ of US troops into Iraq is one more factor likely to prolong them.

Hence the reason why a swathe of US defence and aerospace companies declared ever-increasing backlogs of work at the end of last year. And this is where Raytheon’s huge spread of products and activities in the missile, electronics and system integration fields pays off, says Culligan.

The company has somewhere in excess of 8,000 ongoing contracts: “We’re fairly ubiquitous. We don’t make platforms, but when you peel back the skin of anything from a Predator UAV to a Gripen you’ll find our missiles or systems.”

The wear-and-tear to systems involved in current theatres of operation has also opened up a major market with kit requiring rehabilitation or refurbishment.

Major market

“They’re going to have to bring old equipment back from Iraq and that will need to be rehabbed. We’re not cocky, but whichever way it breaks is pretty good for Raytheon.” The company “generates a nice amount of money out of Europe” – around $1 billion of its total $20bn turnover, with joint ventures in Germany and Spain as well as Raytheon Systems in the UK.

“The French market has traditionally been one of the tougher markets to penetrate as they have so many of their own companies, but we do provide some weapon systems there, such as the Paveway laser-guided bomb.” Additionally, a 50:50 joint venture, Thales Raytheon Systems (TRS), has been operational since 2001 handling a portfolio of battlefield command and control-related activities with products such the Sentinel battlefield radar.

Another market that has been a hard nut for US companies to crack has been India, which has for decades tended to look to Russia and France – as well as its indigenous defence sector – for military systems. At last year’s Farnborough air show, Raytheon made efforts to increase its brand awareness in India.

Despite some sales successes – TRS has sold its Firefinder weapon-locating radars to New Delhi – Culligan accepts that there is a way to go yet. “We have to learn how to do business in India,” he says. “It’s not an easy market for us to get into and it’s going to take time and patience. We’re looking to align or set up some ventures with Indian sources.” That could be particularly important if Raytheon wants to get its equipment on board the aircraft due to be chosen to replace the Indian air force’s MiG-21s.

One system that will be receiving a particular push at Le Bourget is the  Surface-Launched Advanced Medium-Range Air to Air Missile (SL-AMRAAM).