Faced with an uncertainties in the global environment and the defense budget, Raytheon’s [RTN] Integrated Defense Systems (IDS) business is focused on execution, growth and people, the sector president said.
IDS deals with weapons, sensors and integration systems for multiple mission areas, to include air and missile defense, radars, naval ship operating systems, robotics and other advanced technologies.
“I run the business on a triangle,” said Thomas Kennedy, a Raytheon vice president and president of IDS. “In that triangle are people, execution and growth.”
The sector has been driving toward “flawless execution,” he said. “What’s changed over the years is the customer is now demanding it–it’s not just a nice thing to have.”
Any program having issues is up for cancellation, he said in a recent interview with Defense Daily. For example, cost and schedule uncertainties the U.S., German and Italian program, the Medium Extended Area Defense System (MEADS) program, leaves it teetering on the edge of termination in the budget process.
Programs with schedule and cost are no longer being tolerated by the government. The “should cost” effort in DoD is a check to ensure the program isn’t “swimming funny,” he said.
“One of the elements that we’ve been doing under the auspices of flawless execution is developing a detailed set of processes, called our integrated product development system,” Kennedy said. The company worked out the process over the past 12 years to bring together best practices and company capabilities.
IDS uses this process to run its programs.
“We’ve found that when we use those processes, we’re pretty successful in achieving flawless execution,” Kennedy said.
IDS also was recently recertified as CMMI Level 5 capability maturity index, the highest level, for the fourth year, for all IDS engineering processes, the work done to develop products.
“What that does is gives us the assurance that if we follow that process we’ll have a higher probability to success,” he said.
The whole business is now using weekly earned value management as a tool to guage how the program is doing, rather than using earned value management as a recording system, he said.
Kennedy, named sector president in June 2010, has been on the road a lot, to Europe, Africa, the Middle East, Asia and Australia, trying to get a sense of where the market is going. What he found was almost a dichotomy–there is more opportunity than would be expected.
IDS is in a “sweet spot,” Kennedy said. In the Middle East, by which he means Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Oman and Qatar, there’s an enormous amount of construction and infrastructure development going on. For example, Saudi Arabia is building a new woman’s university from scratch, with a campus larger than UCLA.
“All these countries have realized they have to expand beyond the petrochemical area,” Kennedy said. These countries can do such things such as leveraging the low price of fuel. In Saudi Arabia, the equivalent of a gallon of gas is 50 cents. Low energy costs, which if matched with advanced technology manufacture could undercut other producers who need to pay market price for petrochemicals, such as China.
Raytheon has been in the Middle East for more than 45 years.
Where Kennedy sees growth is in providing a secure environment for those countries that are growing outside the petrochemical area and need to protect their assets. There are rogue nations in the neighborhood, and the Arab Spring has increased uncertainty in terms of economic security. And those nations need to defend themselves from anything that could possibly happen.
“We’re seeing a significant interest in countries relative to that,” Kennedy said. “We’re seeing a resurgent demand for our Patriot-type system capabilities and also some of our other systems like our SLAMRAAM surface-launched AMRAAM system.”
The SLAMRAAM system can offer significant cost savings in a country that also uses the AMRAAM missile for its aircraft, because they’re the same, he said.
“We’re seeing a lot of opportunity for growth and it’s really tied to what I would call ensuring economic security,” Kennedy said.
For example, IDS is in a competition in Turkey, with competition coming from China and MBDA, the European missile consortium.
The Patriot weapon system today is “not your father’s missile system,” but into Configuration 3, Kennedy said. The cathode tube displays are gone. There’s a significant improvement in providing situational awareness to the war fighter as well as in reliability, brought by new technologies. The UAE will be the first customer for this Patriot version, he said. Twelve nations use Patriot, and with the potential demise of MEADS, more nations may come on board.
Beyond economic security, Kennedy sees the Obama administration’s Phased Adaptive Approach (PAA) for European ballistic missile defense as another growth area. The Terminal High Altitude Area Defense system radars are helpful in this area.
One of IDS’ new radar technologies is gallium nitride, which requires less power and cooling to achieve the same capabilities as the currently used gallium arsenide. In development for more than 10 years, it is now achieving the required reliability and meeting all the objectives. That will be the new technology for AESA radars.
“Our core competency, in our blood, is radars,” Kennedy said. One of the key things Raytheon has over its competitors is a core competency in building very large radar, such as the Early Warning Radars and the Missile Defense Agency’s Sea-Based X-band Radar.
It comes down to the third area of his triangle: people, he said. “Some engineers have 30 years of experience, and 35 percent of our employees are engineers.”
The company is proactive on people issues, focusing its philanthropy on two areas: Science Technology Engineering and Math (STEM) initiatives, and on the warfighter in areas such as the Wounded Warrior initiatives.