12 ms·

Raytheon, United Technologies Merger Will Create A New Aerospace Giant

184 points by metaphor 7y ago

deleted 7y ago
[deleted]
clvx 7y ago
Not related but some history about Raytheon and Arpanet: https://www.raytheon.com/rtnwcm/groups/gallery/documents/digitalasset/rtn_224614.pdf https://www.raytheon.com/rtnwcm/groups/gallery/documents/dig...
- compuguy 7y ago
  Technically it was BBN Technologies that worked on Arpanet. Raytheon would acquire BBN in 2009...
olliej 7y ago
Until they name themselves union aerospace corporation I will not care :)
- bloopernova 7y ago
  Or Weyland Yutani...
  - olliej 7y ago
    We know UAC definitely establishes a mars colony :D
    - bloopernova 7y ago
      On the one hand, clean Argent energy. On the other hand, Hell.
  - monocasa 7y ago
    That'll be SpaceX or Blue Origin.
- davemp 7y ago
  That's when it's time to rip and tear the monopolies apart ;)
acomjean 7y ago
I used to work at Raytheon. The one weird thing about the defense business is how few businesses and they end up making strange alliances. We were parters with Boeing on the project I worked on, but bidding against them on other projects. Raytheon got rid of all its commercial ventures, Amana appliances, RayMarine, Beech aircraft and anything competing in the private sector was spun off. There corporate structure had a lot of legacy from previous mergers (before my joining) which seemed to be stuck at 85% complete. I can't see how this merger isn't going to set off anti-trust alarm bells in washington, but these companies are well connected.
- hbosch 7y ago
  Who in Washington will be taking up anti-trust discussions against the maker of Tomahawk missiles?
  - barkingcat 7y ago
    The makers of Trident of course.
- baybal2 7y ago
  > I used to work at Raytheon. The one weird thing about the defense business is how few businesses and they end up making strange alliances. Semiconductor industry is heading this way too
- griffinkelly 7y ago
  All the defense companies keep merging. If you look back 30 years ago at the number and variety of airplanes the US military flew, you'd have a dozen or so companies, many now top of mind defunct or merged--Grumman, McDonnell Douglas, Fairchild. My dad used to work for Texas Instruments' defense wing, which merged into Raytheon, developed JSOW missiles. I'm by no means an expert in this, but I think its largely attributed to the contracts going to the lowest bidder, a struggle to compete for them, and move R&D forward simultaneously.
  - TaylorAlexander 7y ago
lotaezenwa 7y ago
The implications this merger could have for local and national politics is understated. Entire Congressional Districts whose main employer is either Raytheon or UTC could see their plants consolidated. Or closed. Lobbyists for both companies will be working with each other on projects and initiatives, which could result in pressure for other defense companies to merge.
- burfog 7y ago
  I really don't see "Entire Congressional Districts" losing anything. The whole point is probably to get more votes in congress. The more districts the better. It's amazing and refreshing when a company breaks this costly trend. Relative newcomer SpaceX is already up to at least 5 states plus DC.
  - lotaezenwa 7y ago
    Once they gain a larger foothold on certain communities and districts, their incentives will change. As well as their ability to solidify votes in the affected states. Kind of like how the electoral college system vs. popular vote system influences where presidential candidates campaign, I believe Raytheon will have a greater incentive to target one or two communities with a lot of sway at different political levels as opposed to several districts with little. It's cheaper to do and more cost effective. Maybe I don't see it the way you do, but I do not see this as a net positive for communities whose sole employer is Raytheon. The measures I'm using are wages, employment, and quality of life.
  - phkahler 7y ago
    I want SpaceX in Michigan! Or even Wisconsin - launch over the great lakes.
- brixon 7y ago
  Did you see their website posted for the merger? There will be 4 divisions/segments/??? 2 are from UTC and 2 from Raytheon, it does not seem like they are planning for a real integration.
VengefulCynic 7y ago
Large defense contracts tend to span large numbers of Congressional Districts in order to enable the sort of economic protectionism that keeps the F-35 and JTRS funded to the tune of billions of dollars, in spite of cost overruns and schedule deficiencies. I would be shocked if this lead to significant site consolidation due to the backlash that this would cause from Congress. If anything, this will enable Raytheon (the company with more defense content) to use United Technologies facilities to create a larger network of appreciative Congressmen for large projects.
- drtz 7y ago
  Exactly: Raytheon is going to have considerably more lobbying power after this merger.
- r00fus 7y ago
  Exactly - this is a merger to increase revenue, not necessarily cut costs.
seancoleman 7y ago
My first internship was as a Sophomore CS student at Raytheon. I learned something life-changing that summer: I will never work at a defense contractor or large corporate behemoth. I think this was in part due to my over-stressed manager at the time saying "I remember college... it was the best time of my life..." as his voice drifted off in a nostalgic melancholy.
- vaguesortof 7y ago
  Not an uncommon experience for college...
- oarabbus_ 7y ago
  >I think this was in part due to my over-stressed manager at the time saying "I remember college... it was the best time of my life..." It's a pretty common trope that you'll hear people saying this regardless of industry. Is there anything else that lead you to feel you'll never work for a defense contractor?
  - makerofspoons 7y ago
    Defense contractors have a huge spectrum of work- some projects will be horrible projects maintaining legacy products with outdated technology and numerous security flaws, some will be using cutting-edge technology and will involve innovative things. There is a lot of bureaucracy, they often move slow, and the pay is often below industry standards. The current backlog of security clearance applications (in the US) means it could take years before you're fully onboard your program, and means that hiring help takes forever as well. If you end up on a great program they can be rewarding places to work, it's just a matter of being careful about choosing your opportunities.
    - vonmoltke 7y ago
      > the pay is often below industry standards Is there any defense contractor that pays anywhere near industry standards?
sailfast 7y ago
Many of these mergers lately seem to be driven by contract books and support structures for future bids. If you lose a contract, buy the company that won, and now you only need one business development group which saves you a bunch of money. Consolidate where you can, call it a win, and now you have a bit more money and less competition for the next contract. (I have no idea if this is the reason for this merger) While you might not end up closing off entire regions, if both companies have offices in, say, Dayton ohio servicing Wright-Patt you can reduce to one and not worry about spare capacity anymore. That can save a lot - especially when bases are super remote. You see this a lot with mid-range providers when interest rates are low and coming up with X Billion is no problem. I don’t know that it ends up providing better service to government - I would bet the answer there is absolutely no, especially as they recoup costs from the acquisition and squeeze staff. Win for the execs though.
apazzolini 7y ago
Oh good, I was worried we weren’t funneling enough taxpayer money into the military industrial complex. I’m happy to see that the undoubtedly now stronger lobbying arm at Raytheon will be able to step up its game. /s
war1025 7y ago
Something that many people are missing in this, and that I know I missed the first time around, is that UTC is the company with majority stake in this merger. The main reason this is relevant from my perspective is that Rockwell Collins, a major employer in Cedar Rapids, Iowa got bought out by UTC a year or so ago, and the clip on the radio about the merger this morning suggested the deal went the other way and the new Collins Aerospace was likely to be renamed into something else. But Collins Aerospace is one of the four main divisions of the proposed new company.
ImprovedSilence 7y ago
I’ll offer a different take on this merger other than the typical defense contractors = bad/politically in bed view held here. (Which may not always be wrong, but by no means is it always right/accurate). I think the merger is about 2 things. 1.) neither company has a “Platform”. United builds jet engines, Raytheon, sensors and missiles. But Lockheed builds the F-35. I think this is about Raytheon getting closer to having platform capability, instead of the constant squeeze the platform owners put in their subcontractors. (Both in price, and function, which is lockheed making their own sensors and cutting out Raytheon biz. 2. I think it’s a debt/revenue restructure advantage for United, they’ve got lots of debt they can spin off without losing revenue, acquire a cash positive company, and look great to stockholders for the next few years and pay out fat dividends. (Which benefits who? all the executives who own tons of stock and make decisions).

184 points by metaphor 7y ago

deleted 7y ago

[deleted]

clvx 7y ago

Not related but some history about Raytheon and Arpanet: https://www.raytheon.com/rtnwcm/groups/gallery/documents/digitalasset/rtn_224614.pdf https://www.raytheon.com/rtnwcm/groups/gallery/documents/dig...

compuguy 7y ago
Technically it was BBN Technologies that worked on Arpanet. Raytheon would acquire BBN in 2009...

olliej 7y ago

Until they name themselves union aerospace corporation I will not care :)

bloopernova 7y ago
Or Weyland Yutani...
- olliej 7y ago
  We know UAC definitely establishes a mars colony :D
  - bloopernova 7y ago
    On the one hand, clean Argent energy. On the other hand, Hell.
- monocasa 7y ago
  That'll be SpaceX or Blue Origin.
davemp 7y ago
That's when it's time to rip and tear the monopolies apart ;)

acomjean 7y ago

I used to work at Raytheon. The one weird thing about the defense business is how few businesses and they end up making strange alliances. We were parters with Boeing on the project I worked on, but bidding against them on other projects. Raytheon got rid of all its commercial ventures, Amana appliances, RayMarine, Beech aircraft and anything competing in the private sector was spun off. There corporate structure had a lot of legacy from previous mergers (before my joining) which seemed to be stuck at 85% complete. I can't see how this merger isn't going to set off anti-trust alarm bells in washington, but these companies are well connected.

hbosch 7y ago
Who in Washington will be taking up anti-trust discussions against the maker of Tomahawk missiles?
- barkingcat 7y ago
  The makers of Trident of course.
baybal2 7y ago
> I used to work at Raytheon. The one weird thing about the defense business is how few businesses and they end up making strange alliances. Semiconductor industry is heading this way too
griffinkelly 7y ago
All the defense companies keep merging. If you look back 30 years ago at the number and variety of airplanes the US military flew, you'd have a dozen or so companies, many now top of mind defunct or merged--Grumman, McDonnell Douglas, Fairchild. My dad used to work for Texas Instruments' defense wing, which merged into Raytheon, developed JSOW missiles. I'm by no means an expert in this, but I think its largely attributed to the contracts going to the lowest bidder, a struggle to compete for them, and move R&D forward simultaneously.
- TaylorAlexander 7y ago

lotaezenwa 7y ago

The implications this merger could have for local and national politics is understated. Entire Congressional Districts whose main employer is either Raytheon or UTC could see their plants consolidated. Or closed. Lobbyists for both companies will be working with each other on projects and initiatives, which could result in pressure for other defense companies to merge.

burfog 7y ago
I really don't see "Entire Congressional Districts" losing anything. The whole point is probably to get more votes in congress. The more districts the better. It's amazing and refreshing when a company breaks this costly trend. Relative newcomer SpaceX is already up to at least 5 states plus DC.
- lotaezenwa 7y ago
  Once they gain a larger foothold on certain communities and districts, their incentives will change. As well as their ability to solidify votes in the affected states. Kind of like how the electoral college system vs. popular vote system influences where presidential candidates campaign, I believe Raytheon will have a greater incentive to target one or two communities with a lot of sway at different political levels as opposed to several districts with little. It's cheaper to do and more cost effective. Maybe I don't see it the way you do, but I do not see this as a net positive for communities whose sole employer is Raytheon. The measures I'm using are wages, employment, and quality of life.
- phkahler 7y ago
  I want SpaceX in Michigan! Or even Wisconsin - launch over the great lakes.
brixon 7y ago
Did you see their website posted for the merger? There will be 4 divisions/segments/??? 2 are from UTC and 2 from Raytheon, it does not seem like they are planning for a real integration.

VengefulCynic 7y ago

Large defense contracts tend to span large numbers of Congressional Districts in order to enable the sort of economic protectionism that keeps the F-35 and JTRS funded to the tune of billions of dollars, in spite of cost overruns and schedule deficiencies. I would be shocked if this lead to significant site consolidation due to the backlash that this would cause from Congress. If anything, this will enable Raytheon (the company with more defense content) to use United Technologies facilities to create a larger network of appreciative Congressmen for large projects.

drtz 7y ago
Exactly: Raytheon is going to have considerably more lobbying power after this merger.
r00fus 7y ago
Exactly - this is a merger to increase revenue, not necessarily cut costs.

seancoleman 7y ago

My first internship was as a Sophomore CS student at Raytheon. I learned something life-changing that summer: I will never work at a defense contractor or large corporate behemoth. I think this was in part due to my over-stressed manager at the time saying "I remember college... it was the best time of my life..." as his voice drifted off in a nostalgic melancholy.

vaguesortof 7y ago
Not an uncommon experience for college...
oarabbus_ 7y ago
>I think this was in part due to my over-stressed manager at the time saying "I remember college... it was the best time of my life..." It's a pretty common trope that you'll hear people saying this regardless of industry. Is there anything else that lead you to feel you'll never work for a defense contractor?
- makerofspoons 7y ago
  Defense contractors have a huge spectrum of work- some projects will be horrible projects maintaining legacy products with outdated technology and numerous security flaws, some will be using cutting-edge technology and will involve innovative things. There is a lot of bureaucracy, they often move slow, and the pay is often below industry standards. The current backlog of security clearance applications (in the US) means it could take years before you're fully onboard your program, and means that hiring help takes forever as well. If you end up on a great program they can be rewarding places to work, it's just a matter of being careful about choosing your opportunities.
  - vonmoltke 7y ago
    > the pay is often below industry standards Is there any defense contractor that pays anywhere near industry standards?

sailfast 7y ago

Many of these mergers lately seem to be driven by contract books and support structures for future bids. If you lose a contract, buy the company that won, and now you only need one business development group which saves you a bunch of money. Consolidate where you can, call it a win, and now you have a bit more money and less competition for the next contract. (I have no idea if this is the reason for this merger) While you might not end up closing off entire regions, if both companies have offices in, say, Dayton ohio servicing Wright-Patt you can reduce to one and not worry about spare capacity anymore. That can save a lot - especially when bases are super remote. You see this a lot with mid-range providers when interest rates are low and coming up with X Billion is no problem. I don’t know that it ends up providing better service to government - I would bet the answer there is absolutely no, especially as they recoup costs from the acquisition and squeeze staff. Win for the execs though.

apazzolini 7y ago

Oh good, I was worried we weren’t funneling enough taxpayer money into the military industrial complex. I’m happy to see that the undoubtedly now stronger lobbying arm at Raytheon will be able to step up its game. /s

war1025 7y ago

Something that many people are missing in this, and that I know I missed the first time around, is that UTC is the company with majority stake in this merger. The main reason this is relevant from my perspective is that Rockwell Collins, a major employer in Cedar Rapids, Iowa got bought out by UTC a year or so ago, and the clip on the radio about the merger this morning suggested the deal went the other way and the new Collins Aerospace was likely to be renamed into something else. But Collins Aerospace is one of the four main divisions of the proposed new company.

ImprovedSilence 7y ago

I’ll offer a different take on this merger other than the typical defense contractors = bad/politically in bed view held here. (Which may not always be wrong, but by no means is it always right/accurate). I think the merger is about 2 things. 1.) neither company has a “Platform”. United builds jet engines, Raytheon, sensors and missiles. But Lockheed builds the F-35. I think this is about Raytheon getting closer to having platform capability, instead of the constant squeeze the platform owners put in their subcontractors. (Both in price, and function, which is lockheed making their own sensors and cutting out Raytheon biz. 2. I think it’s a debt/revenue restructure advantage for United, they’ve got lots of debt they can spin off without losing revenue, acquire a cash positive company, and look great to stockholders for the next few years and pay out fat dividends. (Which benefits who? all the executives who own tons of stock and make decisions).