Raytheon, United Technologies Merger Will Create A New Aerospace Giant(npr.org)
npr.org
Raytheon, United Technologies Merger Will Create A New Aerospace Giant
https://www.npr.org/2019/06/10/731225619/raytheon-and-united-technologies-merge-to-create-a-new-aerospace-giant
107 comments
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.
>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?
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?
Not OP, but I spent a decent amount of time working for Honeywell's armor industry. On of the things that caused me to quit was the unspoken but very palpable excitement exhibited by higher level managers every time a conflict was brewing somewhere in the world (it almost didn't matter who was involved, some side involved was almost always buying our products). It's not a very morally uplifting environment.
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contractors have a huge spectrum of work- some projects will be horrible projects maintaining legacy products with outdated technology and numerous security flaws, some will be using cutting-edge technology and will involve innovative things.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.
My experience at a big defense contractor was like that. Huge spectrum of work. Fortunately I got to work on some very cool cutting edge (at the time) technology. We were developing wafer scale integration, doing things like inter-reticle stitching to make chips the size of an entire 4 inch wafer (4 inch wafers were common at the time). Through on-chip redundancy/self-testing/configuration we were getting 50% yield. It was pretty amazing. But so many other engineers were using stone-aged technology to field satellite systems, working under hugely bloated management structures where easily 20% of your time was spent reporting and accounting for hours and costs. For quite a few years I was clever enough or lucky enough to avoid ever having to work one of those dinosaur projects.
My god, the latency on a wafer sized die must have been incredible. Certainly such a beast wouldn't be used for logic... A 4 inch image sensor would be quite interesting though.
It was indeed logic. A pair of MACs, a pair of ALUs, big chunk of on-chip memory and a big ol' mess of wires to interconnect them all. Heavily pipelined. For use in signal processing applications where latency wasn't really a concern.
We dabbled with big image sensor arrays but the sparing for yield was messy and we never came to grips with how to deal with the situation where the working sensors were in random locations in the array. It seemed to really mess up all the important systems level calculations. We also never completely worked out testing. The big logic chip had BILBO blocks so we could just put it in self test mode, run a lot of clock cycles, check the signatures, and switch in the working blocks. The sensor array needed more than that. Perhaps solvable issues, but we never got around to it.
We dabbled with big image sensor arrays but the sparing for yield was messy and we never came to grips with how to deal with the situation where the working sensors were in random locations in the array. It seemed to really mess up all the important systems level calculations. We also never completely worked out testing. The big logic chip had BILBO blocks so we could just put it in self test mode, run a lot of clock cycles, check the signatures, and switch in the working blocks. The sensor array needed more than that. Perhaps solvable issues, but we never got around to it.
Its really quite amazing how much more dense modern ASICs are.
I don’t think the pay thing is true in general.
> the pay is often below industry standards
Is there any defense contractor that pays anywhere near industry standards?
Is there any defense contractor that pays anywhere near industry standards?
During my career, defense contractors have generally paid a lot more with much more generous benefits (I've seen fully employer paid 401K plans to the IRS maximum), and have been a much more stable employer. Since contract work hours are billable, you generally get paid for each hour you work, unless you are working for the wrong company and only get a salary. This naturally limits extra hours to those that are truly needed, and leads to a good work/life balance.
Other than stability, none of those applied to Raytheon while I was there.
The 401k match was 6% which, while good, didn't even come to what my wife gets from her non-profit. I was paying 25% of my health coverage, which is the highest proportion if any of my five employers. (I will day, though, that Raytheon had the best family coverage rates of any of them.)
I was salaried, and other than a few times was required to record no more than 40 hours in my timesheet regardless of how much time I needed to put in. The work/life balance was highly dependent on the program you were on, and I got trapped on a bad one.
The 401k match was 6% which, while good, didn't even come to what my wife gets from her non-profit. I was paying 25% of my health coverage, which is the highest proportion if any of my five employers. (I will day, though, that Raytheon had the best family coverage rates of any of them.)
I was salaried, and other than a few times was required to record no more than 40 hours in my timesheet regardless of how much time I needed to put in. The work/life balance was highly dependent on the program you were on, and I got trapped on a bad one.
Some parts make you pay 0% of health coverage. It varies.
If you were told to record no more than 40 hours in my timesheet, then that means you DO NOT put in more than 40 hours. You're supposed to go home. If you were told to stay and this was for a government contract, it's a violation that you're supposed to report. Unless this was decades ago, you got training that told you so.
If you were told to record no more than 40 hours in my timesheet, then that means you DO NOT put in more than 40 hours. You're supposed to go home. If you were told to stay and this was for a government contract, it's a violation that you're supposed to report. Unless this was decades ago, you got training that told you so.
/s Palantir.
Honestly, though, defense contractor pay is less location-dependent because a lot of the jobs are billed through to the DOD. Defense jobs can even best the industry--- just not in major areas with high costs of livi g.
Honestly, though, defense contractor pay is less location-dependent because a lot of the jobs are billed through to the DOD. Defense jobs can even best the industry--- just not in major areas with high costs of livi g.
I spent my time in the industry in Dallas, which is pretty close to the optimal balance of salary and metro area. My salary was not at industry averages. I remember, vaguely, Raytheon's salary bands. They weren't anything to write home about, and you were not getting anywhere near the top ends in a low COL location like Dallas.
It depends on who is judging. I recall that you were unemployed for quite a long time because nothing was up to your standard. This suggests that your impression of "industry standards" is inaccurate, at least for someone of your capability.
You recall wrong. I haven't been unemployed since I graduated college 17 years ago.
Interesting that you leaped to the experience of working at such an enterprise, rather than the ethics.
This may come as a surprise, but a lot of military contracting is stuff that many people find ethically un-troublesome. Most people within a military contractor are not working on new ways to kill poor brown people a world away or how to spy on a dissident. Plenty are working on how to preserve food better, or how to keep birds away from runways more cheaply or effectively, or how to detect malware. Or monitoring groundwater for contamination.
It could also be worth considering that anyone who makes the choice to work for such an employer has already reached ethical conclusions they are comfortable with.
It could also be worth considering that anyone who makes the choice to work for such an employer has already reached ethical conclusions they are comfortable with.
I mean there are plenty of places that pay well, allow you to work from home and have no real set hours. Those places have made me feel like my best years were not at college.
I worked at Raytheon for almost 2 years, right out of college.
I worked in R&D, which sounds cool, but essentially means that you’re project’s budget is at the whim of the highest-level executives, who are utterly out of touch with the engineers (looking at the org chart, they’re literally 7-8 levels above me).
Because of that, EVERY single project that I was on was cancelled, due to budgetary reasons. The executives would get really excited about something new, and reallocate funds to new projects.
Nothing ever got done. I saw zero projects get shipped. I never saw a customer - because there’s is no customer. There’s not even a government contract. It’s internal R&D.
I worked in R&D, which sounds cool, but essentially means that you’re project’s budget is at the whim of the highest-level executives, who are utterly out of touch with the engineers (looking at the org chart, they’re literally 7-8 levels above me).
Because of that, EVERY single project that I was on was cancelled, due to budgetary reasons. The executives would get really excited about something new, and reallocate funds to new projects.
Nothing ever got done. I saw zero projects get shipped. I never saw a customer - because there’s is no customer. There’s not even a government contract. It’s internal R&D.
That's R&D in any industry. The question you're answering is not directly "how can we address what the customer needs today" but instead "what does basic science allow us to make within the purview of our company?"
I worked at a defense contractor, and aside from poorly managed bureaucracy (I submitted my clearance paperwork to Northrop, but Northrop didn't submit it externally for over a year), the main drag was being a company that billed the government hourly, which meant subtle / not-so-subtle cues to avoid cost underruns to the government by doing your job too quickly.
That bothered me for a while until I figured it out. After a while, I learned that underspent projects are your opportunity to learn new things, mentor junior people, and provide cushion to people waiting for their next projects.
The only thing I ever got reprimanded for was not spending my money - there are much harder problems to solve than that.
The only thing I ever got reprimanded for was not spending my money - there are much harder problems to solve than that.
I had the same experience! Sophomore EE (signals) internship at Raytheon. While I had the same reaction as you at the time, my thinking has evolved a bit. I can see why a subset of people enjoy working there. The problems are difficult, the work is 'meaningful' (many of my coworkers had family in the military), and the pace is deliberate. I met 60 year-old guys writing firmware for fighter jets and they loved it. The culture is the exact opposite of "move fast and break things" - you may write 10 lines of code a week, but those are some exceedingly important lines.
In defense, you have lower pay, but also better job security and less age discrimination. You'll never have to brush up on how to reverse a linked list. It's also a very 9 to 5 job, there's no oncall for systems that are largely offline, and rarely is there Agile. You put in your hours and clock out for the day.
Generally defense contracts pay very well, and pay hourly. Benefits are usually generous. Work is generally 40 hours a week, but if it is more for some reason, you get paid for each extra hour. If this is not your deal, you're working for the wrong company.
Age discrimination is generally much less, but can be a problem on certain contracts. Sometimes the government thinks they'll save a bundle by getting less experienced people to do the work. They usually repent of that the next time a contract comes out. The experienced / good people can always find another contract to go to.
I've seen all manner of processes from very well done agile, to poorly done agile, to waterfall, to no process at all.
On call depends on the contract, but is not typical.
Age discrimination is generally much less, but can be a problem on certain contracts. Sometimes the government thinks they'll save a bundle by getting less experienced people to do the work. They usually repent of that the next time a contract comes out. The experienced / good people can always find another contract to go to.
I've seen all manner of processes from very well done agile, to poorly done agile, to waterfall, to no process at all.
On call depends on the contract, but is not typical.
Compared to FANG for software jobs, defense benefits and pay are piss poor. For a mech engineer they're very good.
Less than 0.1% of software jobs are FANG. This is not a sensible comparison.
Picking something more normal, Tesla pays software developers just $78k to $147k. Raytheon can beat that. This is without even trying to adjust for hours (a 9-to-5 place, or Elon Musk cracking the whip) or the fact that Raytheon locations typically have a far lower cost of living. Just on raw numbers, totally unadjusted, Raytheon wins.
Picking something more normal, Tesla pays software developers just $78k to $147k. Raytheon can beat that. This is without even trying to adjust for hours (a 9-to-5 place, or Elon Musk cracking the whip) or the fact that Raytheon locations typically have a far lower cost of living. Just on raw numbers, totally unadjusted, Raytheon wins.
More "normal"? Are we looking at whether it pays "normal" or pays "very well"? Don't get me wrong, in the world of all jobs, a defense job is really good, stable, and comfortable. Good to raise family on and have balance. In the world of tech, it's barely mediocre and the lack of stock options, bonus, or any perks to speak of (often not even free coffee) make them struggle to attract the best CS talent. Google pays very well in this field.
There is "very well" and then there is "statistical anomaly".
Google pays almost nobody. The whole firm, called Alphabet, has just 98,771 full-time employees. Most of those are not really "in the world of tech" though, with many devoted to stuff like marketing and human resources. It looks like about 40,000 are engineering talent, but not all of that will be software.
There are over 40 million software developers. At most, about 1 in 1000 work at Google. Again this assumes that all the technical staff at Alphabet is software developers working for Google, but that assumption is clearly wrong. There are hardware people working on cars and phones and more.
That 0.1% is practically nothing. Approximately nobody works for Google. It is just crazy to use Google as a standard for tech pay.
It's like asking why an athlete would be a gym teacher when the NFL pays so much better. It's like asking why a person would give kids private music lessons when you can make so much more money singing like Madonna. It's like asking why a person would be a mayor instead of being the US president.
Furthermore...
You are incorrect about the benefits being offered at defense contractors. Some do have free food, bonuses, decent pay, and even stock options. I've gotten all those things at defense contractors. Another advantage is a 40-hour work week. Another advantage of many defense contractors (not all) is that your coworkers are trustworthy American citizens who don't behave erratically; they have all passed a background check.
Google pays almost nobody. The whole firm, called Alphabet, has just 98,771 full-time employees. Most of those are not really "in the world of tech" though, with many devoted to stuff like marketing and human resources. It looks like about 40,000 are engineering talent, but not all of that will be software.
There are over 40 million software developers. At most, about 1 in 1000 work at Google. Again this assumes that all the technical staff at Alphabet is software developers working for Google, but that assumption is clearly wrong. There are hardware people working on cars and phones and more.
That 0.1% is practically nothing. Approximately nobody works for Google. It is just crazy to use Google as a standard for tech pay.
It's like asking why an athlete would be a gym teacher when the NFL pays so much better. It's like asking why a person would give kids private music lessons when you can make so much more money singing like Madonna. It's like asking why a person would be a mayor instead of being the US president.
Furthermore...
You are incorrect about the benefits being offered at defense contractors. Some do have free food, bonuses, decent pay, and even stock options. I've gotten all those things at defense contractors. Another advantage is a 40-hour work week. Another advantage of many defense contractors (not all) is that your coworkers are trustworthy American citizens who don't behave erratically; they have all passed a background check.
To elaborate on why the job security is so good, it's because of the clearance system. During the internship, my manager said that if I wanted to come back next summer I would have to get top-secret (TS) clearance. Almost everyone working there has at least secret (S) or TS clearance. Getting clearance takes ~1 year WITH an employer backing you, and it may take years (a.k.a impossible) without one. So once you're in the system with clearance, you can bounce around the def-sec world forever.
The government makes these companies keep track of their hours for audit purposes. So while some rare people may work overtime and not log their hours, there is really no culture of working long hours there.
Too many variables to isolate there. It might've had surprisingly little to do with work. He might've just been feeling the cumulative effects of driving his crappy commute home to his too-big house, car-payment, mortgage-payment, spoiled-rotten kids and wife, lawn that needs mowing and gutters that need cleaning. For a lot of people college will be the last time they're not laboring under the full burden of all that stuff.
A lot of people say that.
Being in college while young, hopeful, newly independent, without major responsibilities, and close together with thousands of others creating lifelong friendships really is one of the best times of many people's lives.
Being in college while young, hopeful, newly independent, without major responsibilities, and close together with thousands of others creating lifelong friendships really is one of the best times of many people's lives.
Not an uncommon experience for college...
The people I know who work at defense contractors say that there's basically a cycle of new hires that come in, hate working there, and then leave quickly. Only a certain percentage of hires tolerate the environment.
The particular complaints I heard were all about bureaucracy, time tracking, accountability, etc. I can sympathize, but I know some people with the right personality type who thrive in that environment.
The particular complaints I heard were all about bureaucracy, time tracking, accountability, etc. I can sympathize, but I know some people with the right personality type who thrive in that environment.
IBM Clearcase. Horribly underfunded IT departments. Hugely out of date tools and software design patterns. Tons of extra security constraints on employees for no extra compensation.
what kind of personality types?
Some people are okay with doing everything "by the book" even when it's slow / inefficient. Estimating how long each project will take, and then tracking each hour you spend on the project. This is necessary for billing. Sending your work to the right person for review.
Defense has rules around supply chain enforcement. Everything you do has to be auditable.
Some people can't stand living under that kind of microscope, with such rigid rules and procedures. Some people struggle to be productive in this environment, even though they are perfectly productive in other environments. Same thing applies to other environments... some personality types won't usually thrive at small companies, but do well at large companies, and vice versa.
Defense has rules around supply chain enforcement. Everything you do has to be auditable.
Some people can't stand living under that kind of microscope, with such rigid rules and procedures. Some people struggle to be productive in this environment, even though they are perfectly productive in other environments. Same thing applies to other environments... some personality types won't usually thrive at small companies, but do well at large companies, and vice versa.
I am not even sure if there is anyone that would like working on such environment. They are not designed to be productive and in fact tend to work against anyone who actually wants to get work done. But you bet that they are the first to punish workers for some perceived 'unproductivity' according to whatever random metric the consulting company came up with.
This is not solely relegated to the defense industry - the financial industry tends to come up with this sort of thing as well.
>I am not even sure if there is anyone that would like working on such environment.
I worked as a developer at a large bank and it had a very similar environment. I enjoyed it a lot, and I absolutely despise startup culture.
Some things that I personally enjoyed:
- In general older coworkers from academic backgrounds, more diverse, more grounded. The one gig I had a small startup felt like boyscout summercamp.
- no marketing, no attention seeking, no childish competition, work focussed on actual work. People left when the workday was over.
- Generally interesting technical challenges, not really consumer facing, very little fuzz about the newest frameworks or management styles or whatever, progress was measured, teamwork was valued over individualism.
- Very reliable career opportunities. If you do well you have a career to look forward to, no rapid up and down or hopping around.
I worked as a developer at a large bank and it had a very similar environment. I enjoyed it a lot, and I absolutely despise startup culture.
Some things that I personally enjoyed:
- In general older coworkers from academic backgrounds, more diverse, more grounded. The one gig I had a small startup felt like boyscout summercamp.
- no marketing, no attention seeking, no childish competition, work focussed on actual work. People left when the workday was over.
- Generally interesting technical challenges, not really consumer facing, very little fuzz about the newest frameworks or management styles or whatever, progress was measured, teamwork was valued over individualism.
- Very reliable career opportunities. If you do well you have a career to look forward to, no rapid up and down or hopping around.
I am sure people can be productive in this environment, I personally know some who currently work as defense contractors. You have some good hypotheticals, but much of the environment is driven by legal compliance rather than misguided management.
It’s not that defense is inherently toxic or good, I’d like to be clear what I’m saying. I’m saying that whatever good or bad management you have, there is a ton of legal compliance you have to deal with on top of that. So the baseline level of frustration an bureaucracy is higher than what you might be used to, even with good management. But this makes sense! Development OF COURSE slows down as soon as you are, say, building something that will affect whether somebody lives or dies.
Some amazing, skilled, productive engineers work in defense.
Same with medical technology. They tell stories of the Therac-25 to scare people away in college, and in spite of that, people are still willing to put in the work to make new radiotherapy devices, even with all the red tape.
Same with civilian (non-defense) aerospace.
It’s not that defense is inherently toxic or good, I’d like to be clear what I’m saying. I’m saying that whatever good or bad management you have, there is a ton of legal compliance you have to deal with on top of that. So the baseline level of frustration an bureaucracy is higher than what you might be used to, even with good management. But this makes sense! Development OF COURSE slows down as soon as you are, say, building something that will affect whether somebody lives or dies.
Some amazing, skilled, productive engineers work in defense.
Same with medical technology. They tell stories of the Therac-25 to scare people away in college, and in spite of that, people are still willing to put in the work to make new radiotherapy devices, even with all the red tape.
Same with civilian (non-defense) aerospace.
In my experience, these are usually people who are good at following instructions but bad at the actual job itself.
They tend to also be good at gaming metrics so that higher ups will think they are good at their jobs. Meanwhile, only the absolutely minimal amount of work gets done.
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.
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.
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).
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).
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.
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.
There is very little product overlap so this is categorically false. UTC makes aircraft engines, commercial jet interiors, and avionics. Raytheon makes missiles, radars, and ISR equipment. Please explain how you make a missile in a a turbine engine factory.
>Please explain how you make a missile in a turbine engine factory
It's pretty rare for a single office to create, from start to finish, an entire product, like an engine or missile. The assembly line is distributed in the first place, with separate offices attaching, refitting, and validating different pieces of the entire weapon system.
So I do not believe this comment comes from a place of knowledge on this subject. My comment also asserts that factories are not static, just because they produce something now doesn't mean that they can't be assigned something later.
It's pretty rare for a single office to create, from start to finish, an entire product, like an engine or missile. The assembly line is distributed in the first place, with separate offices attaching, refitting, and validating different pieces of the entire weapon system.
So I do not believe this comment comes from a place of knowledge on this subject. My comment also asserts that factories are not static, just because they produce something now doesn't mean that they can't be assigned something later.
Tomahawks? At least, a sizeable fraction of one.
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.
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.
I want SpaceX in Michigan! Or even Wisconsin - launch over the great lakes.
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.
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.
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.
I did not, so maybe this disqualifies me from commenting further, however I typically don't read press releases because they often contain lies, spin, and everything in between.
I'll give it a look.
I'll give it a look.
Oh so you don’t bother to figure out the facts prior to posting your opinion online? So smart!
Reading press releases is rarely as useful as reading the filings. Whether it's a company's financial numbers (ignore the PR, read the 10-K), an up and coming IPO (definitely ignore the investors and underwriters, read the S-1), or even a piece of legislation (ignore the congressional testimony, it's for cable news soundbites, read the floor text and amendments).
What does reading a companies pr website have to do with figuring out the facts?
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Worth noting, UTC currently has four major business units, and they were already planing to sell 2.
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Not related but some history about Raytheon and Arpanet: https://www.raytheon.com/rtnwcm/groups/gallery/documents/dig...
Technically it was BBN Technologies that worked on Arpanet. Raytheon would acquire BBN in 2009...
Until they name themselves union aerospace corporation I will not care :)
That's when it's time to rip and tear the monopolies apart ;)
Or Weyland Yutani...
We know UAC definitely establishes a mars colony :D
On the one hand, clean Argent energy.
On the other hand, Hell.
On the other hand, Hell.
That'll be SpaceX or Blue Origin.
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.
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.
Much of peacetime military procurement is all about keeping defense contractors alive "just in case" (which you could look at charitably as "maintaining readiness for the next war" or uncharitably as "corporate welfare and pork barrel politics"). Right now, we're at peace. There's no reason for these companies to exist - except that if they didn't, it might encourage adversaries who believe it would be an opportune time for war.
A lot of things that don't really make sense on a military level make a lot more sense on a corporate welfare level. Each Virginia-class submarine is built half at Newport News in Virginia and half at Electric Boat in Connecticut; this is far more expensive than just building the subs in one yard, but is intended to keep both submarine manufacturers in business. The Ford class carriers and F-35 warplanes both contain numerous design innovations that don't really work in practice, but could be viewed as experimentation so that we have engineers with experience in various techniques should we ever need to rapidly build up the military later. The F-35 itself has a large number of subcontractors; you could look at that as a way to make sure that expertise in the program remains widely distributed across as many firms as possible.
I suspect the government is content to allow mergers because it doesn't really reduce the deterrent value of having these programs exist, and the whole point of their existence is to funnel money to defense contractors. If we actually got into a major arms race you'd probably see an explosion of new defense contractors as people start chasing the money available, but for now we're at peace with a shrinking military.
A lot of things that don't really make sense on a military level make a lot more sense on a corporate welfare level. Each Virginia-class submarine is built half at Newport News in Virginia and half at Electric Boat in Connecticut; this is far more expensive than just building the subs in one yard, but is intended to keep both submarine manufacturers in business. The Ford class carriers and F-35 warplanes both contain numerous design innovations that don't really work in practice, but could be viewed as experimentation so that we have engineers with experience in various techniques should we ever need to rapidly build up the military later. The F-35 itself has a large number of subcontractors; you could look at that as a way to make sure that expertise in the program remains widely distributed across as many firms as possible.
I suspect the government is content to allow mergers because it doesn't really reduce the deterrent value of having these programs exist, and the whole point of their existence is to funnel money to defense contractors. If we actually got into a major arms race you'd probably see an explosion of new defense contractors as people start chasing the money available, but for now we're at peace with a shrinking military.
To put it shortly, it may be the case that "we don't need F-35 because we have peace". But a more realistic POV is "We have peace because we build more F-35s"
Si vis pacem, para bellum.
Si vis pacem, para bellum.
Interesting perspective, but let me throw out this perspective from Sun Tzu:
The greatest victory is that which requires no battle.
Part of why we invest in defense is to ensure we never have to fight. True war is costly, by definition.
It should be used as a last resort, when no other tool is available. Conversely, if you do have to deploy it, you want to be sure that it “changes the equation”. In other words, If it didn’t truly hurt/disable you or your opponent at the end if it, then there was no reason to do it in the first place.
How does this relate to current US defense posture? In short: we want to make it such that no one wants to have a real fight with us, that instead they prefer discussions/diplomacy (at least at the nation state level).
While folks complain about how much we spend in defense, a lot of it is not for the result per se (though ensuring cutting edge capability is important), but more to make the point that we are spending X times a given country A. This is intended to make country A less interested in being a bad actor to the US.
Is this perfect? Probably not. Is there lots of waste? Certainly. But overall it has generally worked, and as such underlies much of why the US does what it does with military spending.
The greatest victory is that which requires no battle.
Part of why we invest in defense is to ensure we never have to fight. True war is costly, by definition.
It should be used as a last resort, when no other tool is available. Conversely, if you do have to deploy it, you want to be sure that it “changes the equation”. In other words, If it didn’t truly hurt/disable you or your opponent at the end if it, then there was no reason to do it in the first place.
How does this relate to current US defense posture? In short: we want to make it such that no one wants to have a real fight with us, that instead they prefer discussions/diplomacy (at least at the nation state level).
While folks complain about how much we spend in defense, a lot of it is not for the result per se (though ensuring cutting edge capability is important), but more to make the point that we are spending X times a given country A. This is intended to make country A less interested in being a bad actor to the US.
Is this perfect? Probably not. Is there lots of waste? Certainly. But overall it has generally worked, and as such underlies much of why the US does what it does with military spending.
I agree with you re: keeping them alive, but the US is very much perpetually at war:
https://en.wikipedia.org/wiki/List_of_the_lengths_of_United_...
Almost so much so, that it seems like a reason to keep them alive.
https://en.wikipedia.org/wiki/List_of_the_lengths_of_United_...
Almost so much so, that it seems like a reason to keep them alive.
Those low-grade conflicts aren't what much of the US military is designed for--a large conflict with another capable military force like China, Russia, etc. They are occupations and anti-surgency operations.
A major conflict would require a lot of new manufacturing.
A major conflict would require a lot of new manufacturing.
It's interesting to see the U.S. military retooling for these low-level occupation and anti-insurgency operations. Systems like the Zumwalt destroyers, littoral combat ships, America-class amphibious assault ships, Predator/Reaper/Avenger drones, and laser weapon systems are all adapted to low-intensity, close-to-shore work.
I also wonder whether the assumption that the next big war will a great-power conflict with China, Russia, etc. will actually hold. Our template for what war looks like is WW2, because that's the last time in living memory that the whole world erupted in high intensity warfare. So we've naturally built a military machine to fight the last war, but with bigger and more high-tech weaponry.
But historically, Peter Thiel's observation that "each moment in history happens only once" may be closer to the truth. The era of nation-states duking it out with industrialized armored weaponry started with the Russo-Japanese war in 1905 and ended with WW2 in 1945; it had never happened before, and it never happened afterwards. The previous template for wars before then were the "wars of nationalism" (U.S. civil war, unification of Germany, unification of Italy) in the 1860s-1870s - these had some use of industrialization, but still featured things like cavalry charges and generals personally leading troops into battle. Before then was Napoleon's conquest in 1812, and before that were the American and French revolutions, both of which were very different types of war with entirely different political groups on each side.
For all we know, the next major war might look like Syria but on a global scale, with numerous non-national actors all fighting over territory, resources, and mindshare.
I also wonder whether the assumption that the next big war will a great-power conflict with China, Russia, etc. will actually hold. Our template for what war looks like is WW2, because that's the last time in living memory that the whole world erupted in high intensity warfare. So we've naturally built a military machine to fight the last war, but with bigger and more high-tech weaponry.
But historically, Peter Thiel's observation that "each moment in history happens only once" may be closer to the truth. The era of nation-states duking it out with industrialized armored weaponry started with the Russo-Japanese war in 1905 and ended with WW2 in 1945; it had never happened before, and it never happened afterwards. The previous template for wars before then were the "wars of nationalism" (U.S. civil war, unification of Germany, unification of Italy) in the 1860s-1870s - these had some use of industrialization, but still featured things like cavalry charges and generals personally leading troops into battle. Before then was Napoleon's conquest in 1812, and before that were the American and French revolutions, both of which were very different types of war with entirely different political groups on each side.
For all we know, the next major war might look like Syria but on a global scale, with numerous non-national actors all fighting over territory, resources, and mindshare.
> Our template for what war looks like is WW2, because that's the last time in living memory that the whole world erupted in high intensity warfare. So we've naturally built a military machine to fight the last war, but with bigger and more high-tech weaponry.
This criticism might loosely have been true in the 1980s to 1990s, but doesn't seem particularly relevant now.
> But historically, Peter Thiel's observation that "each moment in history happens only once" may be closer to the truth.
It's obviously literally true, and it's been recognized as true more broadly in military matters since before Thiel was born. What is always in dispute until the next war starts is which lessons learned from the last one are critically in error now, not whether that will be the case somewhere.
This criticism might loosely have been true in the 1980s to 1990s, but doesn't seem particularly relevant now.
> But historically, Peter Thiel's observation that "each moment in history happens only once" may be closer to the truth.
It's obviously literally true, and it's been recognized as true more broadly in military matters since before Thiel was born. What is always in dispute until the next war starts is which lessons learned from the last one are critically in error now, not whether that will be the case somewhere.
You are 4-6 years out of date.
1989/1991 to 9/11/01 was genuine aimlessness and downsizing, missing the boat on a bunch of important developments, etc.
9/11 to Iraq War was massive IC expansion and trying to assign "counter terrorism" to any budget line item.
Iraq from ~April 2004 to ~2011 was the massive retasking toward occupation and LIC. That sort of continued until 2014 in Afghanistan as well. This was also when CIA went from an intelligence agency to a global strike agency, and when JSOC became the second most powerful military in the world (after the US-except-JSOC).
2013/2014 was when they realized that they'd basically cannibalized/neglected the entire conventional military and couldn't fight real wars anymore and then did the "pivot to Asia" under Obama, which has continued under Trump. There are still some serious problems (like Pacific Fleet being...substandard, despite being critical).
They're now basically not planning to occupy anyone ever again, given how badly Iraq/Afghanistan have gone (and would love to get out of Afghanistan to the degree possible); the purpose of the military is now fighting near-peer adversaries (China, to some extent Russia) while continuing to make contractors rich and get congressmen re-elected.
1989/1991 to 9/11/01 was genuine aimlessness and downsizing, missing the boat on a bunch of important developments, etc.
9/11 to Iraq War was massive IC expansion and trying to assign "counter terrorism" to any budget line item.
Iraq from ~April 2004 to ~2011 was the massive retasking toward occupation and LIC. That sort of continued until 2014 in Afghanistan as well. This was also when CIA went from an intelligence agency to a global strike agency, and when JSOC became the second most powerful military in the world (after the US-except-JSOC).
2013/2014 was when they realized that they'd basically cannibalized/neglected the entire conventional military and couldn't fight real wars anymore and then did the "pivot to Asia" under Obama, which has continued under Trump. There are still some serious problems (like Pacific Fleet being...substandard, despite being critical).
They're now basically not planning to occupy anyone ever again, given how badly Iraq/Afghanistan have gone (and would love to get out of Afghanistan to the degree possible); the purpose of the military is now fighting near-peer adversaries (China, to some extent Russia) while continuing to make contractors rich and get congressmen re-elected.
Could be. New military hardware tends to lag strategy by 5-10 years, and most of my examples first shipped in the late 00s. If we changed strategies in 2015, I'd see it around 2020-2025.
It'll be interesting to see if this new strategic priority is actually accurate in the near future.
It'll be interesting to see if this new strategic priority is actually accurate in the near future.
The new strategy is mostly "not doing the other new strategy" and retaining our nominal 1960s-2000s focus. Doing things like keeping brigade combat teams at strength with armor/strategic logistics, etc. Upgrading existing Abrams/Bradley/etc. vehicles vs. switching everyone to MRAPs and Strykers, etc.
I hope this kind of conflict never happens; US v near-peer basically is vanishingly small distance from full-on nuclear WW3 total war, and even a conventional conflict at that scale (or a more limited scope but still all-out within that space) will be incredibly destructive to even the winners.
The wars we're more likely to see are second/third tier powers fighting as well as cyber. However, the lower probability but high severity events need to be mitigated, which is why we need the triad, a substantial navy, ability to rapidly deploy at divisional strength, prepositioned WRM, etc.
I hope this kind of conflict never happens; US v near-peer basically is vanishingly small distance from full-on nuclear WW3 total war, and even a conventional conflict at that scale (or a more limited scope but still all-out within that space) will be incredibly destructive to even the winners.
The wars we're more likely to see are second/third tier powers fighting as well as cyber. However, the lower probability but high severity events need to be mitigated, which is why we need the triad, a substantial navy, ability to rapidly deploy at divisional strength, prepositioned WRM, etc.
Have you read Philip Bobbitt? esp. "The Shield of Achilles"
His theme is something like this, but stressing the coupling between technology (what weapons, and economies, are possible) and law (what states, and what goals, are thought legitimate) and wars.
The 20th-C meat-grinder armies were unique, in that they were both possible to sustain, and useful. And in turn the countries which survived were ones that could support them (i.e. not the Ottomans, the Austrians, etc) for which he reserves the term nation-state -- they had, and needed, a much higher degree of cohesion than had been common before.
He lays out a number of distinct eras before this, with their own notions of what states were, and should do, and could do, and how this all interacted.
Highly recommended if you can stomach 1000-page tomes & skip a lot. I wish there was a great more-popular presentation but I don't know of one.
His theme is something like this, but stressing the coupling between technology (what weapons, and economies, are possible) and law (what states, and what goals, are thought legitimate) and wars.
The 20th-C meat-grinder armies were unique, in that they were both possible to sustain, and useful. And in turn the countries which survived were ones that could support them (i.e. not the Ottomans, the Austrians, etc) for which he reserves the term nation-state -- they had, and needed, a much higher degree of cohesion than had been common before.
He lays out a number of distinct eras before this, with their own notions of what states were, and should do, and could do, and how this all interacted.
Highly recommended if you can stomach 1000-page tomes & skip a lot. I wish there was a great more-popular presentation but I don't know of one.
It sounds really interesting - looking at the Wikipedia summary, it also mentions a potential downfall of the nation-state in favor of the market-state, which is a trend I see happening around me. I'll have to read it when I get a chance.
US defense priorities have firmly shifted towards fighting potentially Russia and China (maybe even at the same time).
"Those low-grade conflicts aren't what much of the US military is designed for--a large conflict with another capable military force like China, Russia, etc."
Doubt it. The US has basically close to zero experience in such a conflict. Even the 2nd WW was mainly a Russian-German war in Europe. 9 out of 10 German soldiers fell on the Eastern front and the US had already a much larger population and industry then Germany.
In Addition, the Navy would be not very useful to engage an able opponent: http://www.johntreed.net/sittingducks.html
Doubt it. The US has basically close to zero experience in such a conflict. Even the 2nd WW was mainly a Russian-German war in Europe. 9 out of 10 German soldiers fell on the Eastern front and the US had already a much larger population and industry then Germany.
In Addition, the Navy would be not very useful to engage an able opponent: http://www.johntreed.net/sittingducks.html
Conflicts which the military industrial complex has no interest in us ever getting out of, as recent events in Yemen demonstrate. Not to mention what's looming on the horizon in Venezuela or Iran.
https://www.opensecrets.org/industries/lobbying.php?cycle=20...
https://www.opensecrets.org/industries/lobbying.php?cycle=20...
>Not to mention what's looming on the horizon in Venezuela or Iran.
Lol. Regarding Venzuela, there is still exactly zero appetite among the general public for another nation building boondoggle. So what if they have oil. We have plenty of oil too. The idea of "building" a friendly nation that's dependent on us to sell us oil has little upside these days.
Regarding Iran, the defense industry is drooling over the idea that the next president may thaw relations and they'll be able to sell to both sides of the Iran/Israel standoff.
Lol. Regarding Venzuela, there is still exactly zero appetite among the general public for another nation building boondoggle. So what if they have oil. We have plenty of oil too. The idea of "building" a friendly nation that's dependent on us to sell us oil has little upside these days.
Regarding Iran, the defense industry is drooling over the idea that the next president may thaw relations and they'll be able to sell to both sides of the Iran/Israel standoff.
The US is perpetually at ‘war’ on purpose. It helps to justify the military spending which in turn boosts the economy.
By saying that there is no reason for defense companies to outside of war, you are vastly underestimating the kind of projects they are involved in.
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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.
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.
Systems have become tremendously more complex in the past 30 years. It's just no longer feasible for a medium sized company to act as a prime contractor due to lack of breadth and resources.
I wonder if it’s also a way to cover up shady practices. Shuffle the deck every once in a while so it’s hard to track the records if a political reckoning ever came.
Satellite imaging is the same way, too. It's pretty hard to be an independent commercial satellite imaging company—most have been scooped up by MDA (Digital Globe) or PLanet Labs (Skybox, Rapideye)
Wonder if Capella Space will break through.
Wonder if Capella Space will break through.
Palantir and Spacex are some of the few ‘startups’ to win government contracts and they had to sue the government to get them.
Who in Washington will be taking up anti-trust discussions against the maker of Tomahawk missiles?
The makers of Trident of course.
> 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
Semiconductor industry is heading this way too
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.
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.
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.
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.