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09/30/2007     Raytheon to Diversify

Missile maker hopes to diversify, create technology for peacetime

Max Jarman
The Arizona Republic
Sept. 30, 2007 12:00 AM

Tucson's Raytheon Missile Systems is on a roll.

The company's Tomahawk and Paveway missiles are the weapons of choice for the U.S. military in Iraq.

Its Standard Missile 3s and its Exoatmospheric Kill Vehicles are the backbone of an elaborate plan to defend the United States and its allies from enemy attacks.

Raytheon Missile Systems, a unit of Waltham, Mass., defense contractor Raytheon Co., now is the world's largest supplier of guided missiles and the largest private employer in southern Arizona.

Since the Sept. 11, 2001, attacks and subsequent invasion of Iraq, Raytheon has racked up billions of dollars in new government contracts that have doubled company revenue to more than $4.5 billion a year.

Louise Francesconi, Raytheon Missile Systems' forward-thinking president, isn't satisfied. She's obsessed with reinventing a peacetime role for the wartime powerhouse and new niches for the company inside an increasingly high-tech U.S. military.

Francesconi, 53, the defense industry's highest-ranking woman, has been on a mission to diversify Raytheon's products and make the company more responsive to its customers since she took the helm in 1996.

With long-term contracts to supply and maintain weapons arsenals in the U.S. and dozens of foreign countries, Raytheon could cruise like one of its renowned Tomahawks. Instead, it is looking to leverage technology that can guide a missile to a target in space into a range of new products for national defense and space exploration.

The projects include guidance systems for spaceships, protective force fields for airports, weapons that shoot light and radio waves, and satellitelike robots that seek out and ram enemy missiles in space.

And those are just the projects the tight-lipped defense contractor can talk about.

"If anyone is going to invent us out of business, I want it to be us," said Michael Booen, Raytheon Missile Systems' vice president of advanced missile defense and directed energy weapons.

Mandates for change

Francesconi asserts that the company has no intention of abandoning the guided missiles that have been its bread and butter since industrialist Howard Hughes founded the business in 1951.

But she adds that new technology, changes in the way wars are being fought and political pressure to rein in defense spending and get out of Iraq are mandates for change that the company can't ignore.

When she thinks of the military's future, Francesconi sees directed energy weapons such as lasers and microwave beams, unmanned air, sea and land vehicles and smart missiles all linked and controlled by computers.

'Bike Shop' innovation

To come up with new products, Francesconi has created an "innovation tank" comprising two groups of about 650 people who are focused on developing new technologies for use on and off the battlefield.

Many products are developed at a Tucson research facility she started called the Bike Shop. There, engineers and machinists develop prototypes of products and existing weapons that have been modified to meet the changing demands of urban warfare.

Francesconi has been focusing Raytheon's sights beyond the Department of Defense.

Raytheon sees a bright peacetime future for itself at the National Aeronautics and Space Administration and is bidding on a key contract there that could get its foot in the door.

"The technology that literally allows us to hit a bullet in space with one fired on the ground certainly has applications in space," Booen said.

Raytheon wants to build the avionics and guidance system for NASA's Ares I crew launch vehicle that will carry astronauts into orbit when the Space Shuttle is retired in 2010. NASA is expected to award a contract for the Ares I rocket guidance system before the end of the year.

"NASA is a perfect fit for us," Francesconi said.

Hybrid company

Raytheon Missile Systems now consists of the amalgamated missile-manufacturing businesses of Hughes Aircraft, Raytheon, General Dynamics and Texas Instruments.

Hughes bought General Dynamics' missile business in 1992 and Raytheon bought Texas Instruments' missile unit in 1997. Then Raytheon bought Hughes later in 1997 and consolidated the missile businesses in Tucson.

While the U.S. Department of Defense is Raytheon's largest customer, about 25 percent of its revenue comes from foreign military sales that are either arranged or approved by the U.S. government.

The ramp-up in defense spending after 9/11and subsequent wars in Afghanistan and Iraq have been a boon to Raytheon.

"The growth has been unbelievable," said John Patterson, Raytheon spokesman. He noted that production of Raytheon's air-launched Paveway missiles went from a handful to more than 2,000 per month after 9/11.

During that period, global employment has grown by 2,500, to 12,000, and in Tucson by 1,000, to 9,000.

With a backlog of more than $5 billion in orders at the end of 2006, the trend is expected to continue - but not indefinitely.

Not only is demand for its traditional products likely to diminish as the war in Iraq winds down, but Francesconi sees its primary customer, the Defense Department, becoming more cost-conscious.

"We have to produce products that do more and cost less," she said.

Changing wartime needs

The urban nature of the battlefields in Afghanistan and Iraq also is creating demand for smaller, more precision weapons that cause less collateral damage.

As the U.S. military becomes more Internet-centric, or "netted," weapons are going to have to be able to communicate and do more than hit a target.

The next generation missiles will be able to be reprogrammed from the ground and gather and disseminate information while in flight.

Technology also is changing the nature of weapons. Instead of bullets, they will fire directed beams of light and radio waves.

Directed-energy research

So-called directed energy is a major area of research and development for Raytheon and a field where the company has taken the lead.

The company's prototype laser weapons can destroy a mortar at 500 meters and, someday, may be able to take out aircraft and enemy missiles.

Its Vigilant Eagle Airport Protection Systems is a protective microwave dome that covers large commercial airports and airbases and protects planes in the airspace from terrorist attacks. The microwaves scramble the heat-seeking sensors on shoulder-launched missiles, diverting them from the target.

Another developing product called Silent Guardian is a focused radio beam that penetrates the skin creating an intolerable heating sensation. The sensation causes the targeted individuals to "instinctively flee or take cover."

The company is developing a large-scale version for the military and a smaller one that could be used by law-enforcement agencies.

MORE ON THIS TOPIC

Louise Francesconi

Position: Vice President Raytheon Co.; President Raytheon Missile Systems.

Compensation: $1.02 million.

Born: Los Angeles.

Age: 53.

Education: B.S. economics, Scripps College; M.S. business administration, UCLA.

Career: 1975 to present, various positions at Hughes Aircraft Co., its subsidiary Hughes Missile Systems and its successor Raytheon Missile Systems.

Community: Director, Tucson Medical Center HealthCare and Tucson Airport Authority. Member, national board of advisers for the Eller College of Management at the University of Arizona.

Notable: For three years, Francesconi earned a spot on Fortune magazine's "50 Most Powerful Women in Business" list.

Raytheon Missile Systems

What: World's largest manufacturer of guided missiles.

Headquarters: Tucson.

President: Louise Francesconi.

Founded: 1951 by industrialist Howard Hughes.

Acquired: 1997 by Raytheon Co.

Employees: 12,000 worldwide; 9,000 in Tucson.

Notable products: Tomahawk, Paveway, Sidewinder missiles.

Revenue: $4.5 billion (2006).

Raytheon Co.

What: Diversified defense contractor.

Headquarters: Waltham, Mass.

Founded: 1922 as a maker of radio tubes.

Chairman/CEO: Bill Swanson.

Organization: Six business units: Raytheon Missile Systems; Space & Airborne Systems; Integrated Defense Systems; Network Centric Systems; Intelligence & information Systems; and Raytheon Technical Services Co.

Employees:
71,000.

Revenue: $21 billion (2006).

Symbol: NYSE: RTN.

Reach the reporter at max.jarman@arizonarepublic.com or (602) 444-7351.

Author: Max Jarman Publication: AZ Republic
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