By the Blouin News Business staff

Raytheon: customers want missiles, states want jobs

by in U.S..

The Raytheon booth at the Singapore Air Show, February 11, 2014. ROSLAN RAHMAN/AFP/Getty Images

The Raytheon booth at the Singapore Air Show, February 11, 2014. ROSLAN RAHMAN/AFP/Getty Images

On Tuesday, the Pentagon announced that defense firm Raytheon had been awarded a $529 million contract to supply missiles to the Air Force, the Navy, and allied nations. A tidy sum for the company, which already boasts $23 billion in sales in 2014 and 61,000 employees worldwide.

In December, the Air Force awarded Raytheon a similar $492 million contract to supply air-to-air missiles and related equipment to South Korea, Oman, Singapore, and Thailand. And earlier this month Raytheon increased its annual dividend for the eleventh consecutive time, by 10.7%. Raytheon has a staggering $33.6 billion backlog of orders from customers, of which $23.1 billion is funded. Even that portion is far more than the company can currently produce and deliver — it expects only $16.4 billion of the backlog to be filled this year.

American states are making an effort to offer incentives for Raytheon to maintain existing operations within their borders or transfer them over, seeking those high-quality jobs. Raytheon Missile Systems (RMS) is the biggest private employer in Tucson, Arizona, with approximately 9,600 workers. However, RMS, like other defense employers, has shed hundreds of jobs in recent years through small layoffs and retirement attrition, and its president Taylor Lawrence said, “It’s no secret … one of our biggest concerns has been our ability to grow here in Tucson.” Case in point: in 2010, rather than expand in Tucson, Raytheon chose Huntsville, Alabama, as the site for a new $75 million factory employing over 200 people.

That rejection led Pima County (which includes Tucson) to intensify its efforts to improve access to Raytheon’s sprawling site at Tucson International Airport (TIA) and to give the company room to expand. A new runway at TIA will encroach upon areas where Raytheon currently operates, so an existing road will be diverted, and county leaders plan to see as many as 2,800 acres around the new roadway turned into “the Aerospace, Defense and Technology Business and Research Park.” An even larger undertaking will be the 16 mile “Aerospace Parkway” that will connect two interstate highways in southern Arizona and will cost up to $600 million. Arizona senator John McCain is working to facilitate all of this, since he said earlier this month that otherwise Raytheon would move jobs and expansions to its plant in Alabama. Raytheon welcomed the Aerospace Parkway and said it remains committed to Tucson for the foreseeable future.

Likewise, Indiana will provide Raytheon up to $4.4 million in incentives as part of a deal expected to bring 250 jobs to Indianapolis over the next few years (a 25% expansion of the company’s existing workforce there), and possibly even 350 by 2020. Additionally, the Indiana Economic Development Corporation will provide Indianapolis with up to $1 million in related infrastructure assistance from the state’s Industrial Development Grant Fund. Raytheon plans to invest about $26.3 million to expand its Indianapolis facility, and many of the new jobs will be moved from the company’s plants in California and Virginia. Raytheon can clam these state incentives only after hiring Indiana residents, so locals will have job opportunities coming.

With enormous demand from the U.S. government and foreign customers, and states competing to offer the best incentives to locate domestic production, Raytheon will continue prospering even as defense budgets shrink.