Inside the Framework
Raytheon’s program diversification cushions a hard economic climate
Dan Smith, president of Raytheon Integrated
Defense Systems (IDS), operates one of Raytheon
Co.’s several defense industrial sectors. Based in
Tewksbury, Mass., Raytheon IDS provides integration of systems for a wide range of U.S. and international government customers, including the U.S.
armed forces, the Missile Defense Agency and the
Department of Homeland Security.
In 2008, the sector generated $5.2 billion in revenue. Smith, a retired naval officer, discussed IDS
programs and their significance to the sea services
in the current economic climate with Managing
Editor Richard R. Burgess and Editor in Chief Amy
Wittman. Excerpts follow.
What are your biggest concerns right now with
regard to naval systems in your sector?
SMITH: The issue in front of the country — it’s not
just Navy, but in the whole military establishment — is
where does this all go to maintain U.S. superiority and,
at the same time, contribute to the economic recovery
that the country needs?
When you look at it from a macro sense that’s the
big concern for any executive these days, looking and
seeing where we can do what [Chairman of the Joint
Chiefs of Staff Adm. Mike] Mullen called the “ 1,000-
ship navy” better. We seemed to have lost track of that.
… The No. 1 concern in my world is getting direction
so that we, industry, can adjust and help fulfill the
needs of the country.
How is the economy affecting your programs
and future competitiveness?
SMITH: The biggest concern for any of the big industry players right now is small industry survivability.
Cash flow is the life’s blood of any company, but when
you’re operating on a hand-to-mouth kind of cash-flow
system, then economic times like this, where borrowing is not as good as it should be, those kinds of issues
are what are driving us.
We’ve had a very focused effort in the supply chain
world making sure that our key suppliers are healthy,
seeing how we can help them, whether it be a
Raytheon Six Sigma event to help them figure out how
to take costs out of their business or accelerating deliveries or, basically, any way we can keep the supply
For big Raytheon, we’re pretty healthy. We took the
hard steps starting in 2000 to get ourselves down and
get the cash flow right. It’s really worrying about those
who help you be successful.
Do you see a lot of suppliers struggling right
SMITH: I wouldn’t characterize it as “a lot.” All suppliers are concerned. A small number are in trouble and
more will probably get in trouble before we get out of
this situation, but we’re all in it together so we have to
help each other.
SEAPOWER / MAY 2009