Overview
Raytheon is the fourth largest defense contractor in the United States, behind Lockheed Martin and Boeing. The Massachusetts-based conglomerate received more than $7 billion in Pentagon contracts in FY 2002. By its own accounting, the company is involved in over 4,000 weapons programs. As Tom Culligan, Raytheon Vice President for Business Development, put it, "As a top tier defense electronics company, our forte is to be a provider to major platform manufacturers, which means you see Raytheon's brand name everywhere - from tanks and rifles to ships, aircraft and UAVs [unmanned aerial vehicles]."

Raytheon's best-known product is probably the Patriot air defense missile, which received massive publicity during the 1991 Gulf conflict when it was used to defend against Iraqi Scud missiles. Analyses performed after the conflict by Dr. Theodore Postol of MIT and the Israeli military indicated that the Patriots were far less accurate than U.S. officials had originally claimed, and that in fact they had missed their targets more often than not. However, since 1991 the Pentagon has spent $3 billion improving the Patriot missile, and now that war in Iraq is imminent, neighboring countries are clamoring to buy them.

Another high visibility system produced by Raytheon is the Tomahawk land attack missile, which company promotional materials describe as "the U.S. Navy's weapon of choice." As evidenced from this passage on their web site, the company is proud of the Tomahawk's combat record: "Tomahawk has played a crucial role in several theater operations including: Operation Desert Storm, Bosnia, Iraq and Kosovo. Over 300 Tomahawks were used in Operation Desert Storm alone. Since Desert Storm in 1991, more than 1,000 Tomahawks have been fired." More than 50 of the missiles- which (depending on their capabilities) cost between $600,000 to $1 million each- were fired in the opening salvo of the war against terrorism in Afghanistan. The U.S. is expected to use even more- as many as 800- in the first hours of the attack against Iraq.

Other Raytheon missile systems include the AIM-65 Maverick, an air-to-surface missile that the company describes as "the most widely used precision guided munition in the free world-- integrated on virtually every fighter aircraft in the free world"; the AIM-9 Sidewinder air-to-air missile; and the top-of-the-line AIM-120 AMRAAM (Advanced Medium Range Air-to-Air Missile), which has been sold to the U.S. armed forces along with more than 20 other nations, including recent controversial offers to Thailand and the United Arab Emirates.

Raytheon also specializes in radar, surveillance, and targeting systems that are used on most U.S.-produced combat aircraft, including the Air Force F-15, F-16, and F-22 fighter planes; the Navy's V-22 "Osprey" tilt-rotor aircraft; and the U.S. Special Forces AC-130U and AC-130H airborne gun ships which have been heavily utilized in the war in Afghanistan. Raytheon calls this latest line of equipment "the Terminator family of targeting systems."

Raytheon manufactures the "bunker buster" GBU- 28, a 5,000-pound bomb and missiles like the TOW, Maverick and Javelin, all of which were used in "Operation Enduring Freedom" in Afghanistan. In addition to the missiles, Raytheon also builds sensors and radars for unmanned and manned reconnaissance airplanes used extensively in Afghanistan.

The company is also a major arms exporter, with billions in overseas arms sales in the past decade to a client list that includes Israel, Egypt, Saudi Arabia, Turkey, Indonesia, Malaysia, Oman, Singapore, Greece, Taiwan and South Korea.

Raytheon and the War
As the fourth largest defense contractor, and a company that not only makes missiles but also the new high tech weapons of war like defense electronics and information systems, Raytheon is well positioned to benefit from war in Iraq. Already the company has won a number of lucrative contracts from the U.S. military, and there is a lot of interest in their missiles and weapons from foreign markets as well.

"Raytheon makes missiles, and it makes defense electronics, and it makes information systems, and this budget is heavily oriented to all three," said Loren Thompson, defense analyst with the Lexington Institute. In January 2003, Raytheon reported that is fourth quarter operating profit doubled. Raytheon CEO Daniel Burnham boasts that the "market is higher today than we thought a year ago. We are perfectly aligned with the defense department's priorities."

As analyst Robert Friedman of Standard & Poor notes, "Raytheon seems to be getting their hands around things and stanching the red ink. It helps that the missile and electronics businesses are growing solidly. But the company was starting from a low base. Thus, the fact that Raytheon reported loses of $15 million for the fourth quarter is a significant improvement over the $162 million in losses reported a year earlier.

Despite this rosier picture and a host of new contracts from the U.S. military in preparation for war in Iraq, Raytheon has announced layoffs in both its civilian and military sectors. At the end of February, the company announced 300 layoffs at its Andover, MA plant, saying that the Patriot missile system's poor overseas sales made this a necessity. In the past year, the company has laid off more than 1,400 people. It is planning on laying off as many as 600 jobs at its Kansas aircraft division in 2003.

The 2004 Military Budget Includes Billions for Raytheon

· The Navy has requested $1.2 billion to develop future ships like the DDX destroyer. Raytheon integrates the electronics for those vessels.

· The Air Force requested $80 million for 325 AGM-154 JSOW missiles, a major increase from last year's request of $12.2 million for 18 missiles. Their request for AIM-9X air-to-air missiles is $69.1 million, for 386 missiles, a $13.2 million increase from last year.

· The Army's budget request includes $140.7 million for 901 Javelin anti-tank missiles, which Raytheon co-produces with Lockheed Martin, $26.4 million for 200 TOW 2 missiles, and $7.3 million for the new SLAMRAAM (surface launched medium range anti-air missile).

Big Guns, Big Money: Raytheon's Campaign Spending and Lobbying Clout

Because it has major facilities in New England, the company has traditionally had clout with key Democrats in the Massachusetts delegation. But the company's pattern of contributions in recent years has leaned heavily toward Republicans, moving from a 35%/65% Republican/Democratic split in 1994, the year before the Republicans took control of the House of Representatives, to a 58%/42% Republican/Democratic split during the most recent election cycle, which culminated in the 2002 mid-term Congressional elections.

In order to keep its Democratic contacts active, Raytheon served as a major corporate sponsor of a fundraiser for the conservative "Blue Dog" Democrats, a group that generally favors high military spending and pet industry projects like missile defense at the 2000 Democratic National Convention in Los Angeles.

When Massachusetts Governor Mitt Romney wanted to celebrate his inauguration in January, he called on corporate donors to underwrite the $750,000 gala. Raytheon generously contributed $5,000 and gave an additional $1 million to the Democratic Party. It is crucial that Raytheon do something to keep Massachusetts lawmakers happy, because the company has pioneered squeezing tax breaks out of state and local governments. In 1995 the company threatened to leave Massachusetts if the State Legislature failed to pass a bill that would drastically reduce Raytheon's tax burden. In exchange, Raytheon pledged to maintain at least 90% of their payroll and property levels in the state. Since then, the company has made thousands of layoffs and reduced its office and factory space, but maintains that it is in compliance with the 1995 law.