WASHINGTON — “Platform agnostic.”
It’s a term getting a lot of play from United Technologies CEO Greg Hayes and Raytheon CEO Tom Kennedy, in the wake of this weekend’s surprise announcement that the two companies would be merging into a new firm, known as Raytheon Technologies Corporation.
Neither company works as a platform producer, eschewing the production of aircraft or ground vehicles and instead focusing on the technology that makes them work. It’s a business model that has produced well for both firms, and in a Monday interview with Defense News, the two CEOs made it clear they see no need to deviate now.
“One of the first and foremost things we absolutely agree on is, we want to be platform agnostic,” Hayes said, noting that UTC sold off its Sikorsky helicopter unit almost five years ago because “we didn’t like the programmatic risk associated with platforms.”
“We’ll supply all the content and all the systems, all of the offensive, defensive capabilities necessary to make the system successful, but we really think it’s important that we remain agnostic among the platform providers,” Hayes added.
Said Kennedy, “Neither of us essentially develop platforms or sell platforms. Why that's important is, really, the amount of capital that you have to go and spend in maintaining and creating these platforms kind of takes your eye off the ball relative to investing in technology moving forward. So that was a big feature, that both companies are platform agnostic.”
Instead, both men said the new firm will remains focused on developing high-end technologies which can be inserted on, or in, platforms developed by the other major defense primes. With that goal in mind, the company is preparing to spend $8 billion in R&D funds in the year following its merger.
When the merger is completed in early 2020, Kennedy will become chairman of the board, with Hayes serving as CEO. Two years later, Kennedy will step down, with Hayes adding the chairman title.
One area Kennedy highlighted as having good synergies is hypersonic weapons, a major interest for the Pentagon. Raytheon has already been working on hypersonic missiles, including the guidance and control systems, but UTC’s experience with propulsion and materials science might be able to help deal with a specific challenge for Raytheon’s weapon designers.
“It just turns out when you’re flying at Mach 5, you really increase your temperature on all your surfaces," Kennedy said. "If you have a propulsion system, the air is coming in at such a high speed, that creates a significant amount of heat; it has to be dissipated in a very efficient way,” Kennedy said. “And one of the areas that the United Technologies has, really based in the Pratt & Whitney guys, is all the technology that they’ve developed over the years in working very high temperatures internal to their turbine engines,” he continued. “So not only do they have, I would call it the heat management capabilities, but also the material science to go implement those.”
Hayes identified two areas where shared R&D will have a near-term impact, and they underline the benefit of having a new company that will be roughly 50-50 defense and non-defense business.
The first is on aircraft control systems, where each company has technologies that can be brought to bear for the FAA’s next-generation air traffic control networks. The second comes in the form of cybersecurity.
“I think Raytheon is second to none as it relates to cyber, and we view this as a core competency that can benefit the entire commercial aerospace ecosystem,” Hayes said. “Not just the connected aircraft, which is probably the first order of business, but the whole ecosystem. How do you protect passenger data, how do you protect the equipment that’s on the ground? How do you protect the airplane while it’s flying?
“I think we’ll see that shortly in the marketplace.”
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.