
Raytheon, United Technologies Merger Will Create A New Aerospace Giant - metaphor
https://www.npr.org/2019/06/10/731225619/raytheon-and-united-technologies-merge-to-create-a-new-aerospace-giant
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VengefulCynic
Large defense contracts tend to span large numbers of Congressional Districts
in order to enable the sort of economic protectionism that keeps the F-35 and
JTRS funded to the tune of billions of dollars, in spite of cost overruns and
schedule deficiencies.

I would be shocked if this lead to significant site consolidation due to the
backlash that this would cause from Congress. If anything, this will enable
Raytheon (the company with more defense content) to use United Technologies
facilities to create a larger network of appreciative Congressmen for large
projects.

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drtz
Exactly: Raytheon is going to have considerably more lobbying power after this
merger.

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seancoleman
My first internship was as a Sophomore CS student at Raytheon. I learned
something life-changing that summer: I will never work at a defense contractor
or large corporate behemoth. I think this was in part due to my over-stressed
manager at the time saying "I remember college... it was the best time of my
life..." as his voice drifted off in a nostalgic melancholy.

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oarabbus_
>I think this was in part due to my over-stressed manager at the time saying
"I remember college... it was the best time of my life..."

It's a pretty common trope that you'll hear people saying this regardless of
industry.

Is there anything else that lead you to feel you'll never work for a defense
contractor?

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makerofspoons
Defense contractors have a huge spectrum of work- some projects will be
horrible projects maintaining legacy products with outdated technology and
numerous security flaws, some will be using cutting-edge technology and will
involve innovative things. There is a lot of bureaucracy, they often move
slow, and the pay is often below industry standards. The current backlog of
security clearance applications (in the US) means it could take years before
you're fully onboard your program, and means that hiring help takes forever as
well. If you end up on a great program they can be rewarding places to work,
it's just a matter of being careful about choosing your opportunities.

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vonmoltke
> the pay is often below industry standards

Is there any defense contractor that pays anywhere near industry standards?

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tomohawk
During my career, defense contractors have generally paid a lot more with much
more generous benefits (I've seen fully employer paid 401K plans to the IRS
maximum), and have been a much more stable employer. Since contract work hours
are billable, you generally get paid for each hour you work, unless you are
working for the wrong company and only get a salary. This naturally limits
extra hours to those that are truly needed, and leads to a good work/life
balance.

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vonmoltke
Other than stability, none of those applied to Raytheon while I was there.

The 401k match was 6% which, while good, didn't even come to what my wife gets
from her non-profit. I was paying 25% of my health coverage, which is the
highest proportion if any of my five employers. (I will day, though, that
Raytheon had the best _family_ coverage rates of any of them.)

I was salaried, and other than a few times was required to record no more than
40 hours in my timesheet regardless of how much time I needed to put in. The
work/life balance was highly dependent on the program you were on, and I got
trapped on a bad one.

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souprock
Some parts make you pay 0% of health coverage. It varies.

If you were told to record no more than 40 hours in my timesheet, then that
means you DO NOT put in more than 40 hours. You're supposed to go home. If you
were told to stay and this was for a government contract, it's a violation
that you're supposed to report. Unless this was decades ago, you got training
that told you so.

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acomjean
I used to work at Raytheon. The one weird thing about the defense business is
how few businesses and they end up making strange alliances.

We were parters with Boeing on the project I worked on, but bidding against
them on other projects.

Raytheon got rid of all its commercial ventures, Amana appliances, RayMarine,
Beech aircraft and anything competing in the private sector was spun off.
There corporate structure had a lot of legacy from previous mergers (before my
joining) which seemed to be stuck at 85% complete.

I can't see how this merger isn't going to set off anti-trust alarm bells in
washington, but these companies are well connected.

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nostrademons
Much of peacetime military procurement is all about keeping defense
contractors alive "just in case" (which you could look at charitably as
"maintaining readiness for the next war" or uncharitably as "corporate welfare
and pork barrel politics"). Right now, we're at peace. There's no reason for
these companies to exist - except that if they didn't, it might encourage
adversaries who believe it would be an opportune time for war.

A lot of things that don't really make sense on a military level make a lot
more sense on a corporate welfare level. Each Virginia-class submarine is
built half at Newport News in Virginia and half at Electric Boat in
Connecticut; this is far more expensive than just building the subs in one
yard, but is intended to keep both submarine manufacturers in business. The
Ford class carriers and F-35 warplanes both contain numerous design
innovations that don't really work in practice, but could be viewed as
experimentation so that we have engineers with experience in various
techniques should we ever need to rapidly build up the military later. The
F-35 itself has a large number of subcontractors; you could look at that as a
way to make sure that expertise in the program remains widely distributed
across as many firms as possible.

I suspect the government is content to allow mergers because it doesn't really
reduce the deterrent value of having these programs exist, and the whole point
of their existence is to funnel money to defense contractors. If we actually
got into a major arms race you'd probably see an explosion of new defense
contractors as people start chasing the money available, but for now we're at
peace with a shrinking military.

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lbotos
I agree with you re: keeping them alive, but the US is very much perpetually
at war:

[https://en.wikipedia.org/wiki/List_of_the_lengths_of_United_...](https://en.wikipedia.org/wiki/List_of_the_lengths_of_United_States_participation_in_wars)

Almost so much so, that it seems like a reason to keep them alive.

~~~
rhino369
Those low-grade conflicts aren't what much of the US military is designed for
--a large conflict with another capable military force like China, Russia,
etc. They are occupations and anti-surgency operations.

A major conflict would require a lot of new manufacturing.

~~~
nostrademons
It's interesting to see the U.S. military retooling for these low-level
occupation and anti-insurgency operations. Systems like the Zumwalt
destroyers, littoral combat ships, America-class amphibious assault ships,
Predator/Reaper/Avenger drones, and laser weapon systems are all adapted to
low-intensity, close-to-shore work.

I also wonder whether the assumption that the next big war will a great-power
conflict with China, Russia, etc. will actually hold. Our template for what
war looks like is WW2, because that's the last time in living memory that the
whole world erupted in high intensity warfare. So we've naturally built a
military machine to fight the last war, but with bigger and more high-tech
weaponry.

But historically, Peter Thiel's observation that "each moment in history
happens only once" may be closer to the truth. The era of nation-states duking
it out with industrialized armored weaponry started with the Russo-Japanese
war in 1905 and ended with WW2 in 1945; it had never happened before, and it
never happened afterwards. The previous template for wars before then were the
"wars of nationalism" (U.S. civil war, unification of Germany, unification of
Italy) in the 1860s-1870s - these had some use of industrialization, but still
featured things like cavalry charges and generals personally leading troops
into battle. Before then was Napoleon's conquest in 1812, and before that were
the American and French revolutions, both of which were very different _types_
of war with entirely different political groups on each side.

For all we know, the next major war might look like Syria but on a global
scale, with numerous non-national actors all fighting over territory,
resources, and mindshare.

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rdl
You are 4-6 years out of date.

1989/1991 to 9/11/01 was genuine aimlessness and downsizing, missing the boat
on a bunch of important developments, etc.

9/11 to Iraq War was massive IC expansion and trying to assign "counter
terrorism" to any budget line item.

Iraq from ~April 2004 to ~2011 was the massive retasking toward occupation and
LIC. That sort of continued until 2014 in Afghanistan as well. This was also
when CIA went from an intelligence agency to a global strike agency, and when
JSOC became the second most powerful military in the world (after the US-
except-JSOC).

2013/2014 was when they realized that they'd basically cannibalized/neglected
the entire conventional military and couldn't fight real wars anymore and then
did the "pivot to Asia" under Obama, which has continued under Trump. There
are still some serious problems (like Pacific Fleet being...substandard,
despite being critical).

They're now basically not planning to occupy anyone ever again, given how
badly Iraq/Afghanistan have gone (and would love to get out of Afghanistan to
the degree possible); the purpose of the military is now fighting near-peer
adversaries (China, to some extent Russia) while continuing to make
contractors rich and get congressmen re-elected.

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remarkEon
>They're now basically not planning to occupy anyone ever again,

>the purpose of the military is now fighting near-peer adversaries (China, to
some extent Russia)

I agree with you here, but this seems like a massive contradiction. I don't
understand how one would win against a near-peer adversary without occupying
_something_ , e.g. Taiwan or Hong Kong or parts of Eastern Europe.

~~~
nostrademons
Presumably Taiwan or Hong Kong would invite us in if there was a serious
threat from China.

I think the problem with occupying countries is when the people in the country
_don 't want us there_. Occupying companies that want you there isn't really
an occupation.

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remarkEon
I think you're mostly right, but it depends - and presumably Eastern Europe
would want us there too in the event of a Russian invasion.

The problem when they "want you" is that your occupying Army now has to do
things like government administration and nominal policing, something the
United States military hasn't done, at least convincingly well, since WWII
(one could make an argument this _started_ going well at the end of the Iraq
war but I would heartily disagree). It's just a different type of occupation.

~~~
rdl
It would be "maintain forward bases during a dynamic conflict with or without
the support of the local government", not "try to turn Afghanistan into an
18th century state for the first time, or fix Iraq".

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sailfast
Many of these mergers lately seem to be driven by contract books and support
structures for future bids. If you lose a contract, buy the company that won,
and now you only need one business development group which saves you a bunch
of money. Consolidate where you can, call it a win, and now you have a bit
more money and less competition for the next contract. (I have no idea if this
is the reason for this merger)

While you might not end up closing off entire regions, if both companies have
offices in, say, Dayton ohio servicing Wright-Patt you can reduce to one and
not worry about spare capacity anymore. That can save a lot - especially when
bases are super remote.

You see this a lot with mid-range providers when interest rates are low and
coming up with X Billion is no problem. I don’t know that it ends up providing
better service to government - I would bet the answer there is absolutely no,
especially as they recoup costs from the acquisition and squeeze staff. Win
for the execs though.

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war1025
Something that many people are missing in this, and that I know I missed the
first time around, is that UTC is the company with majority stake in this
merger.

The main reason this is relevant from my perspective is that Rockwell Collins,
a major employer in Cedar Rapids, Iowa got bought out by UTC a year or so ago,
and the clip on the radio about the merger this morning suggested the deal
went the other way and the new Collins Aerospace was likely to be renamed into
something else. But Collins Aerospace is one of the four main divisions of the
proposed new company.

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ImprovedSilence
I’ll offer a different take on this merger other than the typical defense
contractors = bad/politically in bed view held here. (Which may not always be
wrong, but by no means is it always right/accurate).

I think the merger is about 2 things. 1.) neither company has a “Platform”.
United builds jet engines, Raytheon, sensors and missiles. But Lockheed builds
the F-35. I think this is about Raytheon getting closer to having platform
capability, instead of the constant squeeze the platform owners put in their
subcontractors. (Both in price, and function, which is lockheed making their
own sensors and cutting out Raytheon biz. 2\. I think it’s a debt/revenue
restructure advantage for United, they’ve got lots of debt they can spin off
without losing revenue, acquire a cash positive company, and look great to
stockholders for the next few years and pay out fat dividends. (Which benefits
who? all the executives who own tons of stock and make decisions).

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lotaezenwa
The implications this merger could have for local and national politics is
understated.

Entire Congressional Districts whose main employer is either Raytheon or UTC
could see their plants consolidated. Or closed.

Lobbyists for both companies will be working with each other on projects and
initiatives, which could result in pressure for other defense companies to
merge.

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brixon
Did you see their website posted for the merger? There will be 4
divisions/segments/??? 2 are from UTC and 2 from Raytheon, it does not seem
like they are planning for a real integration.

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lotaezenwa
I did not, so maybe this disqualifies me from commenting further, however I
typically don't read press releases because they often contain lies, spin, and
everything in between.

I'll give it a look.

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seldonnn
Oh so you don’t bother to figure out the facts prior to posting your opinion
online? So smart!

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AaronFriel
Reading press releases is rarely as useful as reading the filings. Whether
it's a company's financial numbers (ignore the PR, read the 10-K), an up and
coming IPO ( _definitely_ ignore the investors and underwriters, read the
S-1), or even a piece of legislation (ignore the congressional testimony, it's
for cable news soundbites, read the floor text and amendments).

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clvx
Not related but some history about Raytheon and Arpanet:
[https://www.raytheon.com/rtnwcm/groups/gallery/documents/dig...](https://www.raytheon.com/rtnwcm/groups/gallery/documents/digitalasset/rtn_224614.pdf)

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compuguy
Technically it was BBN Technologies that worked on Arpanet. Raytheon would
acquire BBN in 2009...

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olliej
Until they name themselves union aerospace corporation I will not care :)

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bloopernova
Or Weyland Yutani...

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olliej
We know UAC definitely establishes a mars colony :D

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bloopernova
On the one hand, clean Argent energy.

On the other hand, Hell.

