Sat, Jul 19, 2008
 Above: An Air Force F-16 fighter jet fires an Advanced Medium-Range Air-to-Air Missile made by Tucson-based Raytheon Missile Systems. Photo Courtesy of Raytheon
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Southern Arizona's largest employer grew by 11.9% last yearArizona Daily Star
Tucson, Arizona | Published: 03.16.2008
Tucson-based Raytheon Missile Systems overcame industry labor shortages and grew by almost 12 percent last year, solidifying its rank as Southern Arizona's largest employer.
In this year's Star 200 survey, the world's largest missile maker reported it grew to 12,515 full-time-equivalent positions by the end of 2007, up from 11,184 at the end of 2006.
That growth came as the company's net sales increased by 11 percent from 2006 to 2007. The job increase in 2007 was Raytheon Missile Systems' largest since 2000, Star 200 data show.
The company remains on course to do "significant hiring" of engineers, said Daisy Jenkins, Raytheon's vice president for human resources.
The company wouldn't specify in which parts of its operations the growth occurred. But Bob Lepore, Raytheon Missile Systems vice president for engineering, said in a written statement that "we are experiencing continued growth in our missile defense programs, extending our Standard Missile family, and developing next-generation products for our Department of Defense and military customers."
Product-development areas include the Small Diameter Bomb II, the Sidewinder air-to-air missile and the Rolling Airframe Missile, according to company press releases and government contracts.
Paul Nisbet, a Raytheon analyst with Newport, R.I.-based JSA Research Inc., said staffing increases could be in part because of rising sales in some missile programs, including the Advanced Medium-Range Air-to-Air Missile.
While there has been notable job growth, Raytheon's hourly workforce has mostly "remained flat," said Jim Watson, the directing business representative of the International Association of Machinists, Old Pueblo Lodge No. 933. He said there are about 1,800 hourly employees at Raytheon.
Raytheon develops and manufactures many battlefield weapons, including the Tomahawk cruise missile and the Paveway laser-guided bomb. It also makes the Standard Missile-3, which came into the news last month when one of the missiles took out a dying U.S. spy satellite 150 miles above Earth. That hit came a week after the government announced a $1 billion, four-year contract for SM-3.
Sales up as retirements loom
The Missile Systems division made about $4.99 billion in net sales for 2007, U.S. Securities and Exchange Commission filings show, compared with about $2.9 billion just six years before and $4.5 billion in 2006.
"We're certainly focused on innovation and growth," Jenkins said. "We're very much focused on getting the right talent at the right time to really address the needs of our business. That also includes the next generation of talent."
While Raytheon officials don't say the company is facing an engineer shortage seen at other defense firms, Raytheon has repeatedly sought to attract new engineers. Raytheon has said it finds ways to allocate its current work force of engineers — about 5,500 — and has not been hit hard by engineering retirements.
Dan Drinkwitz, a recently retired Raytheon engineer, said the company is looking all the time to hire new high-skilled workers. But he also said some engineers like him have retired early — he is 57 — and that scenario may make retaining engineers more difficult for the company.
"One of the issues is aging engineers choosing to retire," he said, because then Raytheon must find new engineers to "replace their experience."
Almost 60 percent of U.S. aerospace workers in 2007 were 45 or older, said Jeremiah Gertler, the vice president for defense and international affairs of the Aerospace Industries Association, an Arlington, Va.-based trade group. And about 20 percent of the workforce is eligible for retirement today, he said.
Election could change course
Tucson as a whole shares the aerospace industry's problem, said Joe Snell, president and CEO of Tucson Regional Economic Opportunities Inc.
"The No. 1 issue facing our industries is a company's ability to retain their talent to fuel their growth," Snell said. Attracting workers to Tucson has to do with opportunities the city provides, such as a "vibrant" Downtown and quality schools for employees' children, he added.
Staffing levels have increased steadily at the Missile Systems division, Star 200 staffing figures show. Raytheon's job growth has risen about 220 percent overall since 1981, the first year of the Star 200 survey, although staffing dipped in the late 1980s and early 1990s.
Continued growth, industry analyst Nisbet said, may partially depend on the upcoming presidential election, which could determine priorities in defense spending after 2010.
"For two or three years, they're going to do well," Nisbet said. "Then it will depend what will happen in the White House."
Top southern Arizona employers
1. Raytheon Missile Systems 12,515
2. State of Arizona 10,754
3. University of Arizona 10,535
4. Tucson Unified School District 8,018
5. Davis-Monthan Air Force Base 7,701
6. Pima County 6,954
7. U.S. Army Intelligence Center and Fort Huachuca 6,701
8. City of Tucson 5,848
9. Freeport-McMoRan Copper & Gold Inc. 5,840
10. Wal-Mart Stores Inc*
*Indicates estimated job totals
Full-time equivalent employees, end of 2007, as reported in the Star 200 survey.
Historical highlights for top employer
Some highlights of the history of Raytheon and predecessor Hughes Aircraft in Tucson:
1951 — Hughes Aircraft Co. builds a plant near Tucson International Airport. Production starts on the Falcon missile, the first operational guided air-to-air missile of the U.S. Air Force.
1957 — Falcon production peaks; Tucson plant employment reaches 5,700.
1962 — Hughes operations are bolstered by the development of the tube-launched, optically tracked, wire-guided (TOW) anti-armor missile for the Army.
1972 — The company begins production of its first Navy weapon, the AIM-53 Phoenix air-to-air missile.
1984 — The U.S. government stops accepting Phoenix air-to-air missiles built in Tucson, citing quality problems. After a four-month review of operations and procedures, the company launches a five-year, $250 million modernization program.
1985 — General Motors buys Hughes Aircraft Co. for $5.2 billion. Employment at the Tucson plant peaks at nearly 9,000.
1992 — Hughes buys General Dynamics' missile business, gaining programs such as Tomahawk, Stinger and Phalanx. Hughes Missile Systems Co. is formed and decides in September to consolidate former General Dynamics manufacturing operations in Tucson.
1994 — Hughes beats McDonnell Douglas in a "winner-take-all" contract to produce the Tomahawk cruise missile.
1997 — Raytheon agrees to buy the Hughes defense units in a $9.5 billion stock deal.
1999 — Raytheon adds some 1,000 jobs in Tucson after Raytheon consolidates some missile operations to Tucson as part of a plan to streamline operations.
2002 — President Bush announces plans to move ahead with a missile-defense system, boosting Raytheon's development of components such as the Exoatmospheric Kill Vehicle and the Standard Missile-3. But the Missile Systems division lays off about 400 engineers due to cancellation of three other development programs.
2004 — Raytheon Missile Systems in May is awarded a contract potentially worth $1.6 billion over five years to supply the next-generation Tomahawk missile, the Block IV or Tactical Tomahawk, to the U.S. and British navies.
2006 — A machinists' union representing about 1,900 Raytheon workers goes on strike over higher health-insurance premiums.
2007 — Striking machinists ratify a new contract and return to work after a 10-week walkout.
See the Star 200 special section, which explores local employment trends coupled with an extensive listing of major employers.
● Contact reporter Jack Gillum at 573-4178 or jgillum@azstarnet.com.
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