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Raytheon Company
141 Spring Street
Lexington, Massachusetts
02421 USA
http://www.raytheon.com

Raytheon Company: Historical Background

FOUNDING

Raytheon Company was founded in Cambridge, Mass., as the American Appliance Company in 1922, a pivotal time in American history. The first decade of modernism, the 1920s saw the advent of automobiles, radios and refrigerators. The electrical industry was extending power lines across the United States, and telephones were linking every hamlet and home. In the aftermath of World War I, the roaring '20s was a time of flappers and flasks, and the nation was in flux, disillusioned by the end of a bitter war that brought no real peace or economic security and energized by the prospects of modern technological advances. Emerging from the depths of a severe post-war depression that wiped out jobs and forged a widening chasm between the privileged and the poor was a breed of entrepreneurs with a driving ambition to succeed and willingness to gamble on it.

It is against this backdrop that the founders of Raytheon became business partners. Two former college roommates, Laurence K. Marshall and Vannevar Bush, formed the company with Charles G. Smith, a young scientist who had developed the prototype for a home refrigerator that used artificial coolants. Marshall, an engineer, businessman and trained physicist, and Bush, a scientist and professor of electrical engineering at the Massachusetts Institute of Technology, along with several other financial backers dreamed of prosperity and a potential market for their newly developed refrigerator.

As is the case with so many other entrepreneurs, however, the product that launched the company was a bust and never left the laboratory. Facing failure, it was Marshall and Bush who suggested revisiting an earlier idea young Smith had experimented with: a new kind of gaseous tube that would allow radios for the first time to be plugged into a wall socket and operate on electricity rather than batteries. The tube would overcome the need for two expensive, short-lived A and B batteries, the greatest shortcoming to widespread radio use at the time. By devising a way to replace the B battery with a tube, the small company not only beat out the army of researchers and engineers of RCA, Westinghouse and other corporate giants, it produced a device that forced the entire radio industry into a new direction and made radios affordable and accessible to every household. Perfected and introduced to the public in 1925, the tube, known technically as a gaseous rectifier and marketed under the brand name Raytheon, brought in more than $1 million in sales by the end of 1926 and positioned the company as a major contributor to the fast-growing radio tube market for nearly two decades.

In the 75 years since, the company would become known for many more major technological advancements that have changed the course of American culture and world history. Among these innovations are the first commercial microwave ovens, miniature tubes for hearing aids, the Fathometer depth sounder, the mass production of magnetron tubes, early shipboard radar, the first successful missile guidance system, a space communications system, mobile radio telephones, the first combat-proven air defense missile system and Terminal Doppler Weather Radar.

ORIGIN OF THE RAYTHEON NAME

In 1925, the year American Appliance Company began to take off, an Indiana company made it known that it held prior claim to the American Appliance Company name. Because of the success of the Raytheon radio tube, company officials at that time elected to extend the use of the name to describe the entire organization, and the company's name was officially changed to Raytheon Manufacturing Company. "Ray" comes from "rai," an Old French word that means "a beam of light," while "theon" comes from the Greek and means "from the gods." Furthermore, both the product and company name were deemed scientifically appropriate given groundbreaking research at the time on the mystery of the Wolf-Rayet star Zeta Puppis, which emitted bright ultraviolet lines believed to be the result of gaseous substances. Laboratory experiments by C.G. Smith on the source of these gases became the basis of crucial importance to his development of the company's radio tube.

GLOBAL TECHNOLOGY LEADERSHIP

Magnetron Tubes

The onset of World War II was Raytheon's introduction to defense-applied technology. British scientists had developed short-wave, or microwave, radar to detect enemy aircraft; however, they were unable to perfect or mass produce the magnetron tube which was the heart of the radar's function. Britain considered the radar to be its most important advantage against Nazi raids because it enabled them to "see" at night when the Nazis were virtually blind. In urgent need to mass produce the tens of thousands of magnetron tubes that would be required to thwart Luftwaffe raids and counterattack the Germans, British scientists turned to the United States, seeking help from America's largest industrial firms. Raytheon, which already had been experimenting with microwave tubes and producing transmitting tubes, was considered too small to be in the running. Nonetheless, at the suggestion of MIT's Radiation Laboratory, a meeting was arranged between Britain's leading scientists and Raytheon engineer Percy L. Spencer.

Spencer, a man with only a grade school education yet a remarkable sense of curiosity, listened carefully to the British describe their method of producing the magnetron tubes, a process Spencer boldly informed them was "awkward and impractical." He persuaded the scientists to allow him to take home the tube, Britain's most valuable secret weapon, and over the weekend Percy not only came up with radical changes that would simplify the manufacturing process, his recommendations also would improve the functioning of the radar. Impressed, Britain awarded, through the MIT Radiation Laboratory, "little" Raytheon a small contract to supply the magnetrons at the same time it awarded giant Western Electric a large contract. Raytheon eventually was established as the major magnetron supplier during the war, providing the most important military advantage for Britain and the Allied Forces. At the end of the war, Raytheon was producing 80 percent of all magnetrons, leaving Western Electric, RCA, GE and other giants far behind.

Shipboard Radar

Unlike Britain and other Allies whose defense in World War II was focused largely on land and air counterattack, the United States was in peril of defeat at sea, which, if successful, would have cut off the nation from both its European and Pacific allies. In the Atlantic, heavily armed Nazi U-boats roamed at will, and every U.S. Naval vessel was needed in a dozen places simultaneously. The creation of shipboard radar and instruments to overcome the U-boats was crucial for the United States.

Raytheon's Fritz Gross, one of the company's most talented young engineers, developed the microwave SG radar, a shipboard radar that was far superior to the radars carried in planes because the German submarines could not tune in on their frequencies as they could with aircraft radar. In 1942, Raytheon began manufacturing the radar for PT boats, a feat other manufacturers previously had claimed was impossible, and by the end of the war, every U.S. PT boat was equipped with the Raytheon radar. Raytheon radar and radio played an important role in the battles of the Atlantic by protecting Allied convoys, allowing them to see at night and to search out and destroy U-boats. As a result of the Allied forces technological advantage, Nazi Germany began for the first time to feel like the hunted rather than the hunter.

Microwave Cooking

Raytheon's discovery of microwave cooking in 1945 was initially an accident, but its development, like so many others, can be credited to Percy Spencer. A candy bar in Spencer's pocket began to melt as he stood in front of a magnetron tube that had been switched on. Intrigued, he placed kernels of popcorn in front of the tube, and they too popped. He then conducted a similar experiment with a raw egg, which exploded when the inside yolk cooked faster than the outside of the egg. Scientists familiar with magnetrons knew the tubes generated heat at the same time they radiated the microwave energy that made radar possible. Spencer was the first, however, to discover that one could cook food using microwave radio signals.

In 1947, Raytheon demonstrated the world's first microwave oven and called it a "Radarange," the winning name in an employee contest. Housed in refrigerator-sized cabinets, the first microwave ovens cost between $2,000 and $3,000 and were sold by Raytheon primarily to the commercial marketplace. By the early 1950s, domestic appliance makers began showing interest in the microwave. Lacking the distribution and marketing infrastructure to promote and sell the product on its own, Raytheon entered into a licensing agreement with Tappan Stove Company in 1952. In 1955, Tappan introduced the first domestic microwave oven, which featured a more compact but less powerful microwave generating system. With a price tag of approximately $1,300, these domestic models fared only modestly.

It was Raytheon's 1965 acquisition of Amana Refrigeration, Inc.--an Iowa-based manufacturer of refrigerators and air conditioners with a well established distribution channel--that ultimately made the microwave oven a fixture in U.S. households. In 1967, Raytheon introduced the first countertop, domestic 100-volt microwave oven, which cost just under $500 and was smaller, safer and more reliable than previous models. The market exploded, women were on their way to becoming more independent of laborious household chores, and Raytheon, under the Amana name, became the dominant player in the home microwave oven business.

Guided Missiles

Despite the effectiveness of radar in World War II, there remained little defense against low flying planes which still could not be detected by standard pulse radar. As a result, the Japanese created a new weapon-- human rockets--Kamikaze aircraft that flew low over the ground and appeared suddenly on the horizon to intermingle with American planes and dive bomb U.S. ships. What was needed was continuous-wave radar capable of tracking moving objects--even through electronic clutter caused by sea waves and ground contours. The ability to isolate moving objects from surrounding clutter on the basis of speed, instead of distance, opened up new possibilities for a missile that could not only seek out but also destroy any airborne enemy target.

In 1948, Raytheon became the first company to develop a missile guidance system that could hit a flying target. The company's early experimental missiles, including the history-making Lark, contained a guidance system in which both the radar transmitter and receiver were carried in the nose of the missile itself. However, this type of guidance system, called an active seeker, had a limited homing range, and Raytheon later developed a semi-active seeker with the radar transmitter stationary at the missile firing point while the receiver, which picked up the signal bouncing off the target, was located on the missile.

Based on Raytheon's success in missile seekers, the Navy awarded Raytheon a contract for the Sparrow air- to-air missile and the Army awarded Raytheon a contract for the Hawk ground-to-air missile. These missile systems are now deployed by the U.S. and dozens of Allied nations around the world.

NASA Communications Systems

When the world stopped to watch as astronauts Neil Armstrong and Colonel Edwin Aldrin stepped out of Apollo XI and drove an American flag into the moon's surface, Raytheon watched with special interest. The Apollo XI had been sent aloft by a Saturn booster rocket, made a successful trip to the moon and returned safely to earth. It was considered the greatest engineering feat in history, and the United States had invested immense amounts of time, scientific explorations, engineering talent and money to achieve it. Raytheon had contributed to the effort at the highest level, by designing and manufacturing the computer that guided the space vehicles in their historic journey.

Patriot Missile System

In 1967, Raytheon was awarded a contract for the U.S. Army's Surface-to-Air Missile Development (SAM- D), a missile designed to provide defense against high-performance aircraft. In development for nine years, the SAM-D entered full-scale production in 1976, at which time it was renamed the "Patriot" in honor of the U.S bicentennial celebration. In 1986, the Patriot Advanced Capability Phase 1 (PAC-1) missile, upgraded with anti-tactical missile capabilities, intercepted and destroyed a Lance missile in flight, successfully proving itself against short-range ballistic missiles.

It was the 1991 Persian Gulf War that put Raytheon's Patriot to the real test of military conflict when upgraded Patriot Advanced Capability Phase 2 (PAC-2) missiles successfully intercepted and destroyed Iraqi Scud missiles fired at Israel and Saudi Arabia. Credited with saving lives and changing the course of the war, the Patriot earned worldwide recognition as the first missile in history to successfully engage a hostile ballistic missile in combat.

DIVERSIFICATION

Despite its initial commercial success in the radio tube market, much of Raytheon's growth since its inception had been driven by international conflict. By 1964 more than 80 percent of Raytheon's revenues came from the U.S. government. But Raytheon, which had been founded as a commercial, not a defense, manufacturer, knew that its future stability would require a greater balance between its commercial and government sales. Under the direction of Thomas L. Phillips, who was named president of the company in 1964, Raytheon set out aggressively to diversify its largely defense-based product lines through a series of strategic commercial acquisitions.

Having already acquired Apelco-Applied Electronics in 1959, a move that significantly expanded the company's involvement in commercial marine electronics, Raytheon was focused on expanding and diversifying its commercial operations throughout the 1960s, while remaining a major player in the U.S. government's military and space efforts. Raytheon added Boston-based D.C. Heath and Company, a textbook publisher; Tulsa, Okla.-based Seismograph Service Corporation, an oil and gas exploration services provider; and Topton, Pa.-based Caloric Corporation, a major manufacturer of gas ranges. The acquisition of Amana Refrigeration Company in 1965 not only helped make the Raytheon Radarange a household name, it added an array of small and large household appliances to its product offering. The Badger Company, a Cambridge, Mass.-based petroleum and petrochemical plant designer and builder was acquired in 1968, and in 1969 United Engineers & Constructors, then a power plant designer and builder based in Philadelphia, was purchased. By the end of the decade, the company had grown its commercial business to 45 percent of overall sales.

With its appetite for acquisitions somewhat satiated, Raytheon continued to expand its commercial operations at a slower pace throughout the 1970s and 1980s. The company acquired Iowa Manufacturing, a manufacturer of road building and construction equipment; Data Logic, a computer software company; Speed Queen, a manufacturer of washers and dryers; Beech Aircraft Corporation, a leading manufacturer of business and small commercial airplanes; and Seiscor Technologies Inc., a manufacturer of telephone equipment.

RAYTHEON IN THE '90s

Based in Lexington, Mass., Raytheon Company is today a global technology leader that operates in three core business segments: defense and commercial electronics, business aviation and special mission aircraft, and engineering and construction.

In order to focus on markets in which it is a leader, Raytheon divested several non-core businesses in the 1990s, including its D.C. Heath educational publishing unit; home appliances, heating and air conditioning businesses; Commercial Laundry business; and the Semiconductor, Switchcraft and Seiscor Technologies operations.

Electronics

Defense and Government Electronics

The end of the Cold War and the resulting decline in the U.S. defense procurement budget brought fundamental changes to the defense industry. Raytheon responded to these changes by making a number of key acquisitions and consolidating its defense businesses.

The company strengthened both its commercial and defense electronics systems capabilities in 1992 by acquiring California-based AMBER Engineering, a designer and producer of infrared components and focal plane arrays, the building blocks of infrared seeker technology. In early 1995, Raytheon merged its Missile Systems Division and Equipment Division, creating Raytheon Electronic Systems. Later that year, Raytheon acquired E-Systems, a defense and government electronics company with a specialty in intelligence, reconnaissance and surveillance systems, command and control, specialized aircraft maintenance and modification, guidance, navigation and control, communications and data systems. During 1996, Raytheon acquired the aircraft modification and defense electronics businesses of Chrysler Technologies and consolidated them into Raytheon E-Systems.

Competition within the defense industry continued to intensify, marked by a series of megamergers between leading defense companies. In order to maintain critical mass in defense electronics and compete effectively in the top tier of the industry, Raytheon opted to pursue a strategy of acquisition and merger. The company acquired the assets of Texas Instruments' Defense Systems and Electronics business in July 1997, adding complementary businesses and expertise in advanced defense systems, including precision- guided weapons, anti-radiation and strike missiles, airborne radar, night vision systems and electronic warfare systems.

In December 1997, Raytheon merged with the defense operations of Hughes Electronics, a leading supplier of advanced defense electronics systems and services. The $9.5 billion transaction with Hughes is the largest in Raytheon's history.

With the completion of the Raytheon/Hughes merger, Raytheon announced the formation of its new, consolidated defense business--Raytheon Systems Company--bringing together the talents and capabilities of Raytheon Electronic Systems, Raytheon E-Systems, Raytheon TI Systems and Hughes Aircraft Company. One of the world's leading defense electronics businesses, the Washington, D.C.-based Raytheon Systems Company is organized into five major business segments that bring together all the resources of the company in key product areas. These five segments are: Defense Systems; Sensors and Electronic Systems; Command, Control, Communication and Information (C³I) Systems; Aircraft Integration Systems; and Training and Services.

Applying Defense Technology to Commercial Markets

Since the end of the Cold War in 1991, the U.S. Department of Defense, Raytheon's largest customer, has reduced defense procurement by 60 percent. Since that time, Raytheon has focused on converting its sophisticated defense technology for commercial markets where appropriate. Raytheon today is successfully expanding its defense technologies into non-defense electronics markets such as air traffic control, data, image and information management, transportation and communications. In the course of this decade, Raytheon has parlayed its expertise in military radar to become the global air traffic control leader.

The conversion of defense is helping to fulfill the promise and needs of a changing world, and has led to the development of such advancements as Terminal Doppler Weather Radar, which detects deadly wind shear in airport terminal areas; the introduction of commercial fishfinders whose function is based on submarine sonar technology; the development and maintenance of a nationwide computer network to catalog and track student loans for the U.S. Department of Education; and the development of infrared night vision for automotive, law enforcement, search and rescue and industrial applications. The company has won key contracts for the IRIDIUM® global satellite communications system and wide-area surveillance systems for environmental and resource management and has developed the Personal Rapid Transit system, an electrically powered, totally automated transit system which continuously transports passengers non-stop from their point of departure to their final destination.

Commercial Group

Raytheon Marine is one of the world's leading suppliers of marine electronics and serves every major marine market in the world from recreational boats to ocean going tankers. The division manufactures a wide array of marine electronic equipment, radars, depth sounders, radios, autopilots, fish finders, navigation aids, global positioning system (GPS) receivers and other marine electronics under the Raytheon brand names in the U.S. and abroad. In 1995, Raytheon acquired the marine navigation business of Anschutz of Kiel, Germany, and in 1996, acquired the marine communication assets of Standard Radio AB of Sweden.

Through its Advanced Device Center, Raytheon is on the forefront of commercial microelectronics growth, specifically in the area of satellite technology. Originally chartered to provide its microelectronics expertise for defense-based applications, today Raytheon's Advanced Device Center is playing an integral role in the development of direct broadcast satellite television receivers, wireless local area networks, and next- generation digital cellular phones based on its gallium arsenide Monolithic Microwave Integrated Circuit (MMIC) technology. In addition, Raytheon developed the transceiver antenna systems for the Motorola IRIDIUM® global satellite communications project, which is designed to provide voice, paging, data, facsimile and location services anywhere in the world.

Acquired by Raytheon in 1972, Cedarapids, Inc., has been in the forefront of construction equipment technology for 75 years. Its crushing and screening, asphalt mixing and asphalt paving machinery is known the world over for quality and dependability. The Grayhound Rubber Track Paver and MVP Rollercone Crusher are the latest additions to the company’s continuing tradition of technological leadership in the industry.

Engineering and Construction

Raytheon Engineers & Constructors was formed in 1993 with the consolidation of the assets and operations from more than a dozen individual subsidiary companies into a single functional organization. Raytheon added to this core in the 1990s through strategic acquisitions of selected assets of Ebasco Services, which bolstered Raytheon's position as a leading contractor to the power industry and strengthened the company's capabilities in such areas as infrastructure and construction. In 1995, Raytheon acquired the assets of Litwin Engineers & Constructors, which expanded Raytheon Engineers & Constructor's presence in the oil and gas and petrochemical industries. And in 1996, assets of Rust International Inc. were acquired, enabling Raytheon to gain a prominent position in the pulp and paper industry and to broaden its presence in the southeastern U.S.

Today, Raytheon Engineers & Constructors is organized into six major business lines: Energy, Process, Metals & Mining, Pulp & Paper, Infrastructure and Chemical Weapons Destruction. The company has offices around world and is one of the world's largest engineering, construction, operations and maintenance organizations.

Aircraft

With one of the most extensive product lines in the general aviation industry, Raytheon is considered to be a world leader in aircraft design and manufacturing as well as in providing service, logistics and support. In 1993, Raytheon acquired Corporate Jets, Inc., from British Aerospace and renamed the business Raytheon Corporate Jets; a year later, the company merged Beech Aircraft with Raytheon Corporate Jets, creating Raytheon Aircraft Company.

Based in Wichita, Kansas, Raytheon Aircraft designs and manufactures the most successful turbine business aircraft series in the history of aviation, the Beech King Air; the Hawker 800XP--the world's most popular mid-sized business jet with nearly 50 percent of the world's mid-sized jet market; the Beechjet 400A light jet; piston-powered aircraft including the single engine Beech Bonanza B36TC and A36 and the twin engine Beech Baron 58; the new Raytheon Premier I, a revolutionary entry-level business jet; the Hawker Horizon super mid-sized jet; and the Beech 1900D Airliner, rated among the best regional aircraft by Professional Pilot magazine.

Raytheon Aircraft supplies special mission aircraft for the U.S. military and government and its allies and was named the prime contractor to develop and deliver the Joint Primary Aircraft Training System--known as the T-6A Texan II--to replace the aging Navy T-34C and Air Force T-37B. The T-6A Texan II will become the primary trainer aircraft for the next generation of Navy and Air Force entry-level student aviators to develop their ability to operate advanced military aircraft. Under the multi-billion dollar JPATS program, Raytheon Aircraft will deliver up to 711 trainers through 2017.

CONCLUSION

We of the 20th century have witnessed more change in our daily lives than in any other century. When Raytheon was founded, electricity was still a luxury, communication was by way of mouth, and the United States lay exposed and vulnerable to enemy attack. Much has changed.

Raytheon's original charter of 1922 was to "engage in the manufacture, design, production and sale of machinery, motors and their components." Though the founders of Raytheon were dreamers of science and business, they could never have imagined the extent to which their company would actually contribute to the progress and constant innovation that have shaped the 20th century.

Today, Raytheon is one of the top industrial companies in the United States and serves customers in more than 80 countries.

Still firmly grounded in the principles and application of scientific-based technology that have guided Raytheon since its inception, the company has put the pieces in place to pursue its goals for the future: to become a more global company, to remain a leader in defense and government electronics, to continue to grow its commercial business in both sales and profitability and to continue to expand defense technology into new commercial markets.
 
 

RAYTHEON COMPANY EXECUTIVE MANAGEMENT

Presidents
 

 

Chief Executive Officers
First established in 1975
 

 

Chairman of the Board of Directors
First established in 1948
 

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Last Updated January 1999