How Arizona stands to benefit from Raytheon-United Technologies merger
“I think the possibility exists because Phoenix has a good business climate,” Zylstra said. “We have all the necessary ingredients to make this a possible place to expand.”
The planned merger between Raytheon Co. and United Technologies Corp. will likely mean big things for Arizona’s growing aerospace and defense ecosystem, including more jobs and further expansions in the state, local experts said.
Waltham, Massachusetts-based Raytheon Co. (NYSE: RTN) announced an all-stock merger of equals June 9 with Farmington, Connecticut-based United Technologies Corp. (NYSE: UTX), with the unified entity to be known as Raytheon Technologies.
The merger would mean Raytheon, which manufactures a variety of missiles in Tucson, would become an even bigger defense contractor behind Boeing Co., said Austin Yamada, president and CEO of the University of Arizona Applied Research Corp.
“RMS (Tucson’s Raytheon Missile Systems) is one component of Raytheon, so it would clearly benefit RMS and its share of the market,” Yamada said. “This is all good news for RMS and southern Arizona, in general. It will likely mean more jobs, and maybe other lines of business coming to Tucson.”
Raytheon, which has more than 12,000 employees in Tucson, is the seventh-largest Arizona employer, and frequently receives hundreds of millions of dollars a month in government defense contracts.
Recent contracts include a $355.5 million contract to refurbish and provide technology upgrades for up to 1,000 High-Speed Anti-Radiation Missiles, and a $419 million contract for the AIM-9X Sidewinder missile for a joint program with the U.S. Navy and Air Force.
United Technologies has at least two offices in the Phoenix area, and those offices could likely expand in the Valley, said Steve Zylstra, president and CEO of the Arizona Technology Council.
“I think the possibility exists because Phoenix has a good business climate,” Zylstra said. “We have all the necessary ingredients to make this a possible place to expand.”
Zylstra, who spent 22 years in the aerospace and defense industry, said the merger is “exciting” and not surprising in this industry.
This kind of consolidation is not unique, and I think it will make a pretty powerful competitor to Lockheed Martin,” Zylstra said. “The combined capability of these two companies is considerable.
The two merged companies boast $74 billion in revenue for 2019, 60,000 engineers and between $18 billion and $20 billion for a three-year return of capital, according to company information.
“I don’t think people should see this as a bad thing,” Zylstra said. “Hopefully it will lead to expansion and more job creation here in Arizona.”
Arizona boasts the second-largest employment in guided missile and space vehicle manufacturing in the nation, with 55,084 people who work in 563 aerospace and defense businesses. Aerospace and defense contributes $11.2 billion annually to gross state product, with average annual salaries at $89,265, according to the Arizona Commerce Authority.
“Raytheon is an incredibly important contributor to Arizona’s economy, with a $2 billion economic impact annually,” said Sandra Watson, ACA president and CEO. “The company currently employs 13,000 people in high-quality jobs, making it the largest employer in Southern Arizona. We’re very grateful to Raytheon for the significant investments they continue to make in Arizona.”
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