GLOBAL DEFENSE MARKET
FARNBOROUGH NEWS: Raytheon Expects Skyrocketing Demand for Munitions
Marine Corps photo
FARNBOROUGH, United Kingdom — The demand for Javelin, Stinger and other munitions in Ukraine could strain the industrial base, necessitating new manufacturing partnerships and processes to weather the storm, according to Raytheon’s CEO.
The United States has already donated hundreds of millions of dollars in Javelin anti-tank munitions and Stinger self-contained air defense missile systems. But Kyiv is quickly running through supplies in its fight against Russia, spurring other NATO members to pitch in despite their own lack of munitions, said Wes Kremer, president of Raytheon Missiles and Defense.
“What Ukraine has proved is that it really is important not only to have that deterrent capability, but to be able to have enough quantities, because as we saw, stores get depleted very quickly in a shooting kind of thing,” he told reporters at the Farnborough International Airshow July 19.
The company will keep a laser focus on strengthening supply chains and readying the industrial base for increased demand from NATO members for munitions, Kremer said.
Many NATO countries have already pledged to increase defense spending. Governments are acknowledging the need to increase their “magazine depth” alongside modernizing systems, he said.
Raytheon is working to meet demand by increasing production of Stingers for the U.S. Army, but the process will be a challenge, he said. Production initially started for the munition in the early part of the century and hasn’t been updated.
“There was really no addressing of the obsolescence and several of the components’ lifetime buys were done,” he said.
Kremer noted Raytheon is a few months into the process of producing 1,300 missiles, and it is clear how much work is ahead. Some suppliers haven’t produced components in “years or decades” because of lifetime buys, he noted.
“It's not just getting the assembly line going. It's all the way down to the lowest level of supplier,” he said.
The supply chain challenges are exacerbated by the COVID-19 pandemic. Staff shortages and lack of materials such as microelectronics have plagued every industry.
“When you see a demand, a surge demand, like we're seeing in Ukraine, and then you couple that with the timing of the global pandemic, we're really stretched on this supply base worldwide,” he said.
For the company to stay relevant and meet demand, it will bolster supply chains using industrial partnerships.
Raytheon has always had business relationships with NATO allies, he said. But in the past, the collaboration has stemmed from starting production on a European-centric platform.
Given the greater demand for allied interoperability, the company will switch focus to building common products that can be used by all allied nations, Kremer said.
“What we're seeing not only in Europe but around the world is that we want interoperable systems, we want — sometimes — the same systems,” he said.
The interoperable platforms will still have localized suppliers that could build subsystems or components or do final assembly, he said.
One example of the kind of relationship Raytheon will build on is the national advanced surface to air missile system. It’s deployed in both Eastern Europe and the United States and is made in partnership with Norway.
“We actually already do a lot of those [partnerships] here in Europe, and we're looking for opportunities to grow that,” he said.
Raytheon is preparing to hunker down. “We believe it’s not going to be a big spike and then it will go away,” he said.