IW Best Plants Profile - 1999

More Than Rocket Science There's plenty of management savvy, too, at Raytheon Missile Systems. By William H. Miller Like a proud papa, Jerry Lockard, general manager of Raytheon Co.'s sprawling Raytheon Missile Systems (RMS) facility on the edge of the desert just outside Tucson, smiles to himself at what he's hearing during a meeting of his top staff. It is near the end of the budget year, and money is tight. One of his vice presidents, Bill Leonard, reports that a promising, unexpected contract opportunity has arisen for the line of land-combat missiles he heads. Unfortunately, Leonard can't make the necessary $1.5 million investment to develop a bid because his budget is shot. One by one, however, without prompting from Lockard, other managers in the room raise their hands and volunteer funds from their own dwindling budgets to make up Leonard's shortfall. Problem solved. Leonard gets the money. The meeting moves to the next agenda item. Reflecting on the incident, Lockard, who also is senior vice president of Raytheon Systems Co. (of which RMS is a business unit), says that this sort of cooperation by his management team "now happens all the time. It didn't used to. It is an example of how our people are focused on the enterprise -- of how far we have come." The plant indeed has journeyed a long way. It now is one of Raytheon's top-performing businesses -- "the preeminent missile plant in the world," says Raytheon Systems CEO Bill Swanson. But to achieve that status, RMS has had to overcome a daunting series of challenges. One is its sheer size. The plant stretches over 3 million sq ft in 24 major buildings and soon will have 9,000 employees -- among the most ever by an IW America's Best Plants winner. If nothing else, this creates a prodigious communications headache. Another is the complexity of its products -- 19 types of precision-electronic tactical missiles such as the Advanced Medium Range Air-to-Air Missile (AMRAAM), Tomahawk, Stinger, Sidewinder, Rolling Airframe Missile (RAM), Sparrow, Standard, Javelin, and Leap. The plant designs, builds, and tests them, installs munitions on them, and markets them to an array of demanding customers -- the U.S. military services and 44 foreign governments. As one local resident, a passenger in an airliner taking off from nearby Tucson Airport, commented to a seatmate while looking down at the plant: "That's the Raytheon plant. They actually do rocket science down there." The complexity of RMS products requires the plant to conduct extensive advanced training, averaging 36 hours a year for production employees. It also creates a formidable supplier-relations task. Even after a concerted campaign to pare its supplier base by two-thirds in the last three years, RMS still counts no fewer than 1,073 suppliers, many from overseas. As if these challenges weren't enough, the plant faces constraints on its flexibility. For one, it is unionized; employees are represented by the International Assn. of Machinists & Aerospace Workers and the International Union of Operating Engineers. For another, it must deal with foreign governments, which increasingly are joint-venture partners with RMS on missile programs. Moreover, because it is a defense contractor, it must abide by Pentagon acquisition regulations not imposed on manufacturers of commercial products. More than 100 government oversight personnel are permanently located at the plant. Of all RMS' challenges, however, none is bigger than its need to manage a remarkable melange of cultures. Consider the plant's history. The facility opened in 1952 as part of Hughes Aircraft Co., but by 1992 its employment, once as high as 9,000, had dwindled to 3,900 with the ending of the Cold War. In that year Hughes acquired the missile business of General Dynamics Corp. and transferred seven product lines to Tucson from GD plants in San Diego and Pomona, Calif. "We moved nearly 3,000 families to Tucson," marvels Chuck Anderson, vice president of the AMRAAM product line. "It probably was the largest personnel move in corporate history." Just as the plant was absorbing that influx, in December 1997 Hughes sold its defense-electronics business, including the Tucson facility, to Raytheon. Earlier, Raytheon also had acquired E-Systems Co., a defense-electronics firm, as well as the defense and electronics arms of Texas Instruments Inc. (TI). This year Raytheon has been consolidating the missile operations of all these firms in Tucson, creating a second enormous inflow of engineers and production personnel. Mainly they're coming from Ray-theon's former missile plants in Andover, Mass., Bristol, Mass., and Tewksbury, Mass.; TI's facility in Lewisville, Tex.; and a former Hughes operation in Canoga Park, Calif. Altogether, RMS has had to assimilate the cultures of five separate companies (Hughes, General Dynamics, Raytheon, TI, and E-Systems) and eight manufacturing sites (counting Tucson itself). Simultaneously, to meet stepped-up business demand, the company has been recruiting some 1,400 engineers -- a difficult assignment in the labor-short U.S. economy -- and incorporating them into the workforce. All this integration hasn't been easy. One RMS staffer recalls that long after the Hughes-GD merger, "people still wore ID tags around their necks that identified them as 'Hughes' or 'GD' employees. There was a definite feeling of separatism." No longer. Now everyone identifies with Raytheon. Lauds one customer, Rear Admiral William W. Cobb Jr., a missile-program officer for the U.S. Navy: "They [RMS] have done a tremendous job of assimilation. Their transfer of people is on schedule and is going better than expected." How has RMS created this unity? "We owe much of it to Vision 2005," Lockard says, referring to an "alignment tool," originally called Vision 2000 but updated this year, that was developed in 1995 by a cross-functional team of employees. The vision is printed on placards ubiquitiously displayed throughout the plant; employees soon will wear a copy of it on a card around their necks. It incorporates short statements on RMS' overriding goals, beliefs, commitments, and steps to success. Vision 2005 drives RMS' strategic and tactical planning. Work teams use it to develop annual goals. It also is the umbrella for the plant's pervasive -- "bordering on compulsive," one supervisor says -- use of metrics. Along with Vision 2005, Lockard credits RMS' leadership structure for smoothing the cultural clash. Two coordinating councils, which meet weekly, report to him. One, the Operations Council, oversees functional activities in the plant; the other, the Program Council, focuses on customers and business development. Leaders of the two panels sit on the President's Council, which meets at least once a month and plots RMS' overall strategy. "Earlier in my career, when I managed a plant with 80 people, I knew 'em all," Lockard reflects. "And I knew what their [plant-floor] problems were. There's no way I can do that with 9,000 people. The councils allow me to stay on top of what's going on." Still another unifying tool is the plant's "flowdown" communications process. Once a quarter Lockard spends a full day giving a series of state-of-the-business presentations to the plant's 700 first-line supervisors and team leaders. They are required to relay the information personally to their employees within 30 days. Union leaders get a presentation, too. None of RMS' processes, however, has been more important than its four-year-old agile-manufacturing initiative. Focusing on elimination of waste and involvement of people, the program has brought dramatic plant-floor improvements. Rick Jennette, a supervisor in the unit of the plant that builds missile guidance-system equipment, cites an example. "Before we started the agile process in 1996," he says, "our cycle time was between 40 and 50 days. Now it is between 10 and 15." Similarly, Michael Crisp, director of the Stinger product line, reports the initiative has enabled his unit to boost its production rate from 80 missiles a month to 250. "We were able to deliver an order to the National Guard a year in advance," he says. The agile program is a core tool in RMS' latest initiative -- deployment of the new, corporate-wide Raytheon Six Sigma process. Nine employee teams are adapting the process to RMS in 32 specific project areas. The plant sees the initiative not only as a mechanism to further assimilate its disparate cultures, but also to boost its performance. Improving that performance will take some doing, because RMS already is operating at what many plants would consider an optimum level. An impressive list of metrics and honors attest to its excellence. Further testimony comes from Raytheon Systems CEO Swanson. "The Tucson plant has emerged as a leader in many key initiatives," he says, calling it a "state-of-the-art facility," which gives Raytheon a "strategic advantage" in the world marketplace. Yet it is testimony from customers that counts most. And the Navy's Cobb, for one, is lavish in his praise. "Walk onto a ship," says the admiral, "and you can tell in two minutes whether it's a good one or a bad one and whether morale is high. It's the same with an industrial plant. You get a good feeling when you walk into the Tucson plant. It is evident right away that it has a people-oriented culture." Good as RMS is, however, its work isn't over. It must complete its culture-assimilation task. It isn't satisfied with its inventory levels. And it must answer Raytheon President and CEO Dan Burnham's challenge that each of the company's businesses achieve a compounded annual growth rate of 10% to 12%. That means, says Lockard, that the plant will have to increase its exports, currently 20% of its revenues. But RMS is confident it's up to the tasks ahead. Ask Brock McCaman, an AMRAAM program manager. Describing how his unit has cut the cost of a missile from $1 million to $250,000 in seven years, doubled deliveries in 12 months, and improved reliability to three times what RMS contracted for, he has a matter-of-fact explanation: "We're starting to figure it all out." You get the idea that the plant's 9,000 other RMS employees would say the same thing.

At A Glance
  • 84 practices cited as "industry best practices," the most ever by a U.S. Navy contractor, by 28-person Navy survey team in 1998
  • In 1997 became one of only three plants ever to win the Arizona Pioneer Award, the state's highest award for quality
  • Hosted 2,500 visitors last year -- half of them international
  • Agile-manufacturing initiative produced cycle-time improvements ranging from 40% to 92% in various missile lines; performance-to-schedule improvements from 60% to 100%; square-footage reductions from 12% to 78%
  • Reduced defect rates 50% a year between 1994 and 1998
  • On-time-delivery -- 99%
  • Achieved energy savings of $15.6 million since 1996
  • Reduced chemical consumption and waste generation by 93% during last decade
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