There remains a lot of uncertainty about the future of Raytheon Aircraft Co., but at least its 6,300 Wichita employees now know what company will control that future, thanks to the $3.3 billion deal announced Thursday. And it’s not as if the owners of the newly named Hawker Beechcraft Corp. are unknown entities. Since the Canadian buyout firm Onex Corp. turned the former Boeing Wichita commercial plant into Spirit AeroSystems last year, the new company has been thriving and hiring. And the other Raytheon buyer, Goldman Sachs, is only the biggest name on investing these days, having just reported the largest yearly profit in Wall Street history.
Posted by Rhonda Holman
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23 Comments
I expected more action on Raytheon’s stock today. So far, nothing much either way. Perhaps it will when the actual sale gets closer.
SOB, I suspect that given the sale has been considered a “sure thing”, with only the potential buyers and amounts somewhat uncertain, for a while, the traders have already taken this into account. Thus, the speculators did their buying or selling weeks ago.
You may be right.
Now if my son-in-law would just get hired at Raytheon, I’d be a happy camper. :)
Of course this sale will be a good thing for Wichita. Onex has already demonstrated its ability to perform. Now, the key will be to get all the old-school Beech guys gone.
Hopefully, the union will follow the path of the Spirit machinists and behave like owners.
KSGolfnut, I don’t know why you would want all of the Old-School Beech guys gone… It’s the East Coast guys we need gone – the old Beech Guys were around before Raytheon when Beech was a thriving and very succesful business. We didn’t start the death spiral until after Raytheon sucked all the money out of us. It’s a good thing that this deal is going thru the profits and cash flow will stay with the new company and it’s investors and not get used by Raytheon with only minimial amounts flowing back to the Employees… I welcome this change and can’t wait for it to be done.
As a former BeechCrafter,I second the motion.Here, here!
It also puts all of Wichita ‘eggs’ into a larger basket.
If Onex wishes to cut its losses, guess which part of the basket will spill out first.
What “losses” is Onex going to “cut,” TRACY?
Beech and Tracy – I don’t disagree that Raytheon + Beech was a bad deal. I’m a former employee there, too. But, I saw Raytheon dudes trying to implement new ideas and philosophies aimed at improving process flow and profitability. I also saw the old-school dudes fighting the evolution.
Now – all that being said – there was clearly no love between Raytheoners and Beechcrafters. And, the new boys did very little to try to foster a positive transition. So, let’s just chalk up the last 20 years of lackluster performance to “a bad marriage”.
Sorry about mis-identifyiong you as the author who prompted my comment, TRACY. I guess my question was for JM. I was let go when Onex completed its purchase of Boeing in 2005, and Spirit has done very well since the acquisition. :-)
JM,This new company will benefit greatly from having Spirit (also owned by Onex) in town. There will be numerous synergies enabling both companies to grow and prosper.
It’s a good deal for all three: Raytheon, Spirit and Wichita.
It’s been a damned long time since I worked there, so I think I’ll just duck out while I still can.
I left in 1998…wondering why I ever went to work there in the first place.
But isn’t this like having only one telephone company in town? Isn’t that a monopoly? Oh, I forgot, the shareholders will make a killing on the market so we don’t care. Free beer for everybody!
“But isn’t this like having only one telephone company in town? Isn’t that a monopoly? Oh, I forgot, the shareholders will make a killing on the market so we don’t care. Free beer for everybody!”
Actually it’s not, assuming that the Beech deal is the same as the Spirit deal. Onex is only an investor, they have no true “control” over the business and eventually they will probably sell their part of the company back to the company so that they would be completely out of the loop. It’s like flipping a house, they buy the struggling company cheap, build it up so that it starts making a lot of money, then sell their shares and move to another investment.
Dept. 805 1990-2004
Too late to do me any good.
I understand management has a third control?
The place is doomed.
People like Goofnuts is why.
R D TRUST me you don’t want anyone you care about working in that place. I wish I had not wasted so much time there.
The union out there is essentialy dead. Take a shovel and bury the place while it still has some dignity.
Canadian buyout firms are becoming a pain in everyone’s collective sides. They bought out a firm which I had invested in, now I have to pay Canadian Taxes as a U.S. Citizen with no choice or say in the matter.
And yeah, next time the Raytheon Employees or whatever name they will be going by ask for a raise, they may politely remind Goldman-Sachs of the multi-million dollar bonuses they paid out to their own employees, ignoring the rest of the invested firms.
In shorter words, the Canadian – Goldman Sachs will take the wheat and leave the companies they take over the chaff.
Good luck in the future on this.
One of the big questions I’m waiting to see answered is whether Golden/Oxen will invest some capital into the new company. There are a lot of things that need “fixin” at Beech/Hawk. I’m curious to see if the place will really be “on it’s own” as they say, or if it’ll get a shot in the arm to jumpstart some new projects.
Heckler,
I really wonder if Gold/Onyx want to be in the jet building business… Some have suggested that G/O will divest Plants 1,2 & 3 to “Spirit” and take Plant 4 and JPATS (military Trainer Division) to the new Hawker/Beechcraft company.
It will be interesting. I also don’t think they need to “invest” much into it. Just let the millions that it is making to stay in ICT rather than taking it back to Raytheon Stock Holders.
Oh, and if they were smart, no matter what happened, the first thing they would do is fire Schoster (sp).
I disagree re: Jim Schuster. He’s done a great job here.
I find your comments about “the jet building business” interesting, too, Tony. Trouble is, I think you have it a bit backwards.
It’s precisely because HB Corp (Hawker Beechcraft Corporation, the entity that’s set to purchase most of Raytheon’s holdings here) wants to be in the jet building business that they’d shed plants west of the runway. There’s been a big, ongoing “discussion,” begun among academic eggheads in American biz schools in the early 90s, that’s now spread to the real biz world and Wall Street big time.
To wit: what makes Toyota Toyota and Honda Honda? Both obviously sell automobiles, but what is the key difference, if any, between them? The answer is that Toyota is a world-class _assembler_ of automobiles while Honda is a world-class _manufacturer_ of auto engines (and maybe certain other auto sub-assemblies). Toyota is extremely successful at selling an auto that’s assembled from parts and sub-assemblies manufactured elsewhere. Honda is less successful at selling an auto that’s still largely manufactured by Honda. The “success gap” between Toyota and Honda is growing, btw.
Everybody who’s not a world-class manufacturer would love skip right over the manufacturing part and simply become a world class assembler like Toyota. BH Corp will certainly inherit a company that’s something less than world-class when it comes to manufacturing aircraft and aircraft sub-assemblies. This is particularly true when it comes to new jet aircraft. Who can blame BH for wanting to shed all the parts-mfg facilities, all of which are located west of the runway, and retain Plant 4 where assembly takes place? Many strategy types can be forgiven, I think, for concluding that in 2007 the real value in the company emerging from Raytheon (a shell of the company that merged with Raytheon more than two decades ago) lies east of the runway there.
In my opinion, it’s due largely to Schuster’s leadership that BH Corp commands such a large price ($3.3bn vs the much bandied-about $2.5-3bn we’ve all read about). If it hadn’t been for Schuster then Onex might not have been interested and who knows what would have happened to Beech when Raytheon had decided to shed non-core businesses.
Me, I think Onex will be a first-class owner. This is not an asset acquisition like Spirit was. Instead Onex is buying the whole enchilada. Make that the enchilada that’s been woefully underinvested for decades now. Onex will fix that, and quickly I think.
In my opinion, it’s a great time to be a local Raytheon employee.
file,
i agree, it is a good time to be a RAC or should i say a BH employee…
It will be interesting i will say…
I think that BH and the western plants will “separate”. I think that Spirit is in the business if making parts and sub assemblies.
I think BH will transition into a larger sub part assembler and a jet builder. Now, i do think they will keep on the smaller, plant 2 stuff too, the bonanza etc…
I think it makes great since, taking the manufacturing of parts “away from BH” and sending it to Spirit. Now, ill bet that if that does happen that spirit will take over plants 1 and 3 and probably move some of their operations from Boeing to RAC, especially if they own it.
It will be interesting…
Now, about Shuster, im split on him. When I was there, i saw him make some questionable decisions. You may be right about shuster getting onyx’s attention but just seeing him move from Mahogany Row back to “Darths Helmet” and the reasoning around that. Also the lavish personal spending the company did on his behalf makes me wonder, whats really in it for him. Remember, shuster doesnt live in Wichita. He lives in Texas and flys back.
Shuster will be gone. Guaranteed.