Waltham, Massachusetts-based Raytheon Co said on Monday it will pare its business units down to four starting on April 1 to boost productivity and lower costs, resulting in annual savings of about $85 million and the elimination of 200 jobs.
Raytheon, maker of the Patriot missile defense system and other weapons, said the changes will not affect its financial outlook for 2013, which foresees a drop in earnings of up to 12 percent. The company has 68,000 employees worldwide.
The company's new structure will include four businesses focused on Intelligence, Information and Services, Integrated Defense Systems, Missile Systems, and Space and Airborne Systems. Parts of the former Network Centric Systems business will be added to each of the four units.
Raytheon and other big weapons makers are girding for declining military spending after more than a decade of sharp growth. Eager to maintain profits, many companies have announced cost-cutting measures, layoffs and structural changes to cut overhead and drive down the cost of weapons programs.
"Our new structure will help us enhance productivity, agility and affordability in a challenging defense and aerospace market environment," said William Swanson, Raytheon's chairman and chief executive.
Top Pentagon officials are trying to rejig their budget plans for fiscal 2013 after Congress passed a stop-gap measure averting a government shutdown this week that left intact over $40 billion in defense spending cuts on top of cuts already proposed by the Obama administration.
Raytheon's board also elected Thomas Kennedy, the former head of Integrated Defense Systems, to the new position of executive vice president and chief operating officer. He will lead the company's consolidation efforts and manage day-to-day operations, while contributing to long-range strategic planning.
Loren Thompson, a defense consultant with close ties to the industry, said the appointment of Kennedy as chief operating officer signaled the start of succession planning for the retirement of Swanson, who is 64.
Raytheon does not have a mandatory retirement age and Swanson has not announced plans to retire anytime soon.
The company said Daniel Crowley, who joined Raytheon from Lockheed Martin Corp in 2009, will succeed Kennedy as president of the integrated defense systems business, while Lynn Dugle will head the newly formed intelligence, information and services business.
John Harris, who had headed the technical services business, will be vice president and general manager of the new business unit, reporting to Dugle.
The missile systems business will be headed by Taylor Lawrence, who had been in charge of engineering, technology and mission assurance at Raytheon, while Richard Yuse will stay on as president of Raytheon's space business, the company said.
Raytheon shares closed 28 cents lower at $56.76.
(Reporting By Andrea Shalal-Esa. Editing by Andre Grenon)