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Roy Norris,
President Raytheon Aircraft

"We want to position ourselves
as the low-cost-producer
in the industry"

We are rebuilding our manufacturing capability, and we are doing it using the latest technology, with the goal of positioning ourselves as the low-cost-producer in the industry. At the same time, we are equipping ourselves to bring new and revolutionary products into the market more quickly than our industry has ever seen before.

The first of these new products has already been launched - the Raytheon Premier I entry-level business jet - the most amazing combination of performance and big cabin comfort on today's market, for just $ 3.9 million.

And now, at this year's NBAA in Orlando, we are introducing the second - the next generation Hawker with more performance and value than any previous version.

These new designs are a direct result of the investment we've made and the work we've done to bring our aircraft design and manufacturing capability into the 21st century.

Our factory modernization program began nearly three years ago. By the time it is completed we will have made an investment of more than $ 150 million in design, development and production process improvements. At our principle facility in Wichita we have already built a world class headquarters office, extended our Plant Four final assembly complex to accommodate the Hawker program, started on a new building to house the Beech/Pilatus PC-9 MkII program, modernized Plant Three to handle the Premier I program, acquired a new building to house our research and development teams, and have just broken ground on the construction of a new, longer runway at Beech Field.

In the course of this initiative we've introduced automated procedures in our metal manufacturing processes, with high speed machining, automatic riveting and cellular manufacturing - all of this designed to reduce the cost of manufacturing and improve the quality of every airplane in our product line. We've also automated our composite assembly process.

To take further advantage of our new equipment, we've introduced new product development methods. These include "Integrated Product Teams", which have become part of our company's culture and which are playing a critical role in expediting our new product development.

We are concurrently developing both, product design and the process we will use to manufacture, with major savings in costs and development time.

Part of our investment has been in computerized design capability such as CATIA - time saving three dimensional interactive programs that speed the design process get it right the first time.

We are becoming a new and different company - unlike anything general aviation has seen before - and we are going to redefine what it means to be competitive in this industry.

For a very long time the major market for the products in this industry has been in the United States. But in recent years the market in the US began to flatten out and stop growing. Today it is largely a replacement market - although a very large one.

The major growth in our industry has shifted overseas. We anticipate that by the year 2000 fully half of our sales will be originating in the international market. The countries of Asia and Pacific Rim have enormous promise as does Latin America, which we are beginning to see right now. We are expecting to see recovery in Mexico and in Europe, and Africa promises to become a significant market in the years ahead.

Prime growth markets are for military trainers and regional airliners - particularly as economies and infrastructures around the world become more sophisticated. Also, we see a growing international market for business aircraft, as entrepreneurs globally discover the competitive advantage that airplanes can give them.

Special missions airplanes play a major role in the company's business.

We've recently appointed a new Vice President whose responsibilities are aimed directly at the expanding international government sector. One of his first assignments is the international sales and marketing program for the Beech/Pilatus PC-9 MkII. Last year the MkII went up against the world's best military trainers - and the MkII came away as the winner of the US Air Force and US Navy's Joint Primary Aircraft Training System (JPATS) competition.

Beginning in late 1998 we'll be delivering the first airplanes for the JPATS program. We are moving aggressively to capitalize on this advantage by mounting a strong and ongoing international marketing effort. We are projecting that our international deliveries of the MkII will eventually equal or exceed the JPATS total, which, when fully implemented, will reach 711 units.

Raytheon Aircraft has the most extensive product line in general aviation. It is the depth and breadth of our line that gives us a particular advantage in the special mission market, indeed putting us as the undisputed leader in this field. We have experience in building airframes in just about any special mission configuration imaginable. Roles such as search and rescue, maritime patrol, electronic intelligence, flight inspection, photogrametry, air ambulance, etc. Over the years we have delivered more than 1,500 special mission airplanes.

This year we received an order for another three search and rescue Hawker 800s for the Japan Air Self Defense Force. This means that ten out of the total requirement for 27 such aircraft have now either been delivered or are on order.

We've also been selected to provide eight Hawker 800XPSs, configured for electronic and signal intelligence, to the Republic of Korea. Four of these aircraft will be configured by Raytheon E-Systems, an example of how we are capitalizing on the synergy among the various divisions of Raytheon Company.

We are also delivering a version of the Beechjet to the JASDF for search and rescue crew training, similar to the T-1A Jayhawk trainers we are building for the US Air Force.

Within the special mission market we have some new concepts that promise to dramatically increase our competitiveness in the special mission arena during the next year.

By the end of this year we will be fabricating the first Premier I fuselage on our new seven-axis, computer controlled fiber placement system. This fully automated robotic machine lays plies of graphite material over complex curves on a mandrel to produce a fuselage. When we reach full production next year it will be capable of turning out a fuselage in a single day - a better fuselage, with more cabin space than if it had been made of metal, and assembled five times as fast.

This year we have also successfully developed and tested the Premier I's aft pressure bulkhead, a 11 lb structure that can withstand 64,000 lbs of load. Other work proceeding on the program includes engineering functional test on the fuel system.

We now hold firm sales positions for the Premier I running into the high double digits and we are having to seriously consider a higher than planned production rate. The first Premier I flies next year and we start customer deliveries at the end of 1998.

The Premier I is the first in a family of new products, and every member of that family is going to redefine the standards in some new segment of the market.

On the commercial side of the international market, we have recently signed a contract to supply aircraft for the first fractional ownership program in Africa. This order calls for four Hawker 800 XPS and four Beech King Air B200s which will be delivered in time for the program start-up in the spring of 1997.

Fractional ownership is already well established as a trend in the United States and is also being introduced in Europe. We have sold airplanes for this purpose to customers in both of these continents. We believe this is only the beginning of a worldwide trend and one in which we intend to remain a key player. Fractional ownership has the capacity to expand the use of corporate airplanes to companies all over the world that have not used them in the past. We see this as an important way to help "grow" the market. Raytheon Aircraft is the unchallenged leader in the business turboprop market and we are the leaders in 19-passenger airliners by a very wide margin. For both, myself and our 15,000 or so employees, this has to be the most exciting time in the company's history, and I am proud to be part of it.