Defence of the peace

Business confidence in Northern Ireland is still high enough for the UK subsidiary of defence electronics giant Raytheon to site a multi-million pound software development centre there. The company’s managing director tells David Fowler why it chose to lo

The future of the Northern Ireland peace process and the Good Friday agreement remain uncertain. In the past week alone, controversy has raged over the status of the IRA ceasefire, prisoner releases and the future of the Royal Ulster Constabulary.

But it’s not all bad news. A ceremony last week to mark the setting up of a software development centre in Derry by Raytheon Systems Limited, the UK subsidiary of US defence giant Raytheon, proves that optimism in the province has not been too badly dented.

But why did the company decide to set up in Northern Ireland?

`We were initially working in Northern Ireland on the Astor radar programme with Shorts [Bombardier Aerospace’s Belfast-based subsidiary] and we were encouraged by the environment,’ says Raytheon Systems managing director Peter McKee. `Tony Blair met our chairman in the US and said: “Why don’t you come and look?” John Hume [MP for Derry] and David Trimble were influential in pressing the case.’ Hume, Trimble and Northern Ireland minister George Howarth all attended last week’s ceremony.

`The education system is also good,’ continues McKee. `The universities produce a lot of software graduates. Many used to leave Northern Ireland, either for political or economic reasons, and quite a few would like to go back – and we can provide exciting and interesting projects to work on.’

McKee seems unfazed by the possibility that the peace process could unravel. `You can’t pretend that there aren’t worries, but the effect on normal life is less than the impression one gathers from the front pages of the newspapers,’ he says. `Getting companies to commit themselves to an industrial infrastructure is the only way to get people to concentrate on building their lives and on the future.’

Raytheon expects to hire 17 people for the new centre by the end of the year, and 100 by the end of next. The target is 150, but the eventual number is not limited, says McKee. With a world shortage of good software production capability, growth of the centre will depend only on attracting the right staff and successfully completing projects.

The centre will produce items such as air traffic control systems (also undertaken at Harlow in Essex and in Massachusetts); training sub-systems for Astor; and testing and simulation software for the yet-to-be-awarded beyond-visual-range missile programme. `Generally all our systems have a significant software content,’ says McKee.

Siting the software centre in the UK helps meet the requirement for local content specified in many defence contracts. McKee says: `It’s good to have international centres of excellence.’

Thus Harlow is Raytheon’s world centre for secondary radar. Glenrothes, Scotland, specialises in electronic power modules and makes key components for the Amraam missile, and so on. The centres also broaden the firm’s outlook and expose it to new ideas.

`We intend to build a close relationship with Queen’s University and the University of Ulster,’ says McKee, who sees the flow of ideas as `a two way street’. Already the company and universities have had talks about course content and some modules are being modified.

Making modules more focused on the type of work the company is doing helps `point students in our direction’ when they look for industrial placements. Students also get more out of it: `I think we all learn better when it’s related to something practical.’

McKee, who trained as an accountant, has worked with Raytheon in a range of its UK and European companies for over 30 years. He joined the company’s Cossor Electronics subsidiary in 1966, moved to software systems company Data Logic in 1977 as finance director and became the firm’s managing director in 1985.

For two years in the 1990s he worked in Germany and Spain, restructuring electronic controls business BSG. In 1993 he became managing director for UK operations, after the acquisition of British Aerospace’s corporate jet business.

He was appointed managing director of Raytheon Systems Limited last year after Raytheon’s merger with Hughes and Texas Instruments’ defence electronics businesses.

Working for the UK subsidiary of a US defence company gives McKee a different perspective on European defence integration. The stated aim of European governments may be to create a single European defence and aerospace giant on the scale of Boeing, Lockheed Martin and Raytheon itself, but as McKee points out: `They have also said they don’t want to see a Fortress Europe.’

The adverse effects of a fortress would work both ways, he argues: no-one wants to exclude US expertise and technology from European defence contracts and European firms do not want to be excluded from US markets.

Moreover, Raytheon chairman and chief executive officer Dan Burnham has said the company will seek further European alliances. McKee says: `A single European defence company would stifle competitiveness and innovation. It wouldn’t be healthy.

`Europe needs a strong defence industry. But we’re a UK firm: we’ve been here 40 years. Who owns us is not as important as who develops the technology. We aim to show we can do that development.’

Peter McKee at a glance

Age: 56

First job: Left school to join Raytheon subsidiary Cossor Electronics as a budget analyst. Studied to become a chartered cost and management accountant

Current job: Managing director, Raytheon Systems Ltd