Microelectronics and Castings Remain Supply Chain Challenges for Raytheon

Pratt & Whitney's Geared Turbofan PW1100G-JM engine on an A10 Test Stand at the West Palm Beach Engine Center in Florida. (Image: Pratt & Whitney)

Raytheon Technologies Chief Executive Officer Greg Hayes and Chief Operating Officer Christopher Calio said microelectronics and engine castings were among the individual aircraft components that continue to challenge its aerospace and defense manufacturing supply chain.

"The constraints are those that we've talked about previously. I said, we saw some improvement on castings," Calio said in response to an analyst question during the earnings call. "It's not where it needs to be. So, castings is still there. Rocket motors continues to be a pacing item at RMD. And microelectronics, while the lead times have stabilized, they haven't come down and back to 2019 historical levels."

Both Calio and Hayes have been referring to challenges with castings and microelectronics in earnings calls dating back to the first quarter of 2022. With structural castings, the shortage has been the result of a lack of available trained workers to build and supply them for the Pratt & Whitney division of Raytheon.

Calio said castings and microelectronics shortages will continue to be a "headwind" in 2023.

"On microelectronics, a lot of that was about the supply base understanding our demand, and then working some interesting agreements on making sure that we had our priority place in line,” Calio said. "With what you're seeing on the consumer side in terms of microelectronics coming down, we expect to see our allocation get better in that area. But again, still not where it needs to be here in 2023."

In addition to the supply chain challenges discussed by Calio and Hayes, Raytheon also announced a plan to realign its business units into three segments. The three focused business segments will be Collins Aerospace, Pratt & Whitney, and Raytheon. The company plans to implement the reorganization during the second half of 2023 and will provide additional updates on its progress over the coming months.

Additionally, the company announced that Roy Azevedo, President of Raytheon Intelligence & Space (RIS), will retire from his role and serve as an advisor to Calio to help with the transformation.