The chief executive of Raytheon Technologies said today he does not expect the defense budget to grow or decline, but there will be some shifted investments.
Speaking at an Economic Club of Washington, DC event today, Greg Hayes said the company has tried to align itself with the National Defense Strategy as it readies for an anticipated flat defense budget.
"The key is, of course, some programs will not survive," Hayes said of how DOD will approach its budget. "We're going to have to invest in new technologies . . . and we're going to have to sacrifice some other programs."
As a result, he added, "the defense industry itself, I think, has to rethink how procurement works and how we're going to work with the Department of Defense."
Meanwhile, Hayes said he also expects a different approach to work following the pandemic.
"I think fundamentally the office has changed," he said, adding that he expects a hybrid working environment in the future.
Hayes said Raytheon is offering employees "a small financial reward" to get vaccinated against COVID-19.
"Our hope is to get at least 80% of our people vaccinated," Hayes added. If employees don't want to be vaccinated for religious or medical reasons, "we're going to have to respect that, but we're also going to have to make sure we can keep the rest of the employee base safe."
Hayes also spoke out against proposed increases to the corporate tax rate, arguing that a higher tax rate will cut investments in innovation.
"I spend about $5 billion a year . . . on capital and [research and development] that I self-fund," he said, adding that President Biden's proposal would cost the company about $1 billion per year in cash taxes.
As a result, Hayes said, Raytheon might need to reduce its investment budget by 20%. "I'm not sure that's exactly what the president wants to have us do," he said.