Japan’s Defense Industry

The defense industry of Japan has an interesting history. It has never been as big as the defense industry of European countries or the US. Since the end of World War II, Japan was basically not allowed to have an army and usually a country’s military is the primary customer of defense industries. Downturns in Japan’s economy has also affected its defense industry. With that said, Japan is still a very modern country and forecasts predict that Japan’s defense industry will grow rapidly in the future. 

Currently Japan’s defense industry is growing at 3.90% annually and is valued at $58.6 billion US dollars. The key drivers in its growth are threats from North Korea’s nuclear program.

The main obstacles to growth lay within Japan’s foreign policy. Japan has had a problem with exporting too much in the past so now they have a ban on selling certain military goods to certain countries. This prevents Japan from doing joint-projects with other countries and prospering in the shared successes like other countries have been doing. Japan also doesn’t have the means to produce certain expensive defense technologies so it has to import them from other countries. This lowers their budget and they are not able to profit from economies of scale. Japan has also restricted itself to making tanks, helicopters, war planes and warships.

However, recently Japan has lifted its ban on its exports regarding military equipment. Japan now has the ability to enter joint developing programs with other countries which will increase its defense industries profits.

Japan spent roughly $700 million  US dollars on F-35 Jets from lockheed Martin because it isn’t able to make its own competitive jets. Japan seems to not have enough money to keep buying foreign military equipment so its government is pushing its defense industry to come up with its own equipment which will lead to growth in its defense industry.

Not Enough People

These days, there is a lot of talk about unemployment and people struggling to keep their jobs, however the problem for most defense companies today is that they are unable to find enough talent to fill all their positions.

Defense companies make more profit when they can push out more products and engineers and other skilled laborers are needed to do that. Engineers are needed to come up with new designs for products and skilled laborers are needed to assemble or oversee the assembly of those products since there is still a large amount of assembly that is not automated.

Last year, about 120000 engineers graduated with technical degrees in europe, but only 10000 of them decided to work in defense or aerospace companies. there are still plenty of open jobs in Europe that are unable to be filled due to lack of talent. The US has the same situation, not enough engineers are graduating, and the ones that do don’t tend to join the defense sector.

Studies show that most skilled laborers choose to join automotive companies instead of defense companies. I believe this is because they receive more benefits from being in a motor union and automotive companies are more accessible to them. Furthermore, security clearances cost a lot and defense companies might take that cost out of a laborers salary so that would lower their pay in addition to the fact that defense salaries are lower in general. Also, defense company labor requires more training that automotive labor but the laborers with good training tend to get better jobs in other places with better pay and badly trained laborers wouldnt be able to do the quality necessary in military grade equipment.

Perhaps defense companies have to invest more in their recruiting and marketing strategies to attract more talent. There are definitely workers who would do well in the defense industry but do not know where to find the jobs. Maybe defense companies have stressful or boring work that turns away workers.

Another problem is that defense companies have a large proportional of close to retiring people and once they retire a lot of knowledge will be gone from their workforce. There is currently a problem with transferring knowledge down the chain of command because people are sort of secretive.

Defense companies could solve their labor shortage by finding workers in places like India but eventually those places will modernize and want to keep their talent pool.

Author’s Opinion

In this blog post I am going to describe why I think defense companies are a great place to work.

The first reason is that I agree with the mission statements that most defense companies have. Usually defense companies have a purpose to make their country a safer place or to make their country stronger.  Some people may think that making weapons is an evil practice since it fuels war but just like how guys go to the gym to get stronger,  countries have a right to get stronger. Some people will argue that some countries just want to oppress people and bully other countries and defense companies shouldn’t be aiding these countries. However,  there are regulations put in to prevent that. Also I personally have a belief that one day extraterrestrial things may visit earth and defense companies will be needed to make weapons to fend them off.

However,  defense companies do alot of other things besides make weapons. For example , they make satellites that monitor things in space soscientists can understand the origins of space better and it will also further human progress in space. The thing I don’t like about high tech consumer electronics companies is that their products don’t always push humans closer to a more tehnologically advanced world.  I mean cameras far better and internet gets faster but it is aimed to make human life more enjoyable.  I think enjoyment is good but I would rather see more futuristic things like space travel.

One last thing I like is that defense companies offer stable jobs although not as high as tech companies and employees get the pride of knowing they areworking on something top secret. It is also more conservative then high tech companies and I personally would enjoy wearing a suit and tie to work everyday since it’s more classy.

These are just my opinions based on my research and I have never worked in a defense company.

 

Scramble for Asia

As European imperialists once fought for land in Africa, defense companies now do the same in Asia. Although most Americans view North Korea as having an incompetent military force, the situation in Asia is different. Countries such as China, South Korea and Japan literally have a nuclear threat in their backyard. Sure, the nuclear capabilities of the North Koreans aren’t anything compared to that of the US, but even a small scale bomb can cause terror as seen recently from the Boston Bombings in the US. The US has sworn to protect Asian countries from North Korean hostility but what happens if diplomatic ties crumble or the US ceases to have the means to protect? Most countries want to be able to fend of threats using their own military.Thus, Asian countries have turned to defense companies to provide them with defense capabilities.

The three major contenders for customers in Asia are Lockheed Martin, Northrop Grumman, and General Dynamic. So far, Lockheed is coming ahead with a 37% return on its investment while Northrop is at 14% and General Dynamic is at -2%. General Dynamic and Lockheed are predicted to have average profit growth rates of 7% and 8% respectively while Northrop is relatively stagnant at -1%.

Lockheed is arguably the biggest defense contractor in the world. It specializes in aeronautics, information systems, missile control and space systems. It had 47.2 Billion dollars of revenue in 2012 and continues to grow each year while other defense companies shrink.

The reason for Lockheed’s success is in the products it manufactures. Lockheed’s F35 Jet is the most advanced fighter jet in the world and every country wants its hands on them. The pentagon has ordered 60 of these jets for a total of 9 billion dollars. General Dynamic has had a struggling fighter jet line in recent years and mostly specializes in business jets.

Northrop is closely tied with the government which is partly why it hasn’t capitalized on the Asian market. After all, the US government doesn’t want the other countries to strengthen their armies too much. Most of Northrop’s revenue comes from missile defense systems, which the government could cut if they got angry. 44% of Northrop’s revenue came from fixed government contracts last year.

General Dynamic has the most hedge funds and the highest hedge fund interest rate with 37 hedge funds. Lockheed is slightly behind with 33. Billionaire Warren Buffet personally invested 3.5% of his wealth into General Dynamic. Northrop has the lowest number of hedge funds with 21.

To summarize, Lockheed Martin is the dominating defense contractor in Asia due to its F35 Jets and its past reputation as the world’s largest defense contractor. General Dynamic hasn’t done as well as Lockheed but seems like a good place to invest for the future. Lastly, Northrop’s progress in Asia has been hindered by its relationship with the US government.

Insight from Upperclassmen about Defense Companies

The annual Cal Poly EE banquet held at the Madonna Inn is a great event to network with older students, professors, and industry representatives. Today, I attended the event and got some insight from some upperclassmen about defense companies.

When signing up for the event, attendees were allowed to write down any industry representatives, professors or students they wanted to sit at the same table with. I requested to sit next to an industry representative from Raytheon, however the table I was seated at did not have any industry representatives. Fortunately, my table was filled with other students who had filled out similar preferences. I found out that many of the upperclassmen who sat at the table had internships at major defense companies and I asked them some questions.

The first student I talked to was a junior who had an internship this summer at Raytheon. Raytheon is notoriously known at the job fair for telling applicants that they “are not accepting resumes and to apply online”. However, according to the the students at the table, that just means your resume did not meet their specifications or impress them enough.The junior I talked to was asked by the Raytheon job fair representative to email him an unofficial transcript and some more detail on the projects he had done. The junior did so, however the representative seemed to have lost interest him. Fortunately, his resume was still in Raytheon’s system and a different department discovered him and eventually he got an internship. I asked him if every 3rd year student gets some sort of internship because it seemed like I hear that a lot of upperclassmen get internships. He said that real paid internships that have you do actual work is hard to come by and only hard working students are able to obtain them. He said to keep gpa high and do a lot of side projects to add to your resume. He told me that the PolySat club on campus had good opportunities for side projects.

The second student I talked to was a 4th year who was doing the 4+1 masters program. He had an internship this summer at Loral Space Systems. He said the interview he did for Loral was all personality type questions(ie: describe a difficult situation etc.) much like the ones discussed in my Tech Writing Class. He said that he was even offered free housing. Loral is located in the town I was raised in and housing there is quite expensive. This made me think that interns must be very highly valued to have their relocation fees paid for. The 4th year student also told me to check out PolySat and to also learn Matlab because professors will expect you to know it even though no classes teach it for EE students.

The last student i talked to was a graduate student who had an internship at Northrop Grumman. He was graduating soon and was basically offered a position. The hiring manager at Northrop bluntly told him that if he was offered a better salary from a different defense company they would offer more. He said that his roommate had an offer from a tech company that was about 15000 more than what a defense company offered his roommate but the defense company said they didn’t have the means to match it.

Overall, I am glad I went to the banquet because I got some valuable knowledge from older students who are currently living through the job and internship finding process.

Defense Company Culture

Every company has a different culture within it and defense companies are no different. If you are considering working for a defense company you should check out its company culture before you apply. Some companies are really old fashion and require you to dress up all fancy-like every day to work while others are more laid back. Defense companies in general are more conservative than other companies in the high-tech industry because of their work in government contracts and the confidentiality of their information since some of it pertains to national security.

According to websites Indeed.com and glassdoor.com which allow employees and former employees to review and comment on companies they have worked for, Raytheon is a company where you typically wear jeans and a collared shirt to work. If high up executives come to visit then you might dress up in a suit or something more formal. Raytheon is a more “youthful” company because it is a better environment for younger engineers. It tries to be cutting edge and up to date and gives its young employees many opportunities to move up.

However, the company culture and Northrop Grumman is a bit the opposite. Former employees described Northrop as a company that turns employees into numbers that do work. Some employees said that they have trouble making any friends at work because if they suggested to do anything fun people would criticize them for not working hard enough. Higher-up management tends to ignore any workers 2 ranks beneath them. There is limited opportunity to move up since there are a lot of old engineers who occupy the high ranking positions. The positions only become available after these old engineers retire. Comments like these were the majority of the posts on Indeed.com but there were a few comments from employees who have had a blast at Northrop who have had many opportunities to grow and have also made a bunch of friends. This goes to show that there are winners and losers at every company.

What it Takes to get a Security Clearance

If you are thinking about joining a defense company, it is probably a good idea to know if you qualify for a security clearance. If you are unable to get a security clearance your resume will probably be tossed out and never even considered. Conversely, if you already have a security clearance, defense companies will be more inclined to hire you because they wouldn’t have to go through the hassle of getting you cleared.

What exactly does it take to get a security clearance? What do they allow you to do? In the next following paragraphs I will be addressing some common questions about obtaining a security clearance.

First off, there are many different levels of security clearance. The first one, called a confidential clearance, is the easiest to get.  Having this clearance will let you access Confidential level information on a need-to-know basis. Immediate relatives are checked and former foreign employment is reviewed to see if you qualify for a confidential level clearance. It lasts for 15 years.

The next level is the secret level clearance or level II clearance. It is screened the same way but allows you to access secret level information on a need-to-know basis. It lasts for 10 years.

The last and hardest level to obtain is the top secret level clearance. All foreign travels, assets, and references are checked and screened in order to qualify for the clearance. With a top secret level clearance, all information is available for you to view on a need-to-know basis. It lasts only for 5 years.

	Relatives	Former Employment	Foreign Citizenship	Foreign Assets	Foreign Relatives	Poor Financial History	Full scope Backround Investiagation
Confidential	x	x	x
Secret	x	x	x	x	x	x
Top Secret	x	x	x	x	x	x	x

*Requirement checks for different security levels

It takes roughly 6 months for the first level of clearance. You basically send in everything that is required and investigators will ask you questions if anything suspicious comes up. You will send in things like fingerprints, birth certificates and IDs. Often times you will take a polygraph during the investigation period.

It will cost a company about 60,000 dollars to get you a clearance so defense companies will only hire a candidate who is worth the investment.

Corruption in Defense Companies

 

Defense companies in general have a bad rep for being corrupt. There are countless movies that represent defense companies as profit-hungry corporations that find ways to illegally sell weapons to war-torn countries. However, is this true? Are the employees who work at the these defense companies aware of the illegal actions that take place? Or are defense companies just like any other company and is just trying to do capitalize on what they need to do to expand.

I came across an article at http://companies.defenceindex.org/ and found some data on the corruption of defense companies. The website indexed all the defense companies and assigned a rank to each of them from A to F, with F being the most corrupt.

The five attributes that the website asses for its index are Leadership, Polices, Personnel, Training and Assesing Corruption Risk.

The website mainly used public data to generate their indexes however, they do have some  sources that provided data from within a couple companies. The companies that have a rank of A or B include Northrop Grumman, HP, BAE, United Technologies Corporations and five more. Half of the rank A companies are not truly defense companies and are just companies that have a small portion,near 1%,of their revenue selling technologies used for defense. These companies score high on the Leadership, Polices, and Personnel attributes.

Analysis of the data shows that most companies are indeed corrupt, or at least appear to be. More than half of the companies assessed lie in category C or D and they seriously lack in Leadership, Risk Management and Training however they still do well in Personnel.

The companies in the last two categories of E and F represent about half of the companies in our index are not able to publicly demonstrate that they have basic anti-corruption systems in place. They are mostly foreign companies from Europe, Russia or China.

The researchers of the findings encourage CEO’s of defense companies to review their companies ethics and anti-corruption systems. They also encourage them to find stake holders that value transparency and honor.

Investors of defense companies should look into a defense company’s corruption index before they invest. A company may be growing fast and valuable but their high stocks are worth nothing if they were created with corrupt actions.

Northrop Grumman

 

 

Raytheon

Since being founded in 1922, Raytheon has grown to become a household name in the vocabularies of many engineers. Raytheon, meaning light from the gods, is currently ranked 117th on the Fortune 500 and 5th in all defense companies. Even during the recent recession, Raytheon took in approximately 25 billion dollars of revenue each year from weapons sales and was actively recruiting new talent to add to its pool of 72,000 employees.

Raytheon has specialized in a wide variety of products over its history including missiles, aircraft and microwave-cooking appliances. During World War II, Raytheon specialized in manufacturering magnetrons, which are microwave-generating electron tubes that greatly enhance radar capability to detect aircraft. In later years, Raytheon began manufacturing missiles such as the Patriot Missile and Phoenix Missiles after it became the first company to develop a guidance system for missiles that could intercept a flying target and destroy it. In the 1980’s Raytheon began to diversify into non-military areas such as business jets, microwave ovens and refrigerators. However today, Raytheon primarily focuses on defense electronics and 90% of its revenue comes from government defense contracts.

Raytheon has facilities in all parts of the US and is actively looking for new employees to match its expected growth. Job positions and descriptions can be found at jobs.raytheon.com however, if you are currently a college student or recent graduate hoping to obtain a job or internship at Raytheon, a better solution would be to talk to representatives of Raytheon that show up at campus recruitment events.

Candidates applying for Raytheon must be able to obtain a security clearance in order to be considered for a job. Therefore, applicants must be citizens of the United States and must rescind citizenship of other countries if they possess dual-citizenship.

Glassdoor.com rates Raytheon as being a relatively good place to work at. New employees are expected to be innovative and there are many opportunities to grow and learn as an engineer. However, innovation is sometimes stifled by the specifications and budgets of government contracts.