Dear Shareowners,
As I reflect on Raytheon Technologies’ growth and progress in 2022, I’m gratified our strong fundamentals and innovative spirit prevailed through a year of adversity.
We worked through tremendous challenges, including inflation headwinds, a strained supply chain, an extremely tight labor market and Russia’s invasion of Ukraine, which caused us to cease all operations and sales in Russia. Despite these many challenges, this past year confirmed that our focused portfolio, our superior technical capabilities and our talented workforce are unmatched across commercial aerospace and defense markets.
Commercial air traffic continued its recovery from the global pandemic, resulting in strong demand for our commercial products and services, while heightened threat levels are leading the United States and its allies to enhance defense readiness and to invest in advanced capabilities. Our transformative technologies are allowing us to shape the future of our industry in sustainable flight, connected aviation ecosystems, multi-domain operations, and next-generation sensors and effectors. Two years into our merger, we continue to realize operational advantages and cost synergies, and our $175 billion backlog underscores the high demand for our solutions, products and services.
We take pride in our mission, and as near-term headwinds recede and we continue to invest in our business, we are well positioned for future success.
Gregory J. Hayes
Chairman and Chief Executive Officer
How we are advancing
2022 was our first full year using our common operating system, known as CORE (customer-oriented results and excellence). Our CORE system provides a common language, toolset and methodology for delivering on customer commitments — all directed toward organic growth through greater collaboration.
Our CORE operating system is showcased in our new state-of-the-art advanced casting foundry and airfoil production facility in Asheville, North Carolina, which opened its doors in November. The facility’s highly automated manufacturing will improve the quality and productivity of high-volume programs for decades to come. Our modernization efforts are also reflected in our linking of more than 15,000 machine tools and test stands to our network and deploying an internet-of-things layer to 46 additional factories. Thanks to CORE initiatives in our factory in Largo, Florida, we achieved a 25 percent reduction in cycle time and a 10 percent reduction in floor space.
Clearly, supply chain disruptions affected the global economy — and Raytheon Technologies. But we were able to reduce the impact through our dedicated team of specialists who worked with our 14,000 product suppliers to monitor performance, diagnose problems and find solutions.
We make products essential to national security and flight safety, and the criticality of that fact underpins everything we do. We understand the importance of delivering what customers need today, while investing our time and talents innovating for the future. We will make advancements in artificial intelligence and machine learning to help enhance shared knowledge and to aid critical decision-making in aerospace, defense and space. We will also continue to develop advanced digital models that increase our industry’s efficiency and productivity, while investing in smart cyber solutions to ensure system safety.
Commitments to our communities and our workforce
In 2022, we put our People, Planet and Principles environmental, social and governance strategy into practice. We built and integrated measurement systems across our company, adding the same engineering rigor and discipline we bring to our product development to our ESG strategy, to create long-term outcomes that will impact generations to come.
As an example, we can see clearly where we continue to make progress on diversity, equity and inclusion. We track global workforce shifts to determine where to make the most impactful community and academic investments that can help solve the pipeline challenge. From there, we are working to achieve executive gender parity, aiming for 50 percent women executives across the globe. And we seek to double the representation of people of color in executive roles compared to 2020.
Improving opportunities for all people is aligned with maintaining the health of our planet. As we look to the future as an industry, we face critical questions about how to grow sustainably. I believe Raytheon Technologies has the talent, technology and vision to meet the environmental challenges ahead and to lead our industry into the future.
Whether it is sustainability or workforce equity, our ambitions are clearly outlined, and we have prioritized progress. Our Board of Directors reviews our plans and milestones regularly and assesses our performance in these areas under our annual incentive compensation plan.
Resilience leads to progress and growth
Since the merger in 2020, we’ve been tested — by the pandemic, by inflation and supply chain issues, and by labor shortages. And we have demonstrated our resilience: We’ve strived to maintain our commitments to our customers and communities, and we’ve built a backlog that supports our position as an industry leader.
As I write this letter, we have just announced a reorganization of our business units to better position Raytheon Technologies for the future. We stand on 100 years of pioneering technology, and yet we still have the energy and opportunity of a newly formed company. One thing you can count on: We will continue to disrupt ourselves when needed in the ongoing pursuit of better ways to deliver value to our customers and all stakeholders.
My thanks to our dedicated team for another outstanding year. And thanks to you, our shareowners, for your ongoing support of Raytheon Technologies as we continue to lead, inspire and redefine our industry. Thank you for your belief in our ability to deliver value to you, and thank you for your trust.
Gregory J. Hayes
Chairman and Chief Executive Officer
Read the original letter here.
