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Business Profile: Harris Corp. Plays to Its Strengths
Over seven years, Harris has abandoned its diversification strategy to focus primarily on building high-tech equipment for governments.
Satellites and robots
Brown’s other big priority is research and development. Harris spent $310 million on R&D this past year, a 50% jump since 2012. The company has boosted research spending from about 4% of revenue to more than 5%, which Brown says is nearly twice what most of its major competitors spend.
Tactical radios, the business for which Harris is best known, have always been a big focus for R&D investment. The company prides itself on following a commercial model, anticipating market and technology trends and developing ready-to-ship, off-the-shelf products rather than reactively responding to government- set specs. The company credits internal radio innovations like multichannel, software-defined and ultralight radios with helping it land those enormous Army contracts.
Brown says Harris has also ramped up R&D spending in other segments, which have historically lagged the core radio franchise. Small satellites are one key area. So are robotics. Last fall, for instance, Harris won a $70-million order from the United Kingdom’s Ministry of Defense for a new line of bomb-disposal robots whose arms provide their operators with human-like dexterity and haptic force feedback through a remotecontrol hand grip. The U.K. is an international leader in bomb disposal, and Harris executives expect the endorsement from that country will lead to more orders from others.
The company has also prioritized electronic- warfare systems — for example, technologies installed on fighter jets or other vehicles that hide radar signatures and allow for hidden communications or that thwart the stealth technologies used by enemies. And it is investing heavily into open-system avionics, which allow for more frequent and affordable updates to onboard computer systems.
Harris says some of its investments are already paying off. Within the past year, for instance, the company won a $320-million contract for cockpit display systems and a $140-million contract for memory system upgrades on F-35 fighter jets. Altogether, each F-35 is now built with about $2.2 million worth of Harris machinery — roughly 1,600 components on every jet, from antennas to bomb racks.
Meanwhile, now that the company has pruned its portfolio of unwanted businesses and just about finished digesting Exelis, analysts expect Harris to use some of its $1 billion a year in free cash flow toward buying more rivals. Brown himself has been stoking that speculation.
“When you go back five or six years ago, the company is very, very different today — strategically, financially. I think we’re in a great position right now,” he says. “I do think there’s opportunities through additional M&A, additional capital deployment, to build on some of the core capabilities we happen to have. And it’s something strategically that we’re looking at as we speak.”
William M. Brown, 55, Chairman, President & CEO Harris Corp.
2017 compensation: $12.5 million
- Work history: Brown was appointed CEO of Harris in November 2011 and elected chairman in 2014. He joined Harris after 14 years at United Technologies.
- Education: An alum of Philadelphia’s Villanova University (bachelor’s and master’s in mechanical engineering) and the University of Pennsylvania’s Wharton School (MBA).
- Diversified workforce: Brown says one of his priorities has been diversifying Harris’ historically white-male-dominated workforce. One-third of Harris executives today are female, up from less than one-fifth five years ago. And nearly 40% of the company’s new college graduate hires this year will be women or minorities, compared to a companywide rate of 25%.
Brown, who serves on the board of the Florida Institute of Technology, says Harris recruits most heavily from universities where female students make up a greater share of the engineering population.
“I look at my two daughters. I think they ought to have every chance of being successful as a woman as I had as a man,” he says. “And, really, it’s the right thing for the company. Having a diverse set of views around the table is always going to drive us into a different direction, a better solution.” - Additional: Brown serves as vice chairman of the Aerospace Industries Association.
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