US ‘capabilities’ can handle North Korean threat, says Raytheon CEO

The CEO of the maker of the Patriot missile defense system said Tuesday that Californians shouldn’t worry about the missile threat of nuclear-armed North Korea, but he urged them to contact lawmakers in Washington to push for more defense spending.

“I would say relative to the North Korean threat, you shouldn’t be worried,” said Raytheon CEO Thomas Kennedy in an exclusive interview on CNBC’s “Squawk Box.” “But you should ensure that you’ve talked to your congressman or congresswoman to make sure they support the defense budget to the point where it can continue to defend the United States and our allies.”

Raytheon, the Massachusetts-based defense giant known for the Patriot anti-missile system, has benefited from global demand for missile defense systems in Asia, Europe and the Middle East.

Kennedy was asked how business has changed since the North Korean threat increased. He said Raytheon is “working with a lot of our customers in the region that want to increase their missile defense capabilities. And that’s probably the main effort there. We’re also ensuring and working with the U.S. government to make sure they have the resources available in the region to do what needs to be done.”

Kennedy believes the U.S. military has the “capabilities and the competencies” to counter the threat from North Korea. “We just need to make sure we continue to fund that capability so we have the systems in place that can counter the threat,” he said.

The CEO said he’s hopeful Congress will reach a bipartisan solution to allow increased defense spending despite the Budget Control Act and sequestration, or the spending caps, that have held back increased military spending for years.

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“This is not a time to be cutting defense budgets,” he said. “This is a time of significant turmoil around the world, and of any time in the history of the United States where we need to support a strong defense, it’s today.”

According to Kennedy, security threats also are driving customer demand in other regions, including Europe, where Russia’s provocations in Ukraine and Crimea have raised the alarm for Eastern European and Baltic states.

“If you go to Europe, you see a lot of Eastern European countries significantly concerned about their sovereignty, the safety of their citizens,” he said. “Raytheon does provide solutions to essentially protect the sovereignty of nations and the safety of their citizens.”

Kennedy said there’s also concern by countries in the Mideast and North Africa that’s driving demand for new defense systems.

“You go over to the Middle East, North Africa region, you see issues in Syria, Iraq, Yemen, Libya. A lot of concern by countries in the region relative to the counterinsurgency and counterterrorism efforts going on there. There’s also concerns about bigger powers in the region,” he said.

The Raytheon executive, who was interviewed while attending the Saudi Arabia Vision summit, noted that the company established a 100 percent owned company in the kingdom and praised economic reforms underway there.

“That was something that wasn’t allowed before. So the kingdom is changing its laws …essentially [to] make Saudi Arabia a much more attractive place for especially U.S. business.”

Meantime, Kennedy was asked about potential interest in acquisitions. He responded, “If we have any gap areas, we look at that continuously, in terms of growing the company. But right now we’re not in a position to make any major acquisitions.”

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The CEO also ruled out any speculation of a merger with a large competitor such as Boeing.

“That’s not on the table today,” he responded.