BAE Systems: The defense never rests

The multinational contractor has delved into everything in Hawaii from surveillance research to military and commercial ship repair

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A lot has changed since BAE Systems Inc. Chief Executive Walter Havenstein last visited Hawaii 30 years ago.

For one, his company's products are now worn by local law enforcement.

On a visit to Pearl Harbor's Arizona National Memorial earlier this month, he told a policeman wearing a gun holster that it was made my BAE Systems.

"When I patted him on the back, I recognized he had on some personal body armor, and I said, 'By the way, we make that, too,' " he said.

Havenstein said he sees Hawaii as a gateway to growth in Asia for parent company BAE Systems PLC, a multinational defense contractor based in England.

The company is investing thousands of dollars into local scholarships and school programs, and has grown its Hawaii employee base to 800 workers through acquisitions since moving into the state in 2004.

But don't expect BAE Systems to advertise -- the company prefers to fly under the radar.

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Call it thinking globally, acting locally and growing quietly. In the three years since multinational defense contractor BAE Systems PLC moved into Hawaii, the company has won as many as eight contracts a year, donated hundreds of thousands of dollars to local schools and charities and partnered with the University of Hawaii on technology projects. From January 2006 to date, the company has brought a total of $203 million to the state with 13 contracts.

But, like its research, England-based BAE Systems prefers to fly under the radar.

BAE stats 400 Technical solutions and services employees in Hawaii 200 Ship maintenance and repair employees 100 Information technology employees 74 Identification and surveillance employees

"BAE Systems tends to be a pretty quiet company," said Walter Havenstein, chief executive of the company's North America division, BAE Systems Inc. "But at the heart of what we do, whether it's the military or the law enforcement, it protects those people and enables them to do their job efficiently and comfortably, and we take a lot of pride in that."

BAE Systems' Hawaii presence ranges from work on high-profile projects such as the 27-story sea-based X-band radar -- resembling a giant golf ball on a floating platform -- to police officer body armor, to weapons technology used by soldiers in Iraq. Most of the projects are with the U.S. Navy.

The company leases a half-dozen sites on Oahu, including shipyard operations at Pearl Harbor, testing ranges at Schofield Barracks, labs in downtown Honolulu and an office in Kailua. It also performs aviation work on Kauai and astrological studies on the Big Island.

When BAE Systems' North America branch was formed in Rockville, Md., in 1998, the company didn't have its eye on Hawaii.

"I think it was a bit serendipitous," said Havenstein, who visited Honolulu earlier this month to participate in the Aloha Festivals. "It became obvious to us over time as we made acquisitions, and part of those acquisitions had a presence in Hawaii. We started to create a critical mass here and then it helped us recognize some of the unique aspects of Hawaii."

Globally, BAE Systems has $25 billion in annual sales with 100,000 employees in 100 countries. About 43,000 work in the United States, including 800 in Hawaii -- built up through acquisitions starting with the $27 million buyout of technology company STI Government Systems in May 2004. BAE Systems says it is the largest defense contractor in the state by number of employees.

The state's clear waters and skies provide a ripe testing ground for BAE Systems' sensitive optics and surveillance work. Hawaii is also an ideal gateway to expanding operations in Asia, primarily Japan and Korea, Havenstein said.

"The Asia connection wasn't initially important," he said. "It is only in the last 12 months of this year that I've considered the diverse nature of the work force here as being a microcosm of what we see in our expansion in Asia as having more strategic relevance."

BAE Systems plans to expand its commercial and military ship maintenance operations here, as well as its sensor and signal processing technology, he said.

This month, the company won a $49 million U.S. Navy contract to develop an optical system that uses aircraft sensors to passively detect concealed targets. It is Hawaii's most significant BAE Systems contract to date, said Ty Aldinger, a director and general manager for BAE Systems' North America division.

"The JMMES (Joint Multi-Mission Electro-Optical System) work is only being done here," he said. "The real benefit being here is being close to the Navy and being able to access the Navy ranges test areas here in Hawaii."

At its shipyard in Pearl Harbor, BAE Systems employs 200 workers, making it the largest non-nuclear ship repair segment in the United States. It operates under a seven-year, $87 million U.S. Navy contract to maintain the harbor's 11 stationed ships and any transient military ships.

Fifty percent of work on each task order goes to locally owned businesses, said Roger Kubischta, president and general manager of BAE Systems Hawaii shipyards.

"We strive to keep it all local," he said. "Ninety percent of the work stays right here in Hawaii and supports local businesses."

Bob Dewitz, CEO of Hawaii-based companies American Electric Co. and HSI Electric Inc., said he has 25 to 30 employees, or about a quarter of his HSI work force, employed under the BAE Systems ship repair contract, won last October.

"I know that BAE from the top level down is very much in tune with team Hawaii," he said. "They may be the big employer, but I know they see themselves as the team leader for a lot of locally owned businesses."

BAE Systems Inc. » What: The North America subsidiary of multinational defense contractor BAE Systems PLC, which is based in England. » Employees: 43,000 in the United States, with 800 in Hawaii » Hawaii contracts: 13 totaling $203 million since January 2006 Source: BAE Systems Inc.

The company's national scale helps small local businesses secure cruise ship maintenance work.

"They've made it viable for us to compete in the large cruise ship business," he said.

BAE Systems works to fill as many positions from within the state as possible, Aldinger said, which can be difficult even with salaries that exceed $80,000 annually. Thirty-one of Aldinger's 74 identification and surveillance group employees graduated from the University of Hawaii.

"UH is a major target for us and we work collaboratively with them on many, many engineering programs," he said. "Our view is we are creating a center of technological skills that truly can separate Hawaii for this kind of work nationally and internationally."

Peter Crouch, dean of the University of Hawaii College of Engineering, said the school works to place students with BAE Systems as well as defense contractors Northrop Grumman Corp. and Lockheed Martin Corp., who also have a presence in Hawaii.

"Some of our students have gone on to do very well at BAE," Crouch said. "We like to work with companies that have a lot of UH alums."

Earlier this month, BAE Systems committed funding for two new university scholarships and agreed to partner with the state for at least five years to support the For Inspiration and Recognition of Science and Technology program for Hawaii schools. The company gave $535,000 to local charities last year, with 2007 donations totaling $75,000.

"This is a global company with a local heart," Aldinger said. "BAE really understands and becomes part of the community that we choose to serve."