The Jet Makers
The Aerospace Industry from 1945 to 1972
I: World War II: Aviation Comes of Age
II: The Aerospace Industry since World War II: A Brief History
III: The National Military Strategy: Background for the Government Markets
IV: The Principal Government Market: The United States Air Force
V: The Other Government Markets: The Aerospace Navy, the Air Army, and NASA
VI: Fashions in Government Procurement
VII: The Heartbreak Market: Airliners
VIII: Design or Die: The Supreme Technological Industry
IX: Production: The Payoff
X: Diversification: The Hedge for Survival
XI: Costs: Into the Stratosphere
XII: Finance and Management
XIII: Entry into the Aerospace Industry
XIV: Exit from the Aerospace Industry
XV: The Influence of the Jet Engine on the Industry
- Peter W. Brooks, The Modern Airliner: Its Origins and Development
(London: Putnam, 1961), pp. 118-19, 137, 141.
- Robin Higham, Air Power, A Concise History (New York: St. Martin's Press,
1972), pp. 3-8, 239-46; Higham, "Government, Companies, and National Defense:
British Aeronautical Experience, 1918-1945 as the Basis for a Broad Hypothesis,"
Business History Review 39 (Autumn 1965): 323-47.
- Robert E. Sherwood, Roosevelt and Hopkins, An Intimate History, rev. ed.
(New York: Harper & Brothers, 1950), p. 100.
- National Aeronautics and Space Administration, Fifty Years of Aeronautical
Research (Washington, D.C.: Government Printing Office, 1967), Introduction.
- Aviation Week (Aviation, Aviation Week, and
Aviation Week and Space
Technology will henceforth be called Aviation Week), 19 Oct. 1959, p.
- Senate Committee on Armed Services, Hearings, Weapons Systems Acquisition
Process (Washington, D.C.: Government Printing Office, 1972), 92nd Congress, 1st
Session, 1971, p. 152.
- Harold Asher, Cost-Quantity Relationships in the Airframe Industry, Study No.
R-291 (Santa Monica, Calif.: RAND Corp., 1956).
- The discussion which follows will concentrate on the Department of Defense.
The other large government customer of the aerospace industry, NASA, adopted
Defense Department procurement systems and has followed roughly the same
fashions in buying at the same times.
- Aviation Week, 19 Mar. 1951, pp. 13-14.
- Ibid., 8 Sept. 1952, p. 32.
- Ibid., 14 July 1958, pp. 29---30.
- Senate Weapons Acquisition Hearings, 92nd Congress, 2nd Session, 1972, p. 37.
- Aviation Week, 14 Sept. 1970, p. 28.
- Richard Austin Smith, Corporations in Crisis (Garden City, N.Y.: Doubleday &
Co., 1963), pp. 184,202.
- Aviation Week, 4 Oct. 1965, p. 21.
- Robert J. Art,
The TFX Decision: McNamara and the Military
(Boston: Little, Brown & Co., 1968).
At one point, in the footnote on page 118, Art is puzzled by
the Air Council's preference for the Boeing design which was deficient in
low altitude supersonic flight, a property critical to the TFX specifications.
However, there should be no surprise that the bomber-minded Air Council chose
the Boeing proposal which was stronger in bomber characteristics over that of
General Dynamics which was better in fighter qualities. At that time the Navy
believed that the "F"-111, the "Edsel convertible," would turn out to be just
another strategic bomber, a "B"-111. The F-111 did prove to be too heavy for its
proposed roles as an Air Force air-superiority fighter and Navy interceptor, and
the aircraft has served mainly in its bomber function.
- Aviation Week, 26 June 1972, p. 15.
- Senate Weapons Acquisition Hearings, 1st Session, p. 19.
- Aviation Week, 10 June 1963, pp. 135, 137-40.
- Comptroller General of the U.S., Adverse Effects of Large-Scale Production
of Major Weapons before Completion of Development and Testing. Department of the
Navy, 19 Nov. 1970.
- Stanford Research Institute (SRI), The Industry-Government Aerospace
Relationship, Vol. I, Report (Menlo Park, Calif.: Stanford Research Institute,
1963), p. 34. Joint Economic Committee, Subcommittee on Economy in Government,
Hearings, The Acquisition of Weapons Systems (Washington, D.C.: Government
Printing Office, 1970-1973, 92nd Congress, 1st Session, 1971, Part 3, pp.
- The Electra ultimately may have proven profitable, for it was converted into
the highly successful P-3 Orion.
- Charles J. Kelly, Jr., The Sky's the Limit: The History of the Airlines
(New York: Coward-McCann, Inc., 1963), p. 168.
- A clear description of the "prisoner's dilemma" is in Paul A. Samuelson,
Economics, 8th ed. (New York: McGraw-Hill, 1970), pp. 482-83. A valuable
description of similar product strategies is in Laurence J. White, The
Automobile Industry Since 1945 (Cambridge, Mass.: Harvard University Press,
1971), pp. 173,175.
- Boeing had expected to break even at 50 aircraft, probably because of the
hoped-for savings from converting a military design. The contemporary and comparable
Douglas DC-6 was expected to break even at the' more common U.S. airliner level
of 300 aircraft.
- Arthur Reed,
Britain's Aircraft Industry: What Went Right? What Went Wrong?
(London: J. M. Dent & Sons, 1973), p. 3.
- Aviation Week, 19 Oct. 1953, p. 13.
- The 720 was part of a Boeing program of offering a model for every purse and
use, just as General Motors blankets the range of passenger cars. One wag at
Boeing suggested the 707/KC-135 family should not be called "Stratoliner" but,
- The one case of satisfactory conversion of the last
piston airliners to turbines.
- Business Week, 21 July 1956, p. 170.
- Dero A. Saunders, "The Airlines Flight from Reality," Fortune 53 (Feb.
- C. R. Smith, "What the Airlines Expect from the 1961 Jet Fleet," Fortune 54
(July 1956): 112-13.
- Because of the propeller, three engines had always been structurally awkward
in piston engine aircraft.
- A factor in jet economy was engine life, or reliability. Time between
overhauls for the last piston engines was 2,000 to 2,500 hours, or a light
distance of 750,000 miles. The jets were getting up to 8,000 hours or 4,000,000
miles because of their higher flight speeds.
- Tom Alexander, "McNamara's Expensive Economy Plane," Fortune 75 (1 June
- Letter to author from Lockheed Aircraft Corporation, 23 May 1973. Aviation
Week, 30 Sept. 1968, p. 13.
- Senate Weapons Acquisition Hearings, 1st Session, pp. 132, 138.
- Aviation Week, 30 June 1952, p. 82; 20 Oct. 1952, p. 17.
- Aviation Week, 16 Nov. 1959, p. 123.
- Gilbert Burck, "Famine Years for the Arms Makers," Fortune 83 (May 1971):
- Senate Weapons Acquisition Hearings, 92nd Congress, 2nd Session, 1972, p. 28.
- Aviation Week, 13 Aug. 1956, p. 33.
- Aviation Week, 2 Aug. 1971, p. 9.
- Lockheed Annual Report for 1969, p. 3.
- Aviation Week, 27 Aug. 1951, p. 23.
- White, pp. 29,45-46.
- Aviation Week, 12 Aug. 1963, p. 36.
- Newsweek, 16 Aug. 1965, p. 67.
- Business Week, 25 Nov. 1950, p. 32. Wesley Price, "Merchant of Speed,"
Saturday Evening Post, 19 Feb. 1949, p. 32. This incident raises many
interesting questions about aircraft industry costs and practices at the time.
- Only one jet aircraft was built in numbers, but it was not a Martin design.
It was the B-57, an American version of the British Canberra, the only non-U.S.
aircraft to go on operations with the Air Force since World War II. Around 400
were built from 1953 to 1956. It has proven to be a productive and long-lived
aircraft, as has the whole Canberra line.
- Time, 5 Apr. 1971, p. 82.
- Wall Street Journal, 18 Apr. 1963, p. 8.
- Wall Street Journal, 5 Aug. 1971, p. 24.
- Aviation Week, 17 Sept. 1971, p.
15. The Arizona Republic, 9 Mar. 1972, p. 60.
- A. Ernest Fitzgerald,
The High Priests of Waste.
(New York: W. W. Norton, 1972).
Joint Weapons Acquisition Hearings, 92nd Congress, 2nd Session, 1972,
Part 5, p. 1406; 1973, Part 6, pp. 2205-52.
- Fitzgerald, p. 159.
- Aviation Week, 24 Apr. 1967, pp. 26-27.
- Senate Weapons Acquisition Hearings, 1st Session, p. 161.
- The Arizona Republic, 13 May 1972, p. 17.
- Martin solved the problems without adding more managers.
- McNamara and the Air Force and Navy secretaries read the report in detail,
analyzed it, and chose General Dynamics as the bid winner.
- Vincent Davis,
The Admirals' Lobby
(Chapel Hill: University of North Carolina Press, 1967), pp. 307-8.
- Overall, McNarney may have hurt General Dynamics; it was he who made the
decision to build the 880.
- House Committee on Armed Services, Subcommittee for Special Investigations,
Hearings, Aircraft Production Costs and Profits (Washington, D.C.: Government
Printing Office, 1956), 84th Congress, 2nd Session, 1956, pp. 2639-59.
- Aviation Week, 28 July 1958, p. 58.
- Quoted in Richard F. Kaufman,
The War Profiteers.
(New York: Bobbs-Merrill, 1970), p. 117.
- Business Week, 3 June 1972, pp. 75-76.
- Business Week, 1 Apr. 1972, p. 44.
- Wall Street Journal, 30 Mar. 1972, p. 10.
- Aviation Week, 24 Nov. 1952, p. 17.
- Fitzgerald, pp. 69-70.
- R. R. Nelson, The Economics of Parallel Rand D Efforts: A
Sequential-Decision Analysis, RAND Corp. Report No. RM-2482, 12 Nov. 1959.
- Edgar E. Ulsamer, "The Designers of Dassault: Men Who Take One Step at a
Time," Air Force 53 (Aug. 1970): 38.
- Herman O. Stekler,
The Structure and Performance of the Aerospace Industry
(Berkeley: University of California Press, 1965), p. 193; Berkeley Rice, The
C-5A Scandal: An Inside Story of the Military Industrial Complex (Boston:
Houghton Miffiin, 1971), p. 54; Joint Economic Committee, Subcommittee on
Economy in Government, Hearings, Economics of Military Procurement (Washington,
D.C.: Government Printing Office, 1968), 90th Congress, 2nd Session, 1968, Part
1, p. 160; Senate Weapons Acquisition Hearings, 1st Session, p. 146;
ibid., p. 244; ibid., p. 215; Joint Weapons Acquisition Hearings, 1972, Part 6,
- A factor in the government's change in policy has been the growing commercial
aircraft business and other diversification which should not be publicly
- Joint Weapons Acquisition Hearings, 92nd Congress, 1st Session, 1971, Part 4,
- Aviation Week, 5 June 1967, p. 79.
- The result was also a significant reduction in profits as well, for interest
on borrowed capital was not allowed as a business expense on defense contracts.
- Tai Saeng Shin, "A Financial Analysis of the Airframe-Turned Aerospace
Industry" (Ph.D. Dissertation, University of Illinois, 1969).
- Ibid., pp. 134-36, 142-43, 146.
- William L. Baldwin, The Structure of the Defense Market 1955-1964
(Durham, N.C.: Duke University Press, 1967), p. 196.
- They have also been sought for nonfinancial reasons: to gain help in
engineering and other resources in attempts by two or more firms to match
weakness in one company with strength in another.
- Aviation Week, 20 Nov. 1967, pp. 59, 99, 101,105.
- Joint Procurement Economics Hearings, Part 1, p. 58.
- Joint Weapons Acquisition Hearings, Part 3, pp. 859-965.
- Allan T. Demaree, "Defense Profits, the Hidden Issues," Fortune 80 (1 Aug.
1969): 82, 83. Aviation Week, 4 May 1970, p. 55.
- Senate Weapons Acquisition Hearings, 1st Session, p. 133.
- Gordon R. Conrad and Irving H. Plotkin, "Risk/Return: U.S. Industry
Pattern," Harvard Business Review 46 (Mar.-Apr. 1968): 91-97.
- John B. Rae, Climb to Greatness: The American Aircraft Industry, 1920-1960
(Cambridge, Mass.: The MIT Press, 1968), p. 218.
- Stekler, pp. 127-28.
- Dennis C. Mueller and John E. Tilton, Research and Development Costs as a
Barrier to Entry (Washington, D.C.: The Brookings Institution, 1970). Reprinted
from The Canadian Journal of Economics/Revue canadienne d' Economique, Vol. II,
No. 4 (Nov. 1969).
- Merton J. Peck and Frederic M. Scherer,
The Weapons Acquisition Process: An Economic Analysis.
(Boston: Graduate School of Business Administration, Harvard University, 1962), pp. 198--99.
- Senate Armed Services Committee, Preparedness Subcommittee Number 1,
Hearings. Aircraft Procurement. Contract Award of C-119 Cargo Planes by Air
Force (Washington, D.C.: Government Printing Office, 1953), 83rd Congress, 1st
Session, 1953, p. 113.
- Harry S. Truman, Memoirs, Vol. 1, Year of Decisions
(Garden City, N.Y.: Doubleday, 1955), p. 184.
- Missiles and Rockets, 26 June 1961, p. 31.
- Richard Austin Smith, Corporations in Crisis, Chapter 3.
- Aviation Week, 22 Aug. 1955, p. 17.
- Senate Weapons Acquisition Hearings, 1st Session, p. 157.
- Stekler, p. 199.
- Rae, pp. 212-19. Stekler, pp. 197, 204.
- Jacob K. Javits, Charles J. Hitch, and Arthur F. Burns, The Defense Sector
and the American Economy (New York: New York University Press, 1968), p. 68.
- J. Herbert Holloman, "Technology in the United States: Issues for the
1970's," Technology Review 74 (June 1972): 10, 18, 20.