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Aviation History
1959
1959 - 0217.PDF
96 FLIGHT, 16 January 1959 The U.S. Industry's Year GEN. ORVAL R. COOK'S ANNUAL REPORT AT each year's end the president of the Aircraft Industries Association—America's equivalent of our S.B.A.C.—issues a review of the industry's experiences during the preceding twelve months. Belowis reproduced the major portion of this "year-end statement" by Gen. Orval R. Cook, U.S.A.F. (Ketd) THE year 1958 began in an atmosphere of national concernover Russia's manifestations of scientific and technologicalprogress, coupled with a reduced defence industrial capacity due to reduced Government expenditures during 1957.In order to cut defence spending many contracts had been can- celled, programmes had been stretched out, progress paymentscut, and employment reduced. Employment in the aircraft industry continued to decrease forthe first five months of 1958, but has increased slightly since then. The national debt ceiling was raised, and during 1958 theeconomic limitations were somewhat lessened. This was reflected in an increase of more than 50 per cent in the orders placed foraircraft and missiles during the first nine months of 1958, com- pared to the first nine months of 1957. However, expendituresfor the same periods show only a slight gain. The industry still is faced with expenditure limitations which limit, and will con-tinue to limit, the scope of the programmes. Demands for the aircraft industry to increase its own financialand business risks continue. The Defense Department policy of reducing progress payments to contractors for work accomplished,and requiring much larger investment by the companies in their cost-plus-fixed-fee business, was continued. Yet, in the face of these various limitations, the aircraft andmissile industry during 1958 delivered hardware that placed four satellites in orbit, and both intermediate-range and intercon-tinental ballistic missiles were tested and put into limited produc- tion. To meet these changing times, the aircraft companies havemade some rather radical changes in their organizations. Com- panies long known only as airframe manufacturers have, in a brieftime, become leaders in propulsion, in guidance, and atomic- energy applications. Virtually every company in our industry isactive in one part or another of the guided-missile programme, holding about 80 per cent of the prime contracts for the majormissile components—propulsion, guidance, structure, warhead. Achievements. The United States aircraft industry, during1958, moved the nation's industry into the jet age with delivery of turbine-powered airliners to both domestic and internationalcarriers. Man's dream of space travel also moved into sharper focus with roll-out, late in the year, of an experimental rocketairplane designed to accelerate to speeds in excess of 3,600 m.p.h. in 90 sees. The fantastic pace for the industry, set by military airrequirements, was highlighted in contract awards by the United States Air Force for a trisonic bomber to fly at speeds in excess of2,000 m.p.h., at an altitude above 70,000ft. More than 40 missile projects, ranging from small air-to-airmissiles to huge intercontinental ballistic missiles, had been announced by the military services by year-end 1958. Thenation's aircraft industry plays a major role in all of these, with responsibilities in the manufacturing fields of the airframe, thepropulsion or the guidance system. The missile projects, by operational category, include: surface-to-surface, 20; surface-to-underwater, 3; air-to-air, 6; surface-to- air, 9; air-to-surface, 6; diversionary, 2. In addition, there wereabout 20 test vehicles, drones, targets and surveillance vehicles. Turbine-powered transports, being manufactured by fivedifferent companies, moved either into operational status or very close to it. About ten other new aircraft models went into produc-tion during the year. An Air Force production fighter captured both world speed andaltitude records, travelling at 1,404.09 m.p.h., and climbing to an altitude of 91,243ft. A U.S. jet tanker transport chalked up anumber of records, including a new non-stop distance record of 10,229.3 miles without refuelling. Smaller craft set official endur-ance and non-stop records. Missile firings continued during the year, with one large inter-continental ballistic missile being fired over 6,300 miles. Lunar probes were successfully launched by both Air Force and Army.Although the probes failed to attain the velocity needed to reach the Moon, both ventures were rewarding because of the knowledgegained. Sales and Production. Sales of the aircraft and missile industry for 1958 are estimated at $11.8 billion,* approximately the same as in 1957. Despite the high sales, production of military aircraft declined *The American billion is 1,000 million.—Ed. from an estimated 5,500 units in 1957 to about 4,000 in 1958.However, rising expenditures for missiles and space vehicles partially offset this marked decline. Expenditures for the procure-ment and production of missiles have risen about 60 per cent from fiscal year 1957 to the estimate for fiscal year 1959.Commercial sales declined for the first three quarters of 1958 as piston-powered airliners were phased out of production. How-ever, the first of the turbine-powered airline transports were delivered and commercial sales were estimated to increase in thefourth quarter. Commercial aircraft, engines, propellers and parts sales are estimated at about $1.5 billion in 1958, compared to$1.6 billion in 1957. Total commercial aircraft production, including helicopters, for1958 is estimated at 6,780 units, slightly higher than the 1957 output of 6,745 units. The value of the 1958 civil aircraft produc-tion is estimated to have been about the same as in 1957. About 225 transports were delivered in 1958, compared to 322 units in1957. More than 50 of these were turbine-powered transports. At the end of October, U.S. manufacturers had orders for morethan 600 turbine transports, valued at about $3 billion. Utility-aircraft production was higher in 1958 than in 1957.About 6,300 utility airplanes were delivered in 1958, compared to 6,118 in 1957. The value of these shipments was approximatelythe same as in 1957—about $100 million. Sales and Earnings. Sales of the twelve major airframe manu-facturers, paralleling those of industry as a whole, were about $7.0 billion, compared to $6.9 billion in 1957. Earnings, however,continued to decrease. The average net profit, as a percentage of sales of the twelve companies, has decreased steadily since 1954—from 3.7 per cent, to 2.4 per cent in 1957. Earnings of the twelve companies were $105.8 million for the first nine months of 1958,compared to $120.1 million for the same period last year. The ratio of earnings to sales for the first three quarters of 1958 wasapproximately 2 per cent, compared to 2.4 per cent for the similar 1957 period, and the annual ratio of earnings to sales will notimprove over the nine months' ratio. The decrease in profit of the aircraft companies, although sales have increased, is due to manyfactors, principally contract cancellations and stretch-outs, reduced progress payments, economic limitations, and proportionatelymore research and development contracts than production contracts. Backlog. The backlog of the aircraft companies is steadilydeclining. It has declined $1.4 billion since the first of the year. As of September 30, 1958, aircraft companies had orders on theirbooks for $13.1 billion, compared to $14.5 billion on December 31, 1957. The backlog has declined more than $5 billion sinceSeptember 30, 1956. Reduction in military aircraft backlog accounts for about abillion of the 1958 decrease, and approximately $4 billion of the $5 billion decrease during the last two years. While it is not possible to calculate the exact increase in themissile backlog, it appears that it does not equal the reduction in the aircraft backlog.The commerical backlog has remained fairly constant for the past year as deliveries of the turbine-powered airline transportsstarted late in the year, and the backlog of piston-powered transports had dropped substantially. Employment. First reversal after 13 consecutive months ofdeclining employment in the aircraft and parts industry occurred in June 1958, when employment increased by 8,400 workers overthe previous month. June employment was 751,200 compared with 742,800 in May—the lowest point in employment since 1955.By May 1958, employment had declined 149,200 workers—a drop of 17 per cent from the peak post-war employment ofApril 1957. Employment at the end of September 1958 was 760,900 and is"expected to remain at about this level into the first months of 1959. Although the work force of the aircraft industry has decreased,the trend has been toward more highly-skilled personnel, which is reflected in their earnings. Costs. The aircraft industry is fighting a battle on two fronts.As the industry fights the technological battle in development of powerful new weapons systems, it simultaneously fights to reducedevelopment and production costs. Average hourly wages of aircraft industry employees are also amajor factor and they continued to increase during 1958, climbing from a 1957 annual average of $2.36, to $2.55 in September 1958.Corresponding average weekly wages have increased from the 1957 annual average of $96.76, to $103.79 in September 1958—an increase of more than 7 per cent.
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