4 Annual Report ~
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~- ---~{ -. --- --~ AEROSPACE INDU.STRIES ASSOCIATION OF AMERICA, INC. 19?4 Annual Report ~ .,.. AlA OFFICERS T. G. POWNALL, Chairman of the Board T. A. WILSON, Vice Chairman of the Board KARL G. HARR, JR., President SAMUEL L. WRIGHT, Vice President/Secretary l GEORGE F. COPSEY, Treasurer EXECUTIVE COMMITTEE T. G. POWNALL, Martin Marietta Aerospace T. A. WILSON, The Boeing Company PAUL THAYER, 17ze LTV Corporation KARL G. HARR, JR., Aerospace Industries Association MARK MORTON, General Electric Company ROBERT ANDERSON, Rockwell International Corporation CARL L. SADLER, Sundstrand Corporation R. D. DELAUER (DR.), TRW Inc. BOARD OF GOVERNORS JAMES R. DEMPSEY, Vice President and Group Executive, Avco Corporation WILLIAM C. PURPLE, President, Aerospace-Electronics Group, The Bendix Corporation T. A. WILSON, Chairman and Chief Executive Officer, The Boeing Company HARRY H. WETZEL, President, The Ga"ett Corporation DAVID S. LEWIS, Chairman and Chief Executive Officer, General Dynamics Corporation MARK MORTON, Vice President and Group Executive, Aerospace Group, General Electric Company C. B. McKEOWN, Executive Vice President, Engineered Systems Co., The B. F. Goodrich Company A. E. PUCKETT (DR.), Executive Vice President and Assistant General Manager, Hughes Aircraft Company K. ROBERT HAHN,Executive Vice President, Lear Siegler, Inc. DANIEL J. HAUGHTON, Chairman of the Board, Lockheed Aircraft Corporation PAUL THAYER, Chairman and Chief Executive Officer, The LTV Corporation T. G. POWNALL, President, Martin Marietta Aerospace CONTENTS S. N. McDONNELL, President and Chief Executive Officer, McDonnell Douglas Corporation GERALD J. LYNCH, Chairman and Chief Executive Officer, Menasco Manufacturing Company 2 Message to the Membership EDWARD L. MONTGOMERY, Executive Vice President, Aerospace and Communications Operations, Phi/co-Ford Corporation 4 Aerospace Operations Service D. BRAINERD HOLMES (DR.), Executive Vice President, Raytheon Company 8 Aerospace Procurement Service ROBERT ANDERSON, President and Chief Executive Officer, Rockwell International Corporation 13 Aerospace Research Center B. F. RAYNES, Chairman and Chief Executive, Rohr Industries, Inc. 14 Aerospace Technical Council ROBERT E. McDONALD, President, Sperry Rand Corporation CARLL. SADLER, President, Sundstrand Corporation 20 International Service JAMES L. MURRAY,President, Teledyne CAE 22 Office of Pub Iic Affairs BARRY J. SHILLITO,President, Teledyne Ryan Aeronautical WILLIAM G. GISEL,President, Bell Aerospace Company, Textron, Inc. 24 Traffic Service R. D. DELAUER (DR.), Executive Vice President, TRW Inc. 26 Transport Aircraft Council HARRY J. GRAY, Chairman, President and Chief Executive Officer, United Aircraft Corporation T. J. MURRIN, President, Public Systems Company, Westinghouse Electric Corporation 27 Organizational Chart KARL G. HARR, JR., President, Aerospace Industries Association In the year 1973, the aerospace industry reversed the trend of Message to the declining sales which began in 1968 and posted an 8.7 percent increase in sales to a total of $24.9 billion. Now, in reporting Membership on 1974, a comparable increase was attained despite such interrelated factors as the energy shortage, increases in both labor and material costs, and worsening domestic and foreign economic conditions. In fact, during 1974 sales rose more than 9 percent to $27 billion; and, other factors being relatively stable, we can see the possibility of an additional increase of 6.8 percent in 1975 to MR. HARR $29 billion. AEROSPACE INDUSTRY SALES 1968 TO DATE (Billions of Dollars) $30 ..--------------------, 25 20 -----~- 15 10 5 0 1968 '69 '70 '71 '72 '73 NOTE : E Estimated This good news must be put in perspective by reporting that these sales figures of the last three years are stated in current dollars, and therefore encompass exceptionally high rates of inflation. Translated into 1968 dollars, the declining trend in sales has not stopped but only slowed appreciably. Again, in terms of constant 1968 dollars, sales declines will continue unless the nation is successful in its efforts to stem inflation and arrest the current recessionary movement of our national economy. In other words, it might be said that the aerospace industry is "about level and holding." Other aspects of the industry's performance in 197 4 bear noting: • Sales to the Department of Defense, which decreased in 1973, recouped in 1974, and sales to NASA increased for the first time since 1968. As forecast, commercial aerospace sales posted the largest percentage increase, up 22 percent to an all·time high of $7.5 billion. Sales of non-aerospace products by aerospace firms was a close second in percentage of increase, approaching $4 billion for the first time. 2 The latter two categories were the only ones to post percentage mittee of the Board of Governors. Examples of subjects covered increases in terms of constant 1968 dollars. include: • New plant and equipment expenditures increased by some • Trade reform. 45 percent, continuing a trend begun in 1972. • Energy patent policies. • Estimated net profits on sales after taxes climbed to 3.4 • Extension of Export-Import Bank operations. percent from 2.9 percent in 1973, but aerospace's 3.4 • International trade. percent still is little more than half the estimated 6 per • The Renegotiation Act. cent profit for all manufacturing corporations. • The Service Contract Act. • The aerospace industry payroll rose slightly over the • The Workmen's Compensation Act. 1973 level to an estimated 968,000 in 1974. In addition, the Association's position on a variety of other • Rei iable yearend estimates indicated that aerospace indus subjects was presented to ap)'lropriate committees and subcom try exports continued their steady upward movement, mittees of Congress. climbing by about one-third to nearly $6.9 billion in AI A continued to be active in the International Coordinating 1974. However, despite this outstanding contribution, Council of Aerospace Industries Associations (ICCAIA), an the U.S. suffered an overall trade deficit of $3.1 billion. organization that gives the manufacturers of civil aircraft a • The backlog of orders for major aerospace companies in voice in the proceedings of the International Civil Aviation creased slightly during 1974 to $32 billion, the $400 Organization (ICAO). million upswing almost totally in U.S. Government con The one-year extension of my original term as Chairman of tracts. ICCAIA expired at the end of 1974 and Dr. E. Gonzalez Garcia, President of the Association Europeenne des Constructeurs de U.S. EXPORTS OF AEROSPACE PRODUCTS Materiel Aerospatial (AECMA) and ATECMA of Spain, was AND AEROSPACE CONTRIBUTION elected Chairman and David Mundy of Air Industries Asso TO U.S. BALANCE OF TRADE ciation of Canada was confirmed as Vice Chairman. (Billions of Dollars) Although the charter for ICCAIA calls for its Secretariat to $8r-----------------------------~ move with the chairmanship, the suggestion that AlA retain it was accepted. I believe that this move was proper and logical ~' 7 ,~ , because it will provide continuity to the relationship with ICAO. I,' Regular semi-annual AlA membership meetings were held I~ in May and November. At the latter meeting, T. A. Wilson, 6 II II Chairman and Chief Executive Officer, The Boeing Company, 1/ was elected to succeed T. G. Pownall, President, Martin Marietta I I 5 I Aerospace, as Chairman of the Board of Governors on Jan. 1, I 1975. S. N. McDonnell, President and Chief Executive Officer, McDonnell Douglas Corporation, was elected Vice Chairman of 4 the Board. A complete list of key personnel for 1974 precedes this message. During the months between regular meetings, conferences with the members of the Executive Committee of the Board of Governors provided valuable guidance for the Association. And 2 AEROSPACE BALANCE OF TRADE as in the past, strong support by member company experts (Exports Minus Imports) made possible a continued high level of productive. effor:.t, Highlights and details are covered in the following sections of this 1974 Annual Report. NOTES: Totals are in current dollars Respectfully submitted, E Estimated During the year, I testified before Congress or submitted statements 0!1 subjects of direct interest to the aerospace in /)r-- I dustry. These activities were undertaken with the guidance KARL G. HARR, JR. and support of the AlA membership and the Executive Com- President 3 Aerospace The Service was involved in a wide variety of projects during Operations 1974. Service Quality Resources Study An annual update of AlA's continuing survey of quality costs was conducted. It serves as a quality management tool The Aerospace Operations Service is concerned with and a reference for various company management functions the management fields of manufacturing, quality as concerned with quality costs and staffing. Training and guid surance, subcontract and materiel management, and ance was provided member companies to assure that the sur post-delivery product support. Its six committees are vey questions would be uniformly interpreted. Resultant data augmented by subcommittees, ad hoc groups of spe provided valid comparisons with prior years and identified cialists, and project task panels of industry experts. changes and trends in the costs of quality assurance. They handle tasks related to new and revised govern Review and Comment ment policies, regulations, statutes and procedures, on Government Specifications and initiate projects-by industry or government re