AlA OFFICERS CONTENTS S. N. McDONNELL, Chairman of the Board 2 Message to the Membership T. J. l'v!URRIN. Vice Chairman o.fthe Board 4 Aerospace Operations Service KARL G. HARR, Jr., President SAMUEL L. WRIGHT. Vice President/Secretary 9 Aerospace Procurement Service GEORGE F. COPSEY. Treasurer 13 Aerospace Research Center 15 Aerospace Technical Council VICE PRESIDENTS 20 International Service MARSHALL J. GARRETT, International 22 Office of Public Affairs LLOYD R. KUHN, LeRislatil·e Affairs 24 Traffic Service FRANZ 0. OHLSON, JR., Procurement & Finance JULIAN R. LEVINE, Public Affairs 26 AlA Membership C. RONALD LOWRY, Research & Technoh>t<Y 28 Organizational Chart EXECUTIVE COMMITTEE S. N. McDONNELl:, McDonnell Douglas Corporation T. J. MURRIN, WestinRhouse Electric Corporation T. A. WILSON, The Boeing Company KARL G. HARR, JR., Aerospace Industries Association WILLIAM L. GORE, Aerojet-General Corporation JOHN B. JACKSON, IBM Corporation WILLIAM F. SCHMIED, The Singer Company HARRY J. GRAY, United Technologies Corporation BOARD OF GOVERNORS WILLIAM L. GORE, Senior Vice President, Aerojet-Genera/ Corporation WILLIAM C. PURPLE, President, Aerospace-Electronics Group, The Bendix Corporation T. A. WILSON, Chairman & Chief Executil·e Officer, The Boeing Company JOHN W. DIXON, Chairman of the Board & President, £-Systems, Inc. HARRY H. WETZEL, Presidelll & Chairman <!f the Board, The Garrett Corporation DAVIDS. LEWIS, Chairman & Chief Execll/il'e Officer, General Dynamics Corporation MARK MORTON, Vice President & Group Executi1·e, Aerospace Group, General Electric Company JAMES E. KNOTT, Vice President & General Manager, Detroit Diesel Allison Division, General Motors Corporation C. M. MARTENSON, President & Chief Executil·e Officer, Heath Teena Corporation E. D. CRITTENDEN, JR., General Manat<er. Industrial Systems Department, Hercules Incorporated JOHN W. ANDERSON, Vice President & Group Executil•e, Aerospace & Defense Group, Honeywell Inc. ALLEN E. PUCKETT, Executil•e Vice President & Assistant General Manager, Hughes Aircraft Company JOHN B. JACKSON, Vice President, IBM Corporation & President, Federal Systems Division RAND V. ARASKOG, Execll/ive Vice President, International Telephone and Telegraph Corporation ROBERT W. HAACK, Chairman of the Board, Lockheed Aircraft Corporation PAUL THAYER, Chairman & Chief Executive Officer, The LTV Corporation T. G. POWNALL, Execlllive Vice President, Martin Mariella Corporation S. N. McDONNELL, President & Chief Executive Officer, McDonnell Douglas Corporation THOMAS V. JONES, Chairman & Chief Executi1•e Officer, Northrop Corporation GERARD A. FULHAM, Chairman <!f the Board & Chi£:{ Executil·e Officer, Pneumo Corporation ROBERT ANDERSON, President & Chief Executin' Officer, Rockwelllntemational Corporation FREDERICK W. GARRY, Chairman, Chief Executi1·e & President, Rohr Industries, Inc. WILLIAM F. SCHMIED, Executi1•e Vice President, The Singer Company ROBERTS. AMES, Senior Vice President, Textron, Inc. HARRY J. GRAY. Chairman, President & Chi£:{ Executil·e Officer, United Technologies Corporation T. J. MURRIN, President, Public Systems Company, Westinghouse Electric Corporation KARL G. HARR. JR., President, Aerospace Industries Association <!{America. Inc. In terms of current dollars, the aerospace industry's sales in 1976 reached record proportions, but the gains were illusory due to the continuing erosive effect of inflation. Sales totaled $29.3 billion, exceeding the previous all­ time record of $29.0 billion achieved in 1968. Measured in constant 1968 dollars, however, 1976 sales were actually more than $11 billion below the record year. Gains in 1976 occurred primarily in military and general aviation aircraft. The major decline was in commercial transport aircraft, reflecting inadequate airline earnings and a slow-paced economic recovery. Export sales, which have mounted steadily in every year KARL G. HARR, JR. since 1972, remained a consistently bright element of the industry's performance. In 1976, aerospace exports reached a new record level of $7.9 billion, up from $7.8 billion in the preceding year. The aerospace trade balance for 1976 similarly reached a new high of $7.3 billion, which compares with the previous record of $7 billion attained in 1975. Contrary to the general public belief, civil aerospace exports far outstripped military sales abroad. Military ex­ ports amounted to $2.2 billion, or less than 28 percent of the total. Other economic highlights of 1976 included: • Backlog as of year-end 1976 was more than $3 billion higher than at the end of the preceding year. Here again however, the inflation factor must be applied. In terms of constant 1968 dollars, 1976 backlog was only $1 billion above the 1975 figure. U.S. government accounted for more than $23 billion, or 60 percent of the total backlog. • Employment, based on data compiled by the Bureau of Labor Statistics and reports from AlA member com­ panies, continued to decline. Total employment at the end of 1976 was 893,000, down from 925,000 at year-end 1975. •Industry net profits as a percentage of sales (after taxes) climbed to 3.5 percent, up from 1975's 3.0 percent Aerospace profits remained low, however, in compariso~ with the estimated 5.3 percent for all manufacturing indus­ tries. • By major categories, the $29.3 billion sales for 197 6 breaks down to $15.7 billion for aircraft and related equip­ ment, $5 billion for missiles, $3.4 billion for space equip­ ment and $5.2 billion for non-aerospace products pro­ duced in aerospace facilities. The latter figure represents an all-time high and continues the pattern of consistent growth that has occurred in every year since 1971. 2 Among significant industry matters addressed by AlA • A statement on the inclusion of white collar workers in during the year were: the Service Contract Act, submitted to the House Educa­ • The Aerospace Technical Council played a major role tion and Labor Subcommittee on Labor-Management Re­ in development of an Office of Management and Budget lations. circular on major systems acquisition policy. Prepared by • A statement on DoD Profit '76, submitted to the Joint the Office of Federal Procurement Policy (OFPP), the cir­ Committee on Defense Production. cular outlines how all federal agencies will acquire major With the assistance of key personnel in member com­ systems in the future. AlA was also working with OFPP on panies, AlA's staff maintained a high level of activity in preliminary draft of another major OMB circular, Federal various other areas of importance to the industry. Such Research and Development Acquisition. activities are detailed in the following sections of this An­ • Through the American National Metric Council's nual Report. Aerospace Sector Committee, AlA continued to assist in coordinating metric conversion planning throughout the aerospace community. Respectfully submitted, • Through the Aerospace Procurement Service, AlA/ CODSIA continued active liaison with government agen­ cies and Congressional committees relative to policies, procedures and practices regarding Independent Re­ / search and Development/Bids and Proposals. • Through the Aerospace Operations Service, AlA par­ Karl G. Harr, Jr. ticipated in the preparation of a report for the Navy on President Automatic Test Equipment. Prepared by a committee of 109 technical and management experts from five associa­ tions, the report treats all aspects of automatic testing of Navy weapons systems and equipment during the years 1981-85. The three-volume report was nearing comple­ tion at year-end. During the year, AlA testified before Congress or submit­ ted industry position statements on a number of subjects of direct interest to the industry, including: • Testimony by the undersigned on the future of avia­ tion before the House Science and Technology Subcom­ mittee on Aviation and Transportation Research and De­ velopment. • Testimony by three industry officials representing AlA on proposed wind tunnel projects before the abovemen­ tioned subcommittee. • A statement on Tariff Schedules 806.30 and 807.00, submitted to the House Ways and Means Subcommittee on Trade. • A statement on extension of the Export Administra­ tion Act, submitted to the House International Relations Committee and to the Senate Banking, Housing and Urban Affairs Subcommittee on International Finance. • A statement on the tax treatment of foreign source income, submitted to the Senate Committee on Finance. 3 The Aerospace Operations Service is The Aerospace Operations Service during 1976 continued concerned with the management and a program of widely diversified projects and ad hoc studies pertaining to improvements in manufacturing pro­ technical aspects of manufacturing, ductivity, quality assurance methods and techniques, quality assurance, and post-delivery weapon system support, commercial airline support and product support. The five committees technical publications and communications techniques. Through liaison with governmental departments and agen­ concerned are augmented by project cies and other national and international associations, groups, subcommittees, liaison panels, these projects and studies are being directed toward ad hoc groups, technical specialists and achieving advancements in the state of the art as well as mutual reductions in program costs. task panels of industry experts. They perform tasks related to Government, Automatic Test Equipment aerospace industry or commercial airline A report by industry on Automatic Test Equipment pre­ pared for the Navy,