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A prime example is Douglas' handling of the manpower problem that has graveled all planemakers. The turnover of Douglas workers actually runs as high as 85% in a year, about average for the Southern California industry. But some how, through his genius for organization and efficiency, Douglas has kept production up without flagging. In the air craft industry, with its outstanding man power problems at Ford's Willow Run and Boeing's Seattle plants, this is a sensational achievement. Vice President Conant's explanation for the phenomenon: "We have had good airplanes. We didn't have to stop and swallow any debacles." Douglas has not achieved this efficiency through any special golden-rule-and-free-showers treatment of workers, though his paternalistic Welfare Department is large.
Nor does he have any exquisitely sympathetic labor relations. He operates one of the biggest and last great open shops in the U.S. Union leaders make no secret of their alarm. Douglas' attitude is direct, as usual. On his desk sits a small pottery model of a skunk, which many visitors instantly link mentally with the colloquial axiom: "Never get in a squirting match with a skunk." It is said that when visitors mention labor problems to him, he merely points at the skunk.
His strategy in labor relations is very simple, as always. After six years of in tensive effort, less than 15% of his 156,000 employes are union-organized. A main reason is that he always keeps the union off balance, "scooping" it again & again.
The union never gets a chance to announce good news. Example: after long union agitation for pay raises for the Southern California aircraft industry, the War Labor Board decided to grant the increases. Douglas Aircraft somehow got an advance tip, and rushed through the presses a special four-page edition of the company house organ, telling all the workers how the company had won them a raise. The U.A.W.-C.I.O., caught flatfooted, limped to press a day later. Its claim for credit for the raise fell flat.
Another, even greater, factor is the large labor turnover. The union proselytizes twelve men to get one more or less permanent member — and sooner or later he quits too.
The Black Future. For the job of running his company, Donald Douglas collects $120,000 salary a year, which he spends sparingly. Dividend-wise, the returns have not been rich, although the company has not lost a dime since it started. The best year was 1941, when net profits were a fat $18,177,000 after taxes on its gross of $41,877,000.
After the company wound up its foreign orders in 1942, the net profits dropped sharply to $11,055,000. This year they will be still lower, with the percentage of profit to gross, which was a firm 8% in 1938, now dropping below 3%. Compared to a 1938 net profit of $2,147,000, these figures are high. But despite its present position with an annual business of $1,000,000,000 and a backlog of over $2,500,000,000 (fourth largest of any U.S. company), the company had been able to pile up only $36,000,000 in net working capital, and contingency reserves of only $6,875,000. This is enough to meet one week's present payroll. And this may be one reason why the future of aviation looks black to Douglas—as, it must be said, it does to many other aviation men.