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Planemakers' sales and profits plunged downward at a speed faster than light. Republic Aviation, which stubbornly clung to the airplane and currently relies on its hot F-IO5 fighter-bomber for 98% of its business, has seen its sales dip from $547 million in 1955 to $215 million last year. The three big companies that winged into the commercial jet market were also hard hit: Boeing, Douglas and Convair spent some $700 million to develop their big jets, and only Boeing is in sight of the break-even point.
Fighting against this trend, some major airframe makers tried diversification—turning to everything from hydrofoil boats to garbage disposal plants. Famed old Glenn L. Martin Co. retired altogether from the airframe business, prospered by putting its chips on missiles and space, and lately has branched into such solid civilian products as cement. In time, most of the major planemakers went over to missiles and space. Today, General Dynamics has its Atlas, Boeing Airplane Co. its Dyna-Soar and Minuteman, Douglas its Skybolt, and McDonnell Aircraft Corp. its Mercury capsule. Lockheed Aircraft Corp., which is the prime contractor for the Discoverer, Midas and Samos satellites, gets more than half its sales from missilery and space. So does the company that has built more planes than any other in the past—giant North American Aviation, now working on projects running from rocket propulsion to inertial guidance. Altogether, eleven old-line plane companies are bidding for a prime contract on Project Apollo, which is calculated to land an American on the moon by 1969.
The Benefits of Fallout. Conspicuously missing from the list of prime contract bidders on Project Apollo is Tom Jones's Northrop Corp. But no matter who wins it, Northrop stands to pick up fat sub contracts.
This happy state of affairs is the consequence of the novel notions that Jones began to urge on Northrop almost from the day he joined the company. Within months after he was hired, Jones was invited by Northrop's late President Whitley Collins to help him reshape Northrop's whole way of doing business. Characteristically, scholarly Tom Jones began by combing through innumerable speeches by top U.S. Government officials, and detected a subtle but profound change in defense spending policy. Says Jones: "We came to the conclusion—it seems simple now, but remember that was the mid-1950s—that the dollar sign had been put into the military-technical equation. Up until that time, it hadn't been necessary to be a good defense contractor. The military had said. 'Don't worry about cost, because this is an emergency.' Well, now we were at last going to have orderly procurement. On top of that, the advancement of technology had shot costs way up."
Even then, Jones foresaw sharply increased Pentagon pressure for higher performance, and sharply increased competition among companies for the defense dollar. How could relatively small Northrop prosper? One answer, Jones concluded, was to concentrate on making selected parts rather than entire systems: "Whatever we could do exceedingly well, we would exploit; whatever we were second best in, we would drop."