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Had Convair backed out of the commercial jet business with the 880 fiasco, it might have held its losses to perhaps $100 million. Instead, in an attempt to recoup its 880 losses, Convair decided to build a long-range jet, the 990, which, by using the then new fanjet engine, would fly faster (635 m.p.h.) than any comparable commercial jet. To save lead time, Convair skipped making a prototype, with the result that when the first 990s came off the production line, they could not fly at the guaranteed speed—and General Dynamics was forced to cut the sale price on early models and lose precious time in modifications.
A Staff Man. It was this series of disasters, all of which sent General Dynamics' jet development costs soaring hundreds of millions of dollars above Convair's original estimates, that landed G.D. in its present trouble. Pace insists that there were no obviously wrong decisions involved—just a run of incredibly bad luck.
But Pace's critics charge him with failing to exercise effective control over Convair, which, as the company's largest and most profitable division, he allowed to operate almost as an independent corporation, until he finally broke it up into four separate divisions last May. By failing to take hold of Convair earlier and to familiarize himself with its operations, argue these critics, Pace deprived himself of the opportunity to spot the danger signals that heralded coming crises. Pace concedes that "from the start, Convair resisted supervision." But, says he, "The people making decisions there had been doing so successfully for ten years. I'm a staff man to the nth degree. I never make a personal arbitrary decision."
The Corner. For Frank Pace and General Dynamics alike, the results of insufficient control at the top have been painful. Today, General Dynamics is being run not by Pace but by an emergency committee of five directors including Chicago Financier Colonel Henry Crown—the man who last week sold his ownership of the world's tallest building, the Empire State, for $65 million. Among other things, the directors' committee is seeking a new chief executive officer. Pace, who at 49 finds his big-time business career probably at an end, expects to step down in April, "if the company has turned the corner."
General Dynamics may well turn that corner in due time. The directors' committee is considering selling off the money-losing commercial products end of the Stromberg-Carlson Division and perhaps also the Liquid Carbonic Division, an indifferent earner. The remainder of General Dynamics' twelve divisions are operating satisfactorily in the black, and some Wall Street analysts believe the company will show a respectable profit in 1962—provided additional write-offs on the jet program do not exceed the $5 to $10 million the directors now predict. But before General Dynamics can realize the promise it once seemed to show, someone will have to give it the aggressive, even arbitrary, leadership to convert it from an artificial colossus to a unified corporation.