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Missiles and Creative Destruction in the American Aircraft Industry, 1956–19611

Published online by Cambridge University Press:  24 July 2012

G. R. Simonson
G. R. Simonson
Affiliation:
Associate Professor of Economics, Long Beach State College
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Abstract

Professor Simonson casts the recent history of the American airframe industry against the Schumpeterian concept of “creative destruction” in this study of business response to technological change.

Type
Research Article
Information
Business History Review , Volume 38 , Issue 3 , Autumn 1964 , pp. 302 - 314
Copyright
Copyright © The President and Fellows of Harvard College 1964

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References

2 Schumpeter, Joseph A., Capitalism, Socialism, and Democracy (3rd ed., New York, 1950), p. 84.Google Scholar

3 Ibid., p. 83.

4 Of all the manufacturing industries within major industrial groupings, as classified by the Department of Labor, the aircraft and parts industry ranked second largest with 701,600 employees in June, 1961. It was exceeded by the first-ranking, motor vehicles and equipment, with 715,800 employees. As recently as 1959, the aircraft and parts industry was the largest employer in the United States. U. S. Department of Labor, Monthly Labor Review, vol. 85 (May, 1962), pp. 573–75.

The aircraft industry is usually broken down into four subgroups: airframes; aircraft engines and parts; aircraft propellers and parts; and other aircraft parts and equipment. The concern herein is with the principal segment of the industry, that of airframe manufacturing. Airframe producers are those who assemble the aircraft components, which they may or may not produce themselves, and produce the finished aircraft.

5 By the time the final versions of the Atlas ICBM are produced, it is expected to exceed a speed of Mach 15. Proell, Wayne and Bowman, Norman J., A Handbook of Space Flight (2nd ed., Chicago, 1958), p. 293.Google Scholar This speed vastly exceeds the 650 miles-per-hour speed of the advanced versions of the B-52 which is our principal long range striking force. Aerospace Industries Association, Aerospace Yearbook (Washington, D.C., 1962), p. 312.Google Scholar

6 Schumpeter used this descriptive term when referring to the reaction of the economy, or firms or industries within it, in adapting to a change in ways that are “outside the range of existing practice.” See Schumpeter, Joseph A., “The Creative Response in Economic History,” Journal of Economic History, vol. VII (November, 1947), p. 150.Google Scholar

7 U. S. Air Force, “The Guided Missile,” The Air Reservist, vol. IX (December, 1957), p. 4.Google Scholar

8 “Aviation,” Time, vol. 74 (September 14, 1959), p. 92.

9 Lee, Ben S. (ed.), Aerospace Facts and Figures, 1962 (Washington, D.C., 1962), p. 14.Google Scholar

10 Ibid., p. 7.

11 Moody's Investors Service, Moody's Industrial Manual, 1961 (New York, 1961), p. 604.Google Scholar

12 Lee, Ben S. (ed.), Aerospace Facts and Figures, ′61 (Washington, D.C., 1961), p. 39.Google Scholar

13 U. S. Congress, House Committee on Armed Services, Aircraft Production Costs and Profits (Washington, D.C., 1956), p. 2583.Google Scholar

14 Gregory, William H., “Write-Offs Swell as Industry Diversifies,” Aviation Week, vol. 73 (March 7, 1960), pp. 208–209.Google Scholar

15 Lee, Ben S. (ed.), Aviation Facts and Figures, 1957 (Washington, D.C., 1957), p. 37.Google Scholar

16 Lee (ed.), Aerospace Facts and Figures, ′61, p. 42.

17 Lee (ed.), Aerospace Facts and Figures, 1962, p. 21.

18 This is not meant to minimize the fact that the advance in aircraft technology has also played an important part in bringing about this change.

19 Lee (ed.), Aerospace Facts and Figures, 1962, pp. 61–66.

20 For an account of the industry's structure both before and during World War II, see Simonson, G. R., “The Demand for Aircraft and the Aircraft Industry, 1907–1958,” Journal of Economic History, vol. XX (September, 1960), pp. 387, 375.Google Scholar

21 Beech, in fact, had a ratio of missiles to military sales of 67.48 per cent but the high ratio was the result of a severe contraction in military sales value relative to a low value of missiles sales, rather than a rapidly expanding missiles demand.

22 Stefan Dupré, J. and Eric Gustafson, W., “Contracting for Defense: Private Firms and the Public Interest,” Political Science Quarterly, vol. LXXVII (June, 1962), p. 166.Google Scholar

23 Ibid., and Fred Weston, J. (ed.), Procurement and Profit Renegotiation (San Francisco, 1960), p. 86.Google Scholar

24 For a listing of the American missiles programs and the firms engaged in them, see Lee (ed.), Aerospace Facts and Figures, 1962, pp. 30–31.