of 1920 placed responsibility for industrial mobilization upon the
Assistant Secretary of War, Louis Johnson, or, noting the controversy
between him and his chief, Secretary Woodring, had changed its mind.
In any event, Bill Knudsen was appointed Chairman of the National
Defense Advisory Committee and George Mead took over the aircraft
job. At the time, no one was able to enlighten us on the real meaning
of the 50,000-plane program; it might be a yearly output, a war
total, or anything else the fancy might suggest. Nor could anyone
advise us what types of aircraft were contemplated. Scuttlebutt
rumor had it that the President had first asked the Army and Navy to
submit estimates of the maximum number of aircraft they could use but
upon receipt of the figures had been disappointed at their lack of
imagination. They couldn’t seem to add up to more than a few thousand.
His own first figure, so the gossip went, had been a nice round
25,000, the very number, curiously enough, which had been hit upon
back in 1917 as the number required to “darken the skies” over
Germany. But later, so ran the story, the President had tried out his
fireside chat on Lord Beaverbrook, the same “Beaver” who, not many
weeks earlier, had snorted his scorn at the suggestion that England
would ever have to look to America for aircraft production. And
the Beaver, so we were told, had advised the President not to be a
piker—100,000 airplanes would make better headlines—and the President
had compromised on 50,000. In any event, BUAERO and Wright Field had
now dubbed the announcement “the numbers racket,” so the fact that
a fellow like George Mead, who not only knew the words and music
of aviation but could actually sing the song, was now handling the
aircraft program seemed to us an incredibly lucky break.
And so it proved, for George got the two services to agree upon the
reasonableness of some kind of program that seemed to add up to
50,000 and then passed the job back to them for execution. This put
the ball back in play on a field where we knew the score and where
the officials knew the rules and the game. It converted the war from
a phony to a shooting war, and gave us the signal for take-off.
Now as the new British addition began to take form, we put our War
Plans Division to work on a new American addition. This we decided to
create in two steps and to finance with funds to be acquired in the
market. Designed to utilize the entire capacity of the East Hartford
area, the addition would double the total facilities already in hand.
Our carefully prepared war plan contemplated farming out more and
more of the work to subcontractors and suppliers as rapidly as they
could be trained to manufacture to our high standards of precision
and workmanship. The original manufacturing concept of Pratt and
Whitney, Hamilton-Standard, and Vought had contemplated utilizing
the skills and facilities of other competent shops in peacetime and
in the interest of economy; now we embarked on our long-contemplated
program of expansion of this technique in the interest of accelerated
war production.
The capacity of any working area such as East Hartford is definitely
limited by physical characteristics, such as transport, electric
power, water supply, labor supply, housing, and so on. These limits,
as they existed in peacetime, could be expanded to meet wartime
needs by close cooperation with the management of the utilities. The
War Plans Division, having foreseen the limitations of the several
factors, had provided us with the information on which to approach
our numerous suppliers of all kinds. Certain of these, like the
power companies, whose normal business contemplated a continuous
expansion of facilities to meet normal demands, used the information
furnished them to arrive at decisions to advance their schedules
wherever necessary to meet peak demands. Now “the aircraft,” as we
were called in Hartford, moved out of the category of a speculative
venture and into the position of the controlling industry of the
area. Our whole philosophy of leadership, based as it was on the
cooperative process, now paid off, not alone in returns to us but to
our neighbors and, in fact, to the whole country.
In this connection, reference can be made to a report on “Industrial
Mobilization and Design and Development of Nazi Germany,” issued by
the Office of Military Government for Germany under date of October
5, 1945. The report is based on an examination of Albert Speer by
several officers of the Intelligence Department, and deals with the
part Speer played subsequent to the year 1942 when he was directed
to take over the administration of German war production. Speer had
realized immediately what great fundamental errors had been committed
and how small armament output had remained prior to his taking over.
The Reichswehr had dealt with armament problems theoretically and
industry generally had had no great inclination to participate in
preparatory work. The government organizations had become so large
that they had managed only to keep each other busy; they committed
what might be called mental incest and paved the way for all the
mistakes that had later kept armament production at a surprisingly
low level.
Speer had gone on to say that the Germans had been at a great
disadvantage because their rearmament had been planned too long
on a theoretic basis. A strict system of discipline and orders
fully in accord with their authoritarian regime had replaced what
this apparatus lacked in knowledge and ability. He had written a
memorandum to Hitler on July 20, 1944, in which he stated that
Russia and the United States were to be envied because external
circumstances had forced them to improvise. The United States had
had to raise their armed forces quickly and therefore could not
do without the active personalities in industry, politics, and
public life. In Germany, on the other hand, those who occupied
themselves with war production were professional soldiers, a closed
corporation without the benefit of fresh outside minds. For this
reason, Speer believed that the extended theoretical preparation of
German armaments had been mainly responsible for their low level of
production until after 1942 when he had restored the principle of
individual initiative by putting war production back into the hands
of private industry. Within a year he had completed an organization
of completely new leading personalities to restore the autonomy of
industry and preserve its unity even in the most trying times.
The virus that infected Germany also attacked us, but our rugged
constitution enabled us to throw it off.
CHAPTER TWENTY-SEVEN
For What Is a Man Profited?
The selection of Bill Knudsen to head up the agency charged with
coordinating war production was a happy one. Just as George Mead knew
his aircraft, so did Bill Knudsen know his production. Furthermore,
he knew the men who knew production and he held their confidence and
regard. This was important at the moment when business and industry
had reason to fear and suspect government; the drift in this country
toward the omnipotent state had aroused intense bitterness and might
have bogged down the whole program had not Bill Knudsen attracted
to his organization other men who held the respect of their fellow
manufacturers. These men began immediately on the complex task of
unraveling all the mare’s nests that had collected around government
procurement.
About the middle of the summer of 1940, Fred Rentschler and I went
down to Washington to call on the Grand Old Man and outline to him
the key to our whole program. The President’s 50,000-plane program,
when superimposed on the already staggering foreign purchases, was
clearly beyond the total capacity of the New England area. And if we
undertook further expansion in other areas, we would impose further
burdens on an already hard-pressed staff. The time had now come to
bring in the great automotive industry.
Since Knudsen had, until recently, been president of the General
Motors Corporation, we saw little hope of interesting him in
diverting Buick or Chevrolet to aircraft-engine production just yet.
For our automobile manufacturers still remembered the treatment given
them back in 1918 when, after the Armistice, their war contracts had
been ruthlessly canceled—torn up like so many scraps of paper—and
their “war profits” had vanished from view except in the news
headlines of the next twenty years. It would take some doing to
persuade Bill Knudsen to our cause, and even Bill Knudsen would have
his work cut out to get his automotive friends on the beam. As a
matter of fact, without Bill Knudsen it could never have been done in
time.
For Bill was animated throughout his wartime service by a great
motive. He had come to the Land of the Free a penniless immigrant,
and had there won not alone riches but the respect and esteem of
the great men of the land. And whatever the generation which had
inherited liberty might think about it, Bill Knudsen knew what
liberty meant; his whole being was imbued with a love for the country
of his adoption, with a devotion to the spirit which animated it and
an intense zeal to pay back in part some of the privileges it had
extended him. And so deeply was this zeal imbedded in his character
and so honestly did he seek to pay back his debt that even men grown
cynical under the lash of government were impelled to go along.
His simple fundamental character combined with his native wit and
intelligence gave Bill Knudsen such qualities of leadership at the
very moment they were most needed.
The day Fred Rentschler and I walked in on him, we found him leaning
over a plain table pawing around among some engine parts with George
Mead and Henry Crane. “Uncle Henry” Crane, one of the great engineers
of the automotive industry, had been called in for a conference over
the failures of the Allison liquid-cooled engine. While Fred and
I cooled our heels waiting for experts to decide upon what design
changes were necessary to make the Allison run, before they could
discuss policy with us, we thought we saw a certain irony in the
situation. For the Allison engine was the power plant that had taken
the business away from our 1830 engine in the critical months of 1939
when that one contract meant so much to Pratt and Whitney.
When, finally, it came our turn, we broke the news to Bill Knudsen
that, with the completion of the new American addition in Hartford,
we would reach a saturation point in Hartford and must look elsewhere
for new facilities. Bill knew that Wright Aeronautical planned to
build a big new shop somewhere in Ohio and presumed, of course, we
would go and do likewise, but when we explained the differences in
our two situations, he understood. Wright Aero had been formed out
of the consolidation of two big engine companies, Curtiss and Wright,
and had more topside staff than Pratt and Whitney. Guy Vaughan was
still its president, but Don Brown had died. Now when we mentioned
licensing the automotive companies, Bill’s first question was who did
we have in mind. When we told him Ford, he at first shook his head,
but when we stressed the point that selling Uncle Henry was his job
and that no one except he and George Mead could do it, Bill Knudsen
reluctantly agreed to try.
And Bill and George succeeded. Within a few days we received word
that Ford Motor would send a group of shopmen to look over the job
and see what could be done. Bill Knudsen, familiar with the Ford
setup, had suggested that the machinery in the great Ford tool room,
along with some six thousand men employed there, would take the
Pratt and Whitney job in its stride. To automotive men, the aircraft
industry still looked something like the ancient “carriage trade,”
and they discounted our insistence that our standards of quality and
precision were not easily come by in the mass-production industries.
Edsel Ford and Charles Sorenson met with Fred Rentschler and me in
the boardroom in East Hartford. Sorenson did most of the talking,
though Edsel Ford was president of the company. A rough-and-tumble
shopman of the Ford school of give and take, Sorenson wasted few
words. His men had looked the shop over and found nothing complicated
about it—nothing they didn’t savvy. The machine tools seemed standard
and the processes excellent. At first his boys had thought the job
looked easy, but the more they had seen of our precision, the more
they had become impressed with the task before them. At first they
had thought we might be overdoing the quality but after a look at the
test-shed running and studying the high demands for durability and
dependability, they had changed their minds. They realized it was a
tough racket but were prepared to go ahead on two conditions.
First, they would have to adopt our technique in every detail and
even have to build a complete new aircraft-engine shop; the idea that
their tool room would serve was fantastic, the machines wouldn’t
do at all. Second, they would have to have access to our suppliers
and subcontractors for parts; they could not find other sources
of supply. He presumed, of course, that we would give them every
assistance and even detail our foremen and leading men to duty in the
Ford shops as necessary.
Sorenson’s requirement as to our suppliers posed a problem; most of
them were already overloaded. Some like Wyman Gordon, of Worcester,
source of our crankshaft and other forgings, were already suppliers
to the automotive industry, and could shift their production from
autos to aircraft. This had been a long-time feature of our war plans
and it applied to many of our parts. On the others we would share
the output with Ford and join him in creating new sources. With that
decision we all shook hands and it was a deal.
One thing that had impressed the Ford people was the vast difference
between the aircraft and automotive processes. Our production was
based on the use of standard machine tools; we had few of the special
single-purpose machines designed for low-cost volume production
of automobiles. Our practice had been deliberately adopted for
several reasons. In expanding for war-emergency production we could
expect machine tool builders rapidly to expand delivery of standard
machines, where special machines would require much longer. Again,
whereas automotive production could be standardized for reasonable
periods, in aircraft engines we must be able to incorporate every new
design change without seriously retarding production. To accomplish
this, we had fitted special jigs and fixtures to our standard
machines; for a design change we could scrap the fixtures but keep
the machines running. No such flexibility as this could be had with
the special machines of the automotive shops, and Sorenson’s crew had
spotted this right away. In fact, if anyone thought we could learn
much about production from the automotive boys, he soon found it was
the other way around. They learned from us our secret of aircraft war
production, the revolutionary idea of flexibility in volume.
Along with this idea we had developed the aircraft-type assembly
of components. Instead of using a conveyer to regulate production
rates, we used it to transport materials to the assembly points. Here
the workers built up complete units or subassemblies and inspected
them on the spot. Aside from the flexibility thus introduced, the
idea had an impact on our production workers. We did away with the
deadly monotony of repetitive processes, by feeding to the operators
such precisely machined parts that even the unskilled could assemble
finished devices and test their functioning. And now as we lost our
experienced workers to the armed forces and began replacing them
with recruits from the white-collar trades, we found this gave a
tremendous boost to shop morale. In the development of this process,
I found myself thinking frequently of the scene in Charlie Chaplin’s
picture where he finally uses both hands and both feet to feed nuts
and washers into the ever-moving and compelling assembly.
Now after Ford had broken the ice, Bill Knudsen began bringing in
other automotive plants to help us. The great Buick and Chevrolet
companies of General Motors joined up, followed soon by Nash. After
Curtice of Buick and Coyle of Chevrolet and Mason of Nash had worked
out general principles with our top management, the jobs were taken
over by the keen shopmen who had made all those organizations
great. In some cases our new allies took on responsibilities for
Hamilton-Standard Propellers and, in the case of Nash, they even went
into production on helicopters when, later on, we faced that new
demand. Chance Vought teamed up with Goodyear Rubber and others, on
the licensing of product and every division of United spread out all
over the country to bring in competent suppliers, large and small.
Meanwhile, after Bill Knudsen had set up the aircraft program
and George Mead had turned it back to the armed forces for
administration, we ran into stormy weather on the matter of
deliveries. The schedules set up by the Army and Navy were fantastic.
Among other things, the two services had long neglected to buy
engines and propellers for training planes and now, of course,
immediate delivery of these was called for. Our plants had been
tooled for foreign account on the 1,000-hp 1830’s, and the trainers
called for 400-hp Wasp Jrs. for which we had no jigs or fixtures in
quantity. Save for our flexible-production scheme, this problem
would have thrown us for a loss, and even then we had to hustle
to retool. Before we had learned the rudiments of the expanded
program, the politicians had begun scrambling for cover. Even some
of our military friends began casting about for excuses to blame the
manufacturers for their own shortcomings. Newspaper columnists and
radio commentators who had previously castigated us as war mongers
now began screaming “too little and too late.”
One of the most acid of these, Fulton Lewis, Jr., made a special
trip to Hartford to give his public an on-the-spot disclosure of
the shortcomings at United Aircraft. His Hartford outlet then was
WTHT, _The Hartford Times_, whose publisher, Francis S. Murphy, was
familiar with our problems “Over East,” as we say up here. Frank
suggested that Fulton Lewis call on me, and I, all unsuspecting,
gave him a personally conducted tour of the shops and then, back in
my office, told him some of our problems. Fulton Lewis, surprised
by what he saw, asked me if I would go on the radio with him that
night. Afterward, he sold the National Association of Manufacturers
on his idea of sending a group of commentators of press and radio on
a nation-wide tour of factories to learn the truth about “too little
and too late.”
As I came to know some of the radio commentators, I was impressed
by the skill with which some of them dug the germ of the news out
of the ruck and got it over to their listeners. After Cedric Foster
left Hartford for Boston to take over his spot on Mutual, he made
it a habit to call his old friends for their slants on spot news.
My experience with Admiral Reeves having taught me to delve for
fundamentals in strategy and tactics, I was able to give Cedric some
slants on the progress of the war. I was always impressed by the
way in which he put his finger on the key items and summarized the
situation succinctly and competently.
Our rate of production was largely dependent upon things outside
our control. Both Army and Navy made contracts with us and each
administered his own business in his own peculiar way. Each
maintained a staff of inspectors at our plants, men who sometimes
liked to show their authority over us and to put each other on the
spot. Each specified the accessories to our equipment according
to his own fancies, and even specified details. On this matter of
accessories, the British and French had their own ideas, and in some
cases these differed from either Army or Navy. A single model of our
engine might have as many variations as there were customers to buy
them or airplanes in which to install them, and the permutations and
combinations ran into complications of all sorts. In an effort to
correct some of this, I used the delivery schedule as a lever.
I agreed to accept their fantastic schedules _in toto_, provided
three requirements were met: First, one of the services would handle
all contracts for our company and administer them for all the
others; second, all the services would standardize their accessories
and attachments as well as their specifications so as to simplify
models; third, the service administering the contracts would require
its inspectors to do all those reasonable things intended to
expedite deliveries according to the terms of the contracts and its
specifications, rather than operate as an obstacle. To the degree
that any or all of these requirements were not met, we now submitted
delayed delivery schedules to correspond with each degree. Under this
pressure, the services agreed to divide the two engine companies;
Pratt and Whitney became the charge of the Navy.
It was when we came to prices for engines that we ran into trouble.
After Jack Homer had discussed the problem with BUAERO as to
details, J. F. McCarthy and I went to Washington to face the issues
with Comdr. L. B. Richardson, then in charge of Procurement. This
was not the Captain Dick Richardson of the big-boat formula fame,
but a younger Dick with whom I had flown in the service. He knew
his business and had positive ideas based on wide experience. On
contracts calling for such large volume, the Bureau would expect a
far lower price than any we had quoted—and in principle it was right.
Our problem was that, pending expansion of the shop, the training
of new operators, the testing of tools, and all the other problems
of getting into production, we would run into high costs. That had
been our experience during the expansion periods with the French and
British contracts and now with the likelihood that we would lose even
some of our key men to the armed forces, we could expect spoiled work
and scrap to skyrocket costs. No one could guess when costs could be
brought into line, and it seemed almost impossible to arrive at a
price agreeable to both sides.
And this problem of price might have delayed negotiations
interminably had we not taken an important decision to break the
deadlock. This decision was based on long experience in business
for government account and on a background of events that have been
herein related. It dated back to that provision in the Air Corps Act
of 1926, in which we granted the government the right to keep cost
inspectors in our plant. To break the impasse we now proposed that
if BUAERO would establish fixed prices on our contracts on the basis
of our earlier experience, we would undertake voluntarily to reduce
future invoice prices on products yet to be shipped, to the end that
we would never accumulate any excessive profit. In other words,
since neither we nor the Bureau could stand any future criticism
on profits, we would voluntarily renegotiate ourselves to avoid
excessive profit. The Bureau’s resident cost inspectors, with access
to all our books, would furnish the data on which the Bureau could
judge the reasonableness of our performance, and we would abide by
their judgment.
This fateful decision removed the last obstacle and cleared the right
of way to the high ball. The remaining problem was to settle upon a
sound principle for determining fair profit. During the busy year
1940, one which could be taken as indicating the return which a plant
of our character could earn under other than wartime conditions, we
had earned $12,000,000 with a plant provided by our own capital, on
sales made of our own initiative, and on shipments that included
practically no business with the United States government. If now we
were to freeze our annual net earnings at that figure no matter how
our sales might soar nor how our plant might be increased at public
expense, we would be stabilizing our earnings at an experienced level
that seemed capable of justification from the points of view of the
stockholder and the public. If in this process we could earn that
return and still pay our employees reasonable wages and salaries,
then we would be discharging our responsibility to all concerned.