Corporations: Filling that Defense Void

Less than a year ago, department-store parking lots in some sections of Seattle were practically deserted, and on normally busy Saturdays the aisles of southend supermarkets were almost bare. Boeing, the city’s biggest employer and once the nation’s largest defense contractor, was on the ropes. It had lost the multibillion-dollar TFX fighter contract to General Dynamics and had its contract for the Dyna-Soar manned spacecraft abruptly canceled. Its defense business had fallen by $150 million since 1962, and its work force had dropped by 12,000 to 92,100. Boeing was undergoing an agony that afflicts many U.S. corporations in a day of selective defense cutbacks: the necessity of finding something to fill that aching void. The agony is still acute at Boeing, but the company has helped to soften some of it with a recent flurry of activity and determined planning for the future.

New Plane. On Nov. 1, Boeing will submit its revised proposals for a variable-sweep wing supersonic transport to the Federal Aviation Agency, which earlier gave Boeing’s design a slight edge over Lockheed’s. The company is making a strong bid to build the CX-HLS, a huge, heavy transport that is capable of putting down on unpaved strips in battle zones. Its commercial jetliners—the popular 707, the intermediate-range 720 and the new 727 tri-jet—are selling so well that the company expects to break its alltime commercial sales record of 139 jets in a year before 1964 is over.

Boeing is also drawing up plans for a new commercial plane: a short-range jet called the 737, which would carry 50 to 60 passengers on runs of 100 to 800 miles at a speed of about 600 m.p.h. and be capable of landing without trouble at small airports. Before deciding whether to go ahead with the plane’s development, the company is sending its salesmen around the U.S. in an effort to convince the airlines that the 737 is the ideal replacement for aging props and turboprop planes, and to persuade them to hold off ordering the new British BAC One-Eleven or the Douglas DC-9.

Thanks in large part to its thriving commercial-plane business—it broke even on the 707 and 720 series at the end of 1963—Boeing’s six-month sales rose from $911 million in 1963’s first half to more than $1 billion this year. But commercial aviation work accounts for only half of Boeing’s business. President William McPherson Allen. 64. the first aircraft executive to take a chance on commercial jets, believes that the company’s real future lies in outer space. He has already begun preparing for other work at the firm’s long-profitable Minuteman ballistic branch, which last week won the company two Government contracts totaling $21 million but is past its peak as a profitmaker. Boeing has also converted the defunct Dyna-Soar branch to space research, is in the running for a contract to build a manned orbiting laboratory, and is building a $15 million space research-and-development center as the next step toward landing more space-age contracts.

Keep Slipping. Such diversification becomes increasingly important as Boeing’s backlog of military orders keeps slipping. But until the company can get spaceborne, it must look hungrily for defense contracts. It has not won a major military contract since 1958, or a prime military aviation contract in ten years. “Development of new military business,” says Bill Allen, “is one of our most important and desired objectives.” Allen knows that, just as an airplane cannot fly on one wing, an aircraft company cannot prosper on commercial plane business alone, any more than it can depend only on defense contracts.