Product Diversification in Aircraft Manufacturing Industry

Abstract

THE AIRCRAFT MANUFACTURING INDUSTRY, ever since it attained the production peaks of World War II, has been concerned with the problem of diversifying into new markets and new types of production in aodes to maintain and expand the over-all scope of its operations. This subject is of particular relevance at the present time when the current and prospective military procurement programs are increasingly geared toward missiles and away from manned aircraft. The efforts of the aircraft manufacturing companies in penetrating the civilian markets after World War II took a tremendous number of forms and developments and met with varying degrees of success and permanency. Some of these efforts were frankly designed to take immediate advantage of a temporary demand for consumer items which had been missing from the economy during World War II. Other efforts were designed to utilize the substantial cash reserves accumulated during the war, and to help tide the companies over during the reconversion period. Many aircraft companies attempted to use their know how and to concentrate on lines where their capabilities would be particularly needed, such as producing aluminum canoes and sport boats-items which required their skills in fabricating aluminum products. Some of the related products were a bit far afield from their customary product lines, including artificial hands, other prosthetic devices, and stainless steel caskets. A number of aircraft companies became subcontractors for established firms in civilian markets, building heater cases, parts for musical instruments, automobile parts, plumbing, and cabinets for radios. In some instances, aircraft firms joined with other companies to form new subsidiaries. More usually, aircraft companies-using their war-accumulated earnings and relying on tax provisions permitting the carryback of losses to offset against previously paid taxes-acquired going concerns in other industries. Typical acquisitions included a producer of motion picture equipment, a manufacturer of precision parts in the automobile field, a designer of prefabricated houses, and a maker of motor buses, trolley coaches, and marine and industrial engines.' A number of channels of distribution were used by the aircraft companies in marketing the products on which they were prime producers. Subcontracting work obviously did not present such problems. Some produced for exclusive distribution by wholesalers and jobbers. Some adopted the attitude, We make 'em-you sell 'em. The early postwar period was an era of shortages and hardly typical of the current situation or the experience to be expected in the future.