During 1954 the aircraft manufacturing industry adjusted itself to the changes in emphasis on procurement of various aircraft types intended to modernize the air forces and to the modifications in the program resulting from the cessation of hostilities in Korea. Some of the cutbacks affected the subcontractors in the defense production program.
New and improved airliners had again shrunk the world and cut time from domestic schedules in the new non-stop transcontinental services. Promise of even shorter time to fly across the American continent was in the foreseeable future.
The cutback and stretch-out of the defense production program following the end of hostilities in Korea resulted in reduction of subcontracts by the larger manufacturers, and grave concern was felt for the subcontractors and suppliers. The results were intense competition as small firms went out of business and government-owned facilities idled. Under the theoretical laws of economics this condition would be adjusted in due course, with the elimination of the weaker units and a general strengthening of the industry. But that segment of industry devoted primarily or exclusively to defense production does not operate in complete accord with basic economic laws for several reasons. Many of these plants produce specialized products suitable for defensive equipment alone. If they close down, it weakens the defense production program. So the government wisely attempts to keep them going even if it must maintain their facilities. It still takes precious time, in case of need, to mobilize manpower to reactivate them.
As the year drew to a close the full extent of the damage was not known accurately, but watchful eyes were studying the situation to be sure the efficiency of the program was not impaired and that vital small organizations were not too frequently disbanded.
As a result of this situation two associations of west coast subcontractors were formed to advocate a higher volume of subcontracting, and those agencies of government concerned with small business were seeking corrective measures.
During the fiscal year ending June 1954, the Air Materiel Command (AMC) of the U.S. Air Force spent $11.4 billion of which more than $8 billion went for hardware and weapons systems for the Air Force. In June 1954, AMC had contracts totaling $17 billion for equipment to be furnished by U.S. industry. During that fiscal year the Command shipped four and one-half million tons of supplies to 30 Air Force bases and 1,800 other military installations throughout the world, handled 39 million supply items and stockpiled more than 800,000 types of items in depots.
For aircraft and related procurement, AMC obligations totaled an estimated $4,405 million for the fiscal year ending June 1955, $2,760 million in new money and an estimated $1,645 million carried over from the previous year.
For major procurement other than aircraft, such as electronics equipment, etc., AMC obligations for 1955 totaled $405 million, $305 million in new money and $100 million carried over from the previous fiscal year.
After a mid-summer slump in both Air Force and Navy obligations for equipment, there was a sudden spurt in production orders during the six-week period beginning Sept. 1, 1954 which resulted in new Air Force contracts totaling $1,037 million during that period.
In addition to accelerated purchases of the B-52 jet bomber and North American F-100 fighter, orders were placed for the Convair B-58 Hustler supersonic bomber, Lockheed F-104 light day fighter, and Boeing KC-135 jet tanker adopted from the Boeing 707, first U.S. jet transport plane.
Other Air Force orders placed during the summer of 1954 included such aircraft as the Sikorsky H-37 helicopter for the Army, the Lockheed C-130 turboprop transport, the Convair C-131 transport and the Beech T-34 trainer.
Engine orders totaling $73 million included such makers as Pratt & Whitney and Ford for the J-57 engine, Allison Division of General Motors for the J-71 jet and T-56 turboprop, and General Electric for the J-73.