Industry Row

Ability of leaders of the aviation industry to get along with each other has been put on trial by a sudden row within the Aeronautical Chamber of Commerce of America.

The resignation in October of a group of Southern California manufacturers, led by North American, was followed by the resignations of most of the other leading figures in the industry. It precipitated the most serious of a string of crises faced by the Chamber since it was formed 21 years ago.

Some sort of a settlement was looked for at or before the Chamber's annual meeting, scheduled for December 3 in New York City — possibly "streamlining" the organization in a number of particulars. But in the meantime the row provided the entire aviation industry with a puzzle.

The most persistent speculation laid the walkout to a clash of sectional interests, dissatisfaction with the Chamber's form of organization and possibly its policies, to personalities and to "war nerves." Whatever the actual explanation, this is the background:

Organized in 1921 to represent all national interests of the aircraft industry, the Chamber has weathered a number of storms as aviation gradually expanded and then mushroomed with the approach of war. Martin was a holdout until two years ago, entering the organization coincident with an expansion of its publicity functions. Since 1940, the Chamber has tripled its staff to some 50 persons, undertaking to keep the industry advised on special legislation and labor developments, fostering efforts to standardize parts, trying to keep abreast of such difficulties as priorities and attempting to maintain public good will with conservative methods of publicity directed by Howard Mingos.

A sign of sectionalism appeared with the formation last spring of the West Coast Aircraft Production Council [Flying, November, 1942], followed this fall by a similar organization of East Coast manufacturers with the same ostensible purpose of exchanging technical information to speed work on war orders. But all was serene when the Chamber's executive committee held a session in mid-October. President John H Jouett was given a pay increase, which seemed to imply a vote of confidence, and Robert P Newton, of Denver, recently of the War Production Board, was made senior vice president to lighten Jouett's load of executive duties.

Then, out of a clear sky, came the sudden resignations a few days later of North American, Consolidated, Vultee and Northrop, with North American's president, J H "Dutch" Kindleberger, leading the van. Inquirers were told these companies were just generally dissatisfied, did not consider they were getting their money's worth from the assessments they paid. The burden of these assessments, however, is actually borne under present conditions by the taxpayers, since the cost of membership is an allowable expense against fixed-fee Government contracts.

The Chamber's fiscal year closed October 31, and the rules provided those who were members after that date were liable for assessments for another year. So with the big Los Angeles area members pulling out, most of the other leading manufacturers, with the exception of Martin, reluctantly put in resignations which they described as "technical." Some offered to pay several months in advance to meet expenses, but that was not necessary as the Chamber possessed a substantial reserve fund.

Meanwhile Colonel Jouett had removed himself from the picture by resigning to build airplanes for the A J Higgins Industries, of New Orleans. This action provided no solution. There was no hint the quarrel revolved about the president personally. Newton took over temporarily. To seek a settlement, a special reorganization committee, headed by Edgar Gott of Consolidated, went to work with representatives of Curtiss-Wright, Boeing, Douglas, North American, Lockheed and Taylorcraft, among others. There seemed to be a general agreement that the Chamber could stand some "streamlining," possibly in the direction of giving the larger companies a greater voice in determining policies. They pay the bulk of the assessments but enjoy only a single vote along with all the rest of the more than 200 manufacturer members.

Any proposed formula involved difficulties. The Southern California group, increased in relative importance by war orders, had been paying about 27% of the Chamber's total assessments, which were based on total aircraft sales. As of last July, they turned out some 35% of all completed aircraft. The East Coast, Mid-West and other sections accounted for the rest of the completed planes, and also 90% of the instruments, and all of the engines and propellers.

Anxious bystanders from the start have been the Army, Navy and War Production Board. It was a private row, but in time of war anything to do with the aircraft industry obviously affects the nation's interest.

This article was originally published in the March, 1943, issue of Flying including Industrial Aviation magazine, vol 32, no 3, pp 62, 138-139.