1976 ANNUAL REPORT AEROSPACE INDUSTRIES ASSOCIATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05S00620R000601510011-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 30
• Document Creation Date: December 22, 2016
• Document Release Date: July 9, 2009
• Sequence Number: 11
• Content Type: REPORT

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AIA OFFICERS
S. N. McDONNELL, Chairman of the Board
T. J. MURRIN, Vice Chairman of the Board
KARL G. HARR, Jr., President
SAMUEL L. WRIGHT, Vice President/Secretary
GEORGE F. COPSEY, Treasurer
Message to the Membership
Aerospace Operations Service
Aerospace Procurement Service
VICE PRESIDENTS
MARSHALL J. GARRETT, International
LLOYD R. KUHN, Legislative Affairs
FRANZ O. OHLSON, JR., Procurement & Finance
JULIAN R. LEVINE, Public Affairs
C. RONALD LOWRY, Research & Technology
EXECUTIVE COMMITTEE
S. N. McDONNELL, McDonnell Douglas Corporation
T. J. MURRIN, Westinghouse Electric Corporation
T. A. WILSON,'The Boeing Company
KARL G. HARR, JR., Aerospace Industries Association
WILLIAM L. GORE, Aerojet-General Corporation
JOHN B. JACKSON, IBM Corporation
WILLIAM F. SCHMIED, The Singer Company
HARRY J. GRAY, United Technologies Corporation
BOARD OF GOVERNORS
Aerospace Technical Council
International Service
Office of Public Affairs
Traffic Service
WILLIAM L. GORE, Senior Vice President, Aerojet-General Corporation
WILLIAM C. PURPLE, President, Aerospace-Electronics Group, The Bendix Corporation
T. A. WILSON, Chairman & Chief Executive Officer, The Boeing Company
JOHN W. DIXON, Chairman of the Board & President, E-Systems, Inc.
HARRY H. WETZEL, President & Chairman of the Board, The Garrett Corporation
DAVID S. LEWIS, Chairman & Chief Executive Officer, General Dynamics Corporation
MARK MORTON, Vice President & Group Executive, Aerospace Group, General Electric Company
JAMES E. KNOTT, Vice President & General Manager, Detroit Diesel Allison Division, General Motors Corporation
C. M. MARTENSON, President & Chief Executive Officer, Heath Tecna Corporation
E. D. CRITTENDEN, JR., General Manager, Industrial Systems Department, Hercules Incorporated
JOHN W. ANDERSON, Vice President & Group Executive, Aerospace & Defense Group, Honeywell Inc.
ALLEN E. PUCKETT, Executive. Vice President & Assistant General Manager, Hughes Aircraft Company
JOHN B. JACKSON, Vice President;' IBM Corporation & President, Federal Systems Division
RAND V. ARASKOG, Executive Vice President, International Telephone and Telegraph Corporation
ROBERT W. HAACK, Chairman of the Board, Lockheed Aircraft Corporation
PAUL THAYER, Chairman & Chief Executive Officer, The LTV Corporation
T. G. POWNALL, Executive Vice President, Martin Marietta Corporation
S. N. McDONNELL, President & Chief Executive Officer, McDonnell Douglas Corporation
THOMAS V. JONES, Chairman & Chief Executive Officer, Northrop Corporation
GERARD A. FULHAM, Chairman of the Board & Chief Executive Officer, Pneumo Corporation
ROBERT ANDERSON, President & Chief Executive Officer, Rockwell International Corporation
FREDERICK W. GARRY, Chairman, Chief Executive & President, Rohr Industries, Inc.
WILLIAM F. SCHMIED, Executive Vice President, The Singer Company
ROBERT S. AMES, Senior Vice President, Textron, Inc.
HARRY J. GRAY, Chairman, President & Chief Executive Officer, United Technologies Corporation
T. J.; MURRIN, President, Public Systems Company, Westinghouse Electric Corporation
KARL G. HARR, JR., President, Aerospace Industries Association of America, Inc.
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In terms of current dollars, the aerospace industry's sales
in 1976 reached record proportions, but the gains were
illusory due to the continuing erosive effect of inflation.
Sales totaled $29.3 billion, exceeding the previous all-
time record of $29.0 billion achieved in 1968. Measured in
constant 1968 dollars, however, 1976 sales were actually
more than $11 billion below the record year.
Gains in 1976 occurred primarily in military and general
aviation aircraft. The major decline was in commercial
transport aircraft, reflecting inadequate airline earnings
and a slow-paced economic recovery.
Export sales, which have mounted steadily in every year
since 1972, remained a consistently bright element of the
industry's performance. In 1976, aerospace exports
reached a new record level of $7.9 billion, up from $7.8
billion in the preceding year. The aerospace trade balance
for 1976 similarly reached a new high of $7.3 billion, which
compares with the previous record of $7 billion attained in
1975. Contrary to the general public belief, civil aerospace
exports far outstripped military sales abroad. Military ex-
ports amounted to $2.2 billion, or less than 28 percent of
the total.
Other economic highlights of 1976 included:
? Backlog as of year-end 1976 was more than $3 billion
higher than at the end of the preceding year. Here again,
however, the inflation factor must be applied. In terms of
constant 1968 dollars, 1976 backlog was only $1 billion
above the 1975 figure. U.S. government accounted for
more than $23 billion, or 60 percent of the total backlog.
? Employment, based on data compiled by the Bureau
of Labor Statistics and reports from AIA member com-
panies, continued to decline. Total employment at the end
of 1976 was 893,000, down from 925,000 at year-end
1975.
'Industry net profits as a percentage of sales (after
taxes) climbed to 3.5 percent, up from 1975's 3.0 percent.
Aerospace profits remained low, however, in comparison
with the estimated 5.3 percent for all manufacturing indus-
tries.
? By major categories, the $29.3 billion sales for 1976
breaks down to $15.7 billion for aircraft and related equip-
ment, $5 billion for missiles, $3.4 billion for space equip-
ment and $5.2 billion for non-aerospace products pro-
duced in aerospace facilities. The latter figure represents
an all-time high and continues the pattern of consistent
growth that has occurred in every year since 1971.
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Among significant industry matters addressed by AIA
during the year were:
o The Aerospace Technical Council played a major role
in development of an Office of Management and Budget
circular on major systems acquisition policy. Prepared by
the Office of Federal Procurement Policy (OFPP), the cir-
cular outlines how all federal agencies will acquire major
systems in the future. AIA was also working with OFPP on
preliminary draft'of another major OMB circular, Federal
Research and Development Acquisition.
o Through the American National Metric Council's
Aerospace Sector Committee, AIA continued to assist in
coordinating metric conversion planning throughout the
aerospace community.
o Through the Aerospace Procurement Service, AIA/
CODSIA continued active liaison with government agen-
cies and Congressional committees relative to policies,
procedures and : practices regarding Independent Re-
search and Development/ Bids and Proposals.
'o Through the Aerospace Operations Service, AIA par-
ticipated in the preparation of a report for the Navy on
Automatic Test Equipment. Prepared by a committee of
109 technical and management experts from five associa-
tions,'the report treats all aspects of automatic testing of
Navy weapons systems and equipment during the years
1981=85. The three-volume report was nearing comple-
tion at year-end.
During the year, AIA testified before Congress or submit-
ted industry position statements on a number of subjects of
direct interest to the industry, including:
o Testimony by the undersigned on the future of avia-
tion before the House Science and Technology Subcom-
mittee on Aviation and Transportation Research and De-
velopment.
o Testimony by three industry officials representing AIA
on proposed wind tunnel projects before the abovemen-
tioned subcommittee.
o A statement on Tariff Schedules 806.30 and 807.00,
submitted to the House Ways and Means Subcommittee
on Trade.
o A statement on extension of the Export Administra-
tion Act, submitted to the House International Relations
Committee and to the Senate Banking, Housing and
Urban Affairs Subcommittee on International Finance.
o A statement on the tax treatment of foreign source
income, submitted to the Senate Committee on Finance.
o A statement on the inclusion of white collar workers in
the Service Contract Act, submitted to the House Educa-
tion and Labor Subcommittee on Labor-Management Re-
lations.
o A statement on DoD Profit '76, submitted to the Joint
Committee on Defense Production.
With the assistance of key personnel in member com-
panies, AIA's staff maintained a high level of activity in
various other areas of importance to the industry. Such
activities are detailed in the following sections of this An-
nual Report.
Respectfully submitted,
Karl G. Harr, Jr.
President
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1 he Aerospace Operations Service is
concerned with the management and
technical aspects of manufacturing,
qualify assurance, and post-delivery
product support. The five committees
ecncermcd are augmented by project
croups, subcommittees, liaison panels,
cut floc groups, technical specialists and
tusk panels of industry experts. They
,pcrfcirrrr tasks related to Government,
eruspacc industry or commercial airline
)rohlerrrs in the fields of policies,
repulaiions, statutes and procedures.
1 hey initiate projects at the request of
rrcrnthcr companies, of government
rlclcncies, such as DoD, NASA or FAA, or
of orcl~lnirations, such as the Air
I rutisport Association, to improve
pcrfnrtuance and seek resolution of
issucs of mutual concern.
The Aerospace Operations Service during 1975 continued
a program of widely diversified projects and ad Pion
studies pertaining to improvements in manufacturing pro
ductivity, quality assurance methods and techniques,
weapon system support, commercial airline support anti
technical publications and Cori -,rr!unicaticrln techrhqurm.
Through liaison with governmental depart; nerits and agcri
cies and other national and internatior!na.i as uni itioris,
these projects and studies are being directed toward
achieving advancements in the state of the at as well or:
mutual reductions in program costs.
out.
The key technical requirement is "testa'
Automatic Test Equipment
A report by industry on Automatic Test E_quinrnerii: pre-
pared forthe Navy, comprising three voiumes in `he forrn of
an Executive Summary, 'Technical arid . in
agement Considerations, was near coop eticn at the end
of the year.
Automatic Test Equipment is defined as t:ypra of
automatic and semi-automatic test, rnonitnnng and diag
nostic systems and equipment. This ineiudes tine autumn
tion of testing to permit on-iine oerforrnance rrmonitorinq,
fault isolation, and fault prediction.
The report was prepared bya comrnitfco co,~i ,rising 10=)
technical and management experts from rive associations
(AIA, National Security Industrial Association, Electronic
Industries Association, Western Electronic Manufacturers
Association and the Shipbuilders Council cif America) rep-
resenting aircraft, electronics, test equiprrdeent, computer
manufacturers and the academic community. The report
treats all aspects of automatic testing of Nav.il wrcapons
systems and equipment during the yr;ra_rs 1 f)H1 through
1985.
Navy concern with logistic costs and operational readi
ness was a fundamental frame of reference: ann turned the
basis for this project. The report presents conclusion:: and
recommendations relative to all aspects of automatic test
ing that bear upon these factors, Throughout oh of the
specific conclusions and recommendations, (here appear
to be common recurring conciu:siens:
? The management of automatic test syste :~s, arid of
prime systems as well, must he improved tci the print
where well-informed decisions ure made at optirmil
times in the system life cycle- from r;cr,cr~f;! to oh;!se
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HAROLD J. BECKMAN
McDonnell Douglas Corporation
Chairman, Spare Parts Committee
RICHARD F. OHLEMACHER
Hughes Aircraft Company
Chairman, Quality Assurance Committee
GILBERT D. MASTERS
McDonnell Douglas Corporation
Chairman, Manufacturing Committee
WALTER R. GEIB
The Singer Company
Chairman, Service Publications Committee
CHESTER W. CECIL
General Dynamics Corporation
Chairman, Product Support Committee
needs -to develop weapon systems designed to permit
accurate fault-detection and fault-isolation at minimal
expense. Present systems do not meet these criteria.
In anticipating the technology of 1981-1985, it is certain
that increasingly capable and complex systems will
prove to be virtually untestable unless a well-coordinated
program is instituted to improve their manageability and
testability.
The report contains specific conclusions in 13 areas of
study and deliberation (seven in the R&D field and six in the
management area) which support these three major con-
clusions, and also presents a wide range of recommenda-
tions for each of the disciplines.
Review of Specifications
Work has continued on responding to Department of
Defense and other agencies on their request for industry
review of proposed specifications, military standards, and
regulations as well as follow-up by industry on requesting
changes in Government documents that have been pub-
lished and are found to be objectionable.
As in the past, they include work measurement stan-
dards, production management, non-conforming material,
packaging and shipping and the most recent and very
significant is a request for industry comments on "Draft
Military Standard (MIL-Q-9858A)." The Department of De-
fense has been trying for several years to publish a military
standard on Quality Program Requirements that would be
acceptable to all services and industry. The recent study
has been designated as a CODSIA Case and AIA has
been assigned the project managership.
Computer Aided Manufacturing (CAM)
The project to establish a long range plan for Computer
Aided Manufacturing (CAM) was completed and the report.
presents a discussion of each project describing the
unique features. It is segregated into these subject areas:
Numerical Control
Material Handling
Design/Manufacturing Interface
CAM Hardware
e Computer-Aided Planning
Computerized Process Control
o Miscellaneous CAM Projects
The AIA report covers CAM activities from the stage of
receiving a released engineering design to the stage of
delivering manufactured parts for inspection. Within man-
ufacturing, it contains design processes for tool design;
computer technology for numerical control; group tech-
nology for production engineering; material movement,
shop loading and tool and cutter systems for the factory.
Some projects also reflect educational workshop activities,
seminars with Government and industry, review and anal-
ysis of pertinent reports and the development of standards.
The need for a long range plan matured when the com-
puter aided manufacturing technical specialists found it
necessary to display a historical track of the AIA projects
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and interests, to divide the many projects into major
technological areas, to provide a documented plan that will
easily display the future plans for CAM in AIA and to
provide a continuously maintained plan which can readily
accept changes.
The report will be updated annually.
Integrated Computer Aided Manufacturing (ICAM)
As a logical next step to Computer Aided Manufacturing,
the U.S. Air Force is turning its attention to Integrated
Computer Aided Manufacturing.
A national need exists to increase the capability, reduce
costs, and increase the productivity of the U.S. manufac-
turing industry as a major supplier to DoD and other
agencies.
The Air Force has asked several associations and
societies to assist in this effort. They are: AIA, Society
of Manufacturing Engineers, American Defense Pre-
paredness Association, Numerical Control Society, Elec-
tronic Industries Association and Computer-Aided
Manufacturing-International. Work has begun on formulat-
ing the charter for an "Industry Review Panel," selecting
individuals to represent the various associations/societies
and determining the specific scope of work to be under-
taken.
The Industry Review Panel is to represent the industrial
community to ensure the ICAM program recognizes the
present computer aided design and manufacturing capa-
bilities of industry, and assist in coordination of information
among universities, industry, and Government.
Laser Cutting of Aluminum Alloys
The vast majority of parts fabricated by the aerospace
industry from flat sheet metal blanks are produced from
aluminum alloys by conventional manufacturing methods
such as blanking, routing, or sawing. The need to establish
improved methods, such as laser cutting, for fabricating
aerospace parts produced from high-strength materials
should also be applicable to the large volume of aluminum
parts, particularly if overall program cost reductions are to
be realized.
Today's laser technology is sufficiently advanced to pro-
vide the required manufacturing capability to achieve cost
reduction goals; however, the total effect of laser power
melting on the physical and metallurgical properties of
aluminum alloys is still an unknown factor which must be
determined prior to any system implementation considera-
tions.
Recognizing the extensive test program required to pro-
vide such base data and the duplication of man-hours if
performed individually, "Process Evaluation-Laser Cut-
ting. of Aluminum Alloys" project, was approved by the
Manufacturing Committee. The objective was to "deter-
mine the effect of laser power melting on the physical and
metallurgical properties of aluminum alloys, common to
aerospace products, necessary to establish process
parameters for the application of laser cutting to aerospace
manufacturing methods." Seventeen representatives of
nine aerospace companies participated in this effort.
A- report was issued covering six technical fields:
? Fatigue Test
? Notched Fatigue Test
? Tensile Test
? Corrosion Test
? Bend Test
? Metallurgical Examination
A proposed Work Statement was prepared and sent to
Air Force Materials Laboratory for consideration.
-It has been recommended that the Manufacturing
Committee implement the proposed joint AIA/Air Force
Project as a Phase II effort.
Quality Resources Study
The annual survey of quality costs was conducted by
AIA, providing quality management a tool and a reference
point forthe many company functions concerned with qual-
ity costs and staffing.
The data provided by the study shows valid comparisons
with prior years with changes and trends in the cost of
quality assurance.
As in previous reports, the 1975 study includes only data
for the year reported. Trend analysis is left to each com-
pany in comparing its relative position with the reported
data and with data previously reported.. The "Quality Re-
sources Study" replaces the "Quality Assurance System"
previously produced annually.
End Item/Spares Concurrent Procurement
To assure timely availability of spares assemblies for
operational systems support, an AIA study was completed
during 1976. It recommended that guidance instructions
be provided that would specify the exact items and quan-
tities of spares parts assemblies to be provided concurrent
with the end item(s) delivery schedule.
Spare parts orders are. usually placed later in a program
from the effective date of the system hardware, causing
separate spares procurement and production cycles which
increase the cost of the major weapon system and its spare
parts.
Further activities will include the coordination and formal
submission ofthe report to DoD.
Airlines Technical Glossary
Periodic revision of the World Airlines Technical Opera-
tions Glossary is the product of a continuing airline/
manufacturer coordination program which has been de-
veloped jointly by AIA, AECMA (Association Europeene
des Constructeurs de Materiel Aerospatial), ATA (Air
Transport Association) and IATA (International Air Trans-
port Association).
The intent of this glossary is to foster improved
worldwide interindustry communications through the use
of common definitions for airline maintenance and en-
gineering, and manufacturer engineering and product
support terms.
Since the initial edition of this Glossary in 1970, operat-
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ing experience has revealed the need for regular updating
in order to reduce inconsistencies with definitions con-
tained in the ATA specifications for supply/data processing
and manufacturers' technical data. In support of this objec-
tive, AIA recommendations were submitted to ATA during
November 1976 for review in preparation of the seventh
edition of the glossary which is scheduled for release dur-
ing 1977.
Air Transport Association Liaison
AIA members continued their joint review activities with
their counterparts in the Air Transport Association (ATA) in
the areas of product support, supply information, data pro-
cessing and technical data publications.
These efforts were directed toward improving the man-
ufacturers and suppliers implementation of airline re-
quirements. Some of these efforts also involved coordina-
tion with foreign trade associations such as the AEA (As-
sociation of European Airlines), the SBAC (Society of
British Aerospace Companies), the French GIFAS
(Groupement des Industries Francaises Aeronautiques et
Spatiales) and the German BDLI (Bundesverband der
Deutschen Luft-und Raumfahrtindustrie).
During a series of meetings early in the year, AIA and
ATA members refined and reviewed improvements in
lead-time and spare parts priority ordering instructions with
the ultimate objective of reducing processing and inventory
costs to both the supplier and airline user. Subsequently,
agreement was reached for the acceptance of a uniform
measure of both supplier and operator performance in
fulfilling lead time requirements.
During 1976 the latest edition of the World Airline
Suppliers' Guide was issued by ATA. This Guide plays a
prominent role in providing assistance to the
manufacturer/supplier by establishing a single outline of
policy for airline customers.
As anticipated, it incorporated a number of previously
submitted AIA recommendations. This edition includes
amendments to facilitate inventory data reporting, clarify
procurement information and add supply data telecom-
munication instruction. Its utilization as a reference guide
should make the next general procurement cycle more
realistic and simpler.
In an effort to reduce aircraft time out of service, an AIA
task group developed for ATA a series of procedures for
more accurately reporting aircraft faults or malfunctions
and for isolating and correcting these faults. Subsequently,
these procedures were utilized by ATA as the basis for a
series of standards to be incorporated in the ATA specifica-
tion for manufacturers technical data.
These standards will provide effective fault reporting
procedures for flight crew use and corresponding fault
isolation procedures for mechanic use. It is anticipated that
these standardized procedures will improve aircraft dis-
patchreliability by allowing for preplanning of parts, man-
power and equipment.
AIA members with their British and French trade associ-
ations' counterparts have joined with ATA in a series of task
groups directed toward achieving more efficient implemen-
tation of the airline requirements now contained in the ATA
supply/data processing specification. These groups will
undertake studies relative to airlines/industry inventory
management functions concerning spare parts control,
tracking, monitoring and reporting support systems, how
lead times are established and monitored, usage data for
forecasting spare parts requirements and other appro-
priate inventory management subjects. Among the studies
underway; are development of specification instructions
for tracking/monitoring and reporting supplier delivery per-
formance and airline short cycle purchase orders. It is
anticipated;, that the specification instructions will be ap-
proved for implementation during the latter part of 1977.
Air Force Proposed Data Automation
Requirements Review
At the invitation of the Air Force, an industry review was
initiated in 1976 on a proposed Air Force Automated Tech-
nical Order System requirements plan. This plan provides
for the modernization of an outdated technical order sys-
tem which does not meet the operational requirements of
the Air Force and its future needs for weapon systems
support in terms of timeliness, flexibility, accuracy and
economy.
Presently, there are more than 80,000 technical orders
for specific weapon systems, accessories, engines, etc., in
the Air Force system, the majority of which are prepared by
contractors, primarily by manual means, and are delivered
in the form of negatives and reproducible copy.
Through a long range program extending over a five to
fifteen year period, the proposed system would take full
advantage of increased use of advanced state-of-the-art
automated equipment, computers, programs, techniques
and processes for maintenance diagnosis, publication, dis-
tribution, storage, retrieval, presentation and file mainte-
nance of technical data.
Based upon member company responses, an AIA report
has been prepared for presentation to Air Force officials in
1977. It notes that the scope of the ATOS program and the
specialized inputs involved will place a severe burden on
all but the largest contractors. While the approaches noted
in the Air Force plan for ATOS development are in line with
current trends relative to the communication of technical
data, utilization of advanced systems and techniques for
preparing, managing and transmitting data they address
is only part of the ATOS development needs.
The remainder of these needs concern the development
of guidelines/specifications to ensure that the data is prop-
erly presented and organized to facilitate usage in an
ATOS environment, impart knowledge and gain user ac-
ceptance.
The AIA report will recommend the expertise of some of
its members as an advisory panel to the Air Force to assure
that the complex ATOS functions affecting industry will be
initiated with economy and flexibility. In view of similar data
automation plans under consideration in the Navy, a rec-
ommendation will be made to the DoD that the support
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requirements for this type of activity should be coordinated
among Air Force, other military services, and contractors.
Automated Publications Symposium
Reducing the cost of processing technical data is a
common goal shared by publication and system mana-
gers. This goal has continued to stimulate computing com-
panies supplying goods or services and system users to
develop new automated publication methods and technol-
ogy.
Aerospace computing industries and their system users
spend substantial amounts of money annually in develop-
ing and implementing automated publications systems. As
more opportunities to use automation become available,
the need for a meeting with the computing industry and the
product users to join in discussing new developments and
trends was recognized. However, with so many options
involving either large or small volumes of,data, the system
definition and selection process has become very com-
plex. Therefore, a symposium where these complexities
can be minimized through the exchange of ideas was
held in 1976.
More than 215 representatives from AIA member com-
panies, counterpart foreign trade associations, airlines
publications managers (both domestic and foreign), com-
puting industry and government publication managers at-
tended.
The objectives of this symposium were to:
Bring together industry counterparts to exchange infor-
mation on new developments.
Examine state-of-the-art improvements in computerized
publishing systems.
o Develop an understanding of trends and direction of
system applications and technology.
Provide a forum where systems in use could be
evaluated.
o Provide access to specialized talent while discussing
common problems.
Symposium discussions indicated that the cost of auto-
mation is decreasing while the application of computer-
powered tasks is increasing. In view of rising labor and
material costs, many of the tasks not previously economi-
cal for. automation are now possible.
Computing industry representatives discussed a broad
span of'.data processing alternatives in which the sales
competition for mainframe, mini and microcomputers was
intense. It was noted that tailored publication systems have
evolved which fit specific purposes, have relatively low
software development cost and increase reliability through
reduced, operator judgement factors.
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The Aerospace Procurement Service
supports the business management
activities of member companies in the
fields of accounting and financial
management, contractor administration,
procurement law, industrial relations,
industrial security, materiel management,
patents, proprietary information and
small business. A Council and four
Committees composed of senior
executives of member companies
provide experts to initiate actions seeking
to improve business relationships or
resolve problems of mutual concern to
Government and industry.
During 1976, the Materiel Management Committee was
transferred from the Aerospace Operations Service to
APS. The Service now comprises the Procurement and
Finance Council, Industrial Relations, Industrial Security,
Materiel Management and Patent Committees.
Equal Employment Opportunity
In order to stay current with the dynamics of Equal
Employment Opportunity laws and regulations, AIA joined
the Equal Employment Advisory Council (EEAC), a volun-
tary non-profit association founded early in 1976 to pro-
mote the common interest of employers and the public
in the field of non-discriminatory employment practices.
AIA and the Advisory Council complemented each
others activities on two significant proposals: The Admin-
istrative Conference's "Public Comment on Consent Set-
tlements," for which a number of AIA members provided
EEAC with comments, and Office of Federal Contract
Compliance Programs Revisions and Redesignation of
Regulations pertaining to EEO. Both AIA and EEAC pro-
vided pertinent comments opposing many of the proposed
changes, which are pending a decision.
Industrial Security
AIA through CODSIA presented recommendations on
15 proposed changes to the DoD Industrial Security Man-
ual. Major changes were recommended in the areas of
Consultants, Parent-Subsidiaries Acting as Multiple Facil-
ities; Revision of DD Form 254 and Revision of DD Form
441's. AIA's proposed change to the Industrial Security
Manual for Arms, Ammunition and Explosives, carried
over from the previous year, was favorably implemented.
Occupational Safety and Health
Occupational Safety and Health Administration (OSHA)
proposed numerous standards during 1976, including a
major revision on noise standards.
AIA representatives appeared at hearings on the pro-
posed noise standards, in liaison with the U.S. Chamber of
Commerce. OSHA is studying the transcript of the hearing
in preparation of issuing the final noise standards in 1977.
In addition, AIA submitted comments on eleven toxic
substances, a statement on sulfur dioxide and a statement
on ammonia.
In 1976, OSHA appeared to be devoting greater atten-
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DONALD G. SPEYER
The Bendix Corporation
Chairman, Procurement and Finance Council
DANIEL T. ANDERSON
The Boeing Company
Chairman, Patent Committee
DENNIS L. HERZOG
Aerojet-General Corporation
Chairman, Industrial Security Committee
N. B. MORSE
United Technologies Corporation
Chairman, Industrial Relations Committee
DAN P. APPELBY
Vought Corporation
Chairman, Materiel Management Committee
tion to occupational health problems and it is reasonable to
assume that, in future inspections, OSHA will be investigat-
ing exposures to toxic substances and impact-impulse
noise sources as well as safety violations. Health stan-
dards will include: Monitoring and measuring of employee
exposure; employee observation of monitoring; medical
surveillance of employees; daily rosters of employees in
regulated areas; and use of signs and labels, engineering
controls, .and recordkeeping.
DoD Profit Study
Principal outcome of a DOD study on defense industry
profits (Profit '76) was a revision of the weighted guide=
lines set forth in the Armed Services Procurement Regula-
tion which provides guidance to contracting officers in the
development of prenegotiation profit objectives.
The guidelines were restructured to provide for the first
time a factor recognizing the cost of facilities capital in-
vestment; however, this increase in cost recovery by con-
tractors was offset by an overall reduction in profit rates.
The guidelines were also restructured to shift the em-
phasis from contract cost to risk and to add new factors
relating to productivity and foreign military sales.
The Office of Federal Procurement Policy (OFPP) held
hearings to determine whether there should be a uniform
Government-wide profit policy and, if so, whether the pol-
icy should be structured similar to that of the weighted
guidelines in the ASPR. The hearings also examined
whether the allowability of facilities capital should be made
applicable to all Federal agencies. AIA submitted a state-
ment recommending Government-wide application of the
allowability of capital cost and suggesting further study and
review before deciding on a Government-wide contract
profit policy.
The Joint Committee on Defense Production also held
hearings on the DOD study as well as the revised DOD profit
policy. AIA filed a statement directed principally to the
problem of capital formation in the aerospace/defense in-
dustry and indicated that the revised DOD profit policy
would not contribute to a resolution of this problem.
Warranties
A revision to the Federal Procurement Regulation (FPR)
was proposed in 1975 which embodied the ASPR provi-
sions on the limitation of liability for damages arising. from
defects in a contractor's products. Meetings with FPR staff
resulted in a proposed revision to the FPR which is less
complex and more effective than the current ASPR provi-
sions.
AIA, through CODSIA, continued to work with the DOD
Tri-Service Group and other DOD components on de-
velopment of the Reliability Improvement Warranty Con-
cept. General agreement, was reached that a fixed price
contract or a fixed price contract provision should not be
required until that point in the procurement cycle when
Mean Time Before Failure (MTFB) and other pertinent
factors are reasonably predictable. Prior to that time, in-
centive and other appropriate types of contracts should be
used.
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Small Business Activities
Major projects progressed in conjunction with several
Government agencies concerned with small business.
A study on how to combat inflation was completed and a
guideline for voluntary participation in the Small Business
Program currently is in process. Additional activities were
directed to a review of data base forms for reporting on
small business participation. A study of the Armed Ser-
vices Procurement Regulation revisions dealing with
"make or buy" as that concept applies to small business
and a report on efforts in the aerospace industry to subcon-
tract with minorities were also prepared.
Commission on Federal Paperwork
During 1976 a Commission on Federal Paperwork
(COFP) was established to reduce the burden of Govern-
ment paperwork imposed on industry.
Because of the broad spectrum of the Commission's
activities, it was decided that AIA would concentrate its
efforts in the field of procurement and to the extent practic-
able utilize existing AIA studies and papers. Association
activities in connection with the Commission's efforts in-
clude subjects such as "Most Burdensome Reports", "Re-
quest for Progress Payments", (Form DD 195); "Materiel
Inspection and Receiving Reports" (Form DD 250); "Data
Management" (Form DD 1423); "Implementation of the
Federal Reports Act of 1942" and "Management Systems
in Federal Government Procurement."
Incremental submissions to the Commission were made
during the year in order to keep pace with Commission
activities. It is presently planned to complete AIA input by
March 30, 1977, to provide adequate time for the Com-
mission to consider AIA's recommendations for possible
inclusion in its formal report presently scheduled for Octo-
ber 30, 1977.
The Commission plans to provide a follow-up
mechanism, similar to that established for the Commission
on Government Procurement, to follow up on its recom-
mendations.
Value Engineering
A CODSIA project was initiated to review experience
with the revised provisions of Armed Services Procure-
ment Regulation (ASPR) governing Value Engineering
(VE), which became effective in the spring of 1974. The
project objective is improvement of the VE program, by
making appropriate recommendations to the ASPR Com-
mittee.
In addition, AIA through CODSIA was successful in per-
suading the ASPR Committee to review the long standing
practice of ASPR on rights in data in approved Value En-
gineering Change Proposals under which the Government
acquires unlimited rights to the VE technical data. Pro-
posed new language has been prepared by the ASPR
Committee and referred to industry. The proposed revi-
sions! would substantially accommodate the industry's
recommendations.
Independent Research and Development and
Bid and Proposal
Active liaison was continued during the year with Gov-
ernment agencies and Congressional committees relative
to IR&D/B&P policies, procedures and practices.
In February, a report was published on the IR&D hear-
ings held by the Subcommittee on Research and De-
velopment of the Senate Committee on Armed Services,
and the Subcommittee on Priorities and Economy in Gov-
ernment of the Joint Economic Committee.
The report indicated that the DoD Director of Research
and Engineering, and other government and industry wit-
nesses, including Tri-Association Ad hoc Committee rep-
resentatives, strongly supported the general adequacy of
current IR&D management policies, and the need for
adequate flexibility in IR&D management.
AIA/CODSIA continued liaison on IR&D/B&P matters
with the Office of Federal Procurement Policy (OFPP). The
OFPP has completed an in-depth study on IR&D and R&D
policy guidance which was referred to the Office of Man-
agement and Budget (OMB) with approval and release for
industry comment scheduled in 1977.
The study recommends that OMB support and/or spon-
sor IR&D legislation which stresses its science and
technology characteristics.
AIA comments were also developed and transmitted to
the Energy Research and Development Administration
(ERDA) on its proposed revision of ERDA temporary Pro-
curement Regulation No. 21, "Unsolicited Proposals." The
proposed revision made reference to a cost participation
policy, which had not yet been finalized or distributed for
industry comment. This was pointed out to the Director of
Procurement of ERDA that it was first necessary to con-
sider the cost participation policy.
Product Liability
AIA activities to provide appropriate protection to the
public and those having a potential legal liability arising
from a catastrophic occurrence in air transportation con-
tinued during 1976. Legislation to effectuate AIA's concept
was introduced in the Senate as the Air Travel Public
Protection Program (ATPPP), but no hearings were held
prior to adjournment of the 94th Congress.
ASPR Cost Principles
AIA during the year initiated a program seeking to revise
those cost principles of the Armed Services Procurement
Regulation (Section XV) considered to be inequitable or to
cause unwarranted and unnecessary administration or
implementation. Proposed revisions were suggested to
the cost principles on Bad Debts; Contributions and Dona-
tions; Relocation; Valuation of Pension Fund Securities;
Property Taxes; Selling Costs and others. The Association
participated with CODSIA in commenting on DoD-initiated
proposed changes to the cost principles.
Cost Accounting Standards
The Chairman of the Cost Accounting Standards Board
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Indicated during Congressional hearings in 1975 that two
standards - Inflation Accounting and Cost of Capital -
would be issued to offset the adverse effects of the De-
preciation standard.
In 1976, the standard on Cost of Facilities Capital (414)
was promulgated and DoD policy revised to make such
cost allowable. In computing the cost, the renegotiation
interest rate is used which reflects the impact of inflation.
However, a standard on inflation accounting was not pub-
lished.
Government procurement agencies have implemented
Standard 414 generally by offsetting the newly allowed
cost in the profit rate.
AIA prepared a summary report on Cost Accounting
Standards, primarily for distribution to members of cogni-
zant Congressional committees, urging a review of the
costs and benefits of Cost Accounting Standards. AIA also
participated in the CODSIA-sponsored Second Industry
Survey of the Economic Impact of Cost Accounting Stand-
ards, which questions the need for or benefits of Cost
Accounting Standards.
The Board has stated that it will consider whether to hold
a Second Evaluation Conference in the fall of 1977.
Patents
AIA continued to present its view to Federal agencies
and Congressional committees on the appropriate alloca-
tion of rights to inventions made under Government con-
tracts.
This included presentations to the Subcommittee on
Domestic and International Scientific Planning of the
House Committee on Science and Technology. Addition-
ally; efforts were continued to seek adoption of a proposed
Federal Patent Policy developed by AIA through the
medium of the Office of Federal Procurement Policy.
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0
The Aerospace Research Center
provides a special focal point and
expertise within the Association through
which the aerospace industry can
comprehensively examine current and
emerging issues of major importance. It
conducts research, analyses and
advanced studies designed to bring
perspective and understanding to the
issues, problems and policies which
affect the aerospace industry and, due to
its broad involvement in our society,
affect the nation itself.
The Aerospace Research Center brings
to bear the judgment, knowledge and
depth of experience available within the
industry, as well as the expertise of others
prominent in the government, academic
and other professional communities.
Consistent with its objectives, throughout 1976 the Aero-
space Research Center (ARC) heightened its participation
in projects concerning many important policy issues of
interest to the industry. Increasingly the ARC is called upon
to support the ongoing work of the Offices of Public Affairs,
Legislative Affairs, and the various Councils and Services
with substantive inputs in the form of review, background
papers and supporting analysis.
During the year, the Center published an extensive
two-volume report, "Aerospace Capital Formation," an
analysis of the impact of inflation and depreciation on the
U.S. aerospace industry. A comparative assessment of the
public benefits of "Air Transportation" was also published
by the Center in 1976.
In response to wide acceptance of "A Financial Profile of
the U.S. Aerospace Industry," the Center is preparing an
updated analysis of this issue for the 1965-1976 decade.
This comprehensive report is scheduled for publication
during 1977 as an in-depth study on research and de-
velopment, which stresses the importance of this invest-
ment factor to long-term economic growth and the health of
the aerospace industry in a changing environment.
The Center supported implementation of AIA policy
through government liaison on several major economic
issues in 1976. Typical of these efforts were asset depre-
ciation guidelines and international trade, particularly
foreign military sales. Another major effort of ARC was the
preparation of issue statements for the Democratic and
Republican Platform Committees; a more detailed set of
statements was drafted later for submittal to President
Carter.
The Economic Data Service (EDS) of the Center pro-
vides the pulse point of aerospace data through periodic
publication of industry-tailored evaluations of both public
and private economic statistics. Regular features include
Aerospace Facts and Figures, the Semi-Annual employ-
ment Survey and the Year-End Review and Forecast of the
industry, as well as a comprehensive statistical series
which includes international trade data, employment
trends and government expenditures. EDS cooperated
with the Council of Defense and Space Industry Associa-
tions (CODSIA) on a survey of CODSIA members to deter-
mine the impact of the Cost Accounting Standards Board
promulgations on the defense industry. In addition, EDS
serves as an information center and clearing house for
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industry data, dealing with the press and government
agencies as well as investment analysts and AIA member
companies.
A more efficient information center for research and
reference has evolved through reorganization of the AIA
Library, a unit of the Research Center. The Library com-
pleted cataloging its 2,400-volume collection, which in-
cludes valuable legislative documents section as well as
strength in the areas of aeronautics, technology,.
economics and statistical source material. In addition, the
closed files house background information for current pro
jects in the form of annual reports, speeches, news 're
leases and material on relevant organizations. Through
these. resources, numerous services are provided by the.
Library to AIA member companies, staff and the general
public.
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&&T(Dego Ep
LI (U Ulf K o 1
The Aerospace Technical Council is the
industry's top technical advisory body
through which broad technical and
management problems affecting both
government and industry are reviewed
and solutions are sought.
The major thrust of the Aerospace Technical Council in
1976 was assuring Government policy formulation con-
cerning technical matters was congruous with industry
objectives.
The development of major systems acquisition policy,
providing for improved flexibility and innovation, remains a
principal area of endeavor. AIA involvement is also
broadening as technical management concerns, particu-
larly standardization management, increasingly extend
beyond national boundaries and require consideration in
the context of international policies and activities. Actions
are being taken to better fit U.S. aerospace standardization
into the changing international standardization picture.
AIA is continuing its efforts to protect the future health of
civil aviation by promoting the benefits of air transportation,
and attempting to obtain technologically feasible environ-
mental regulations and reasonable certification require-
ments.
Major Systems Acquisition Policy
The Council has played a major role in the development
of an Office of Management and Budget (OMB) circular on
major systems acquisition policy. This circular, prepared
by the Office of Federal Procurement Policy (OFPP), and
issued in April after five years of gestation, outlines how all
federal agencies will acquire major systems in the future.
Intended implementation of Department of Defense
regulations DoDD 5000.1 and DoDI 5000.2 are now un-
dergoing careful scrutiny. The Council has maintained a
close liaison with Department of Defense Research and
Engineering with the aim of removal of objectionable sec-
tions and addition of desirable sections in these regula-
tions.
Major new OMB circular, Federal Research and De-
velopment Acquisition, is being drafted by OFPP, and AIA
has been working with that office on preliminary versions.
Basically this document makes a concise justified declara-
tion that federal support of research and development is
good for the nation. Future R&D statements by OFPP will
be appended to this circular, assuring consistency with the
basic document.
RFP Improvement
AIA is maintaining its efforts devoted to the objective of
improving Requests for Proposals (RFP's). Data is being
collected through an RFP Improvement Survey, and re-
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suits will be available in 1977. The current effort is aimed at
acquiring implementation of DoD policy on providing draft
RFP's for industry comment prior to their formal release.
Survey results will indicate if further efforts are necessary
in this area.
tions, which have been incorporated, are the concepts of
imposing added management systems and product data
requirements only when they have been proven cost bene-
ficial.
Engineering and Configuration Management
Progress is being made in both Government and indus=
try in the development of cost effective changes to MIL-
STD-480, Configuration Control, Engineering Changes
and Waivers. A principal industry effort is the introduction
of a "Parts Substitution List" into this and related docu-
ments. Such a list would allow contractors to identify sub-
stitute parts without requiring an Engineering Control
Notice (ECN) for every substitution. It would allow industry
to take advantage of bulk buying and multi-application of
parts. Extensive application of such a concept would pro-
vide significant benefits.
Application of Military Specifications and Standards
Tailoring has long been promoted by industry as a
means of reducing unnecessary contract costs due to mis-
application of military specifications and standards. The
concept is gaining ground within the DoD and is central to
the recommendations of a Defense Science Board study
on improving specifications and standards, to be released
in 1977.
During the year, AIA representatives completed a report
on tailoring which further clarifies the industry position. The
report has led to a more detailed consideration of means to
effectively accomplish tailoring. One such means is the
restructuring of the format of specifications and standards.
Controlling proliferation of specifications and standards
is the subject of an industry paper, currently being re-
viewed. The paper outlines industry's views on a set of
functions which must be performed to reduce the prolifera-
tion of such documents.
Implementing Design to Cost
The concept of Design to Cost (DTC) has undergone a
transition during 1976. Generally accepted earlier views
held that the objective of DTC was to produce a product at
a price that had been pre-defined and subsequently re-
fined.
This price was basically a "manufacturing" price. Re-
cently, however, inclusion of the operations and support
costs as a basic part of the DTC goal, has been gaining
ground. This concept, although not as all-encompassing,
approaches the Life Cycle Cost (LCC) definition. Con-
sequently, the interrelationship between LCC and DTC is
less clear and is becoming an area of industry concern.
Management Systems and Data Requirements
The release of a Draft OMB Circular and Guide dealing
with Management Systems and Data Requirements
stemmed from a series of reviews and discussions be-
tween the industry and OFPP. The circular is currently
under industry review. Among the many industry sugges-
International Standardization
AIA is working to assess the changing climate in interna-
tional standardization and to evaluate its effect on the
industry. The impact of international standards on the de-
sign, certification, and marketing of U.S. military and com-
mercial aircraft seems certain to increase.
Emphasis on NATO standardization, the trend toward
multinational cooperation on major aerospace projects,
metric conversion, and the GATT Standards Code are all
developments forcing increased interest in international
standardization activities.
A new leadership role in the International Organization
for Standardization (ISO) was assumed in September
1976 when AIA acquired the Secretariat of TC 20, a key
management focal point in world wide aerospace stan-
dardization. ISO standards are becoming increasingly im-
portant as they are the basis for many NATO standards.
Additionally the proposed GATT standards code would
require that such international standards be the masters to
which all national standards must conform.
Regional standards, such as those produced by the
Association Europeenne des Constructeurs de Materiel
Aerospatial (AECMA) and the European Association of
Aerospace Manufacturers are also assuming greater im-
portance. AECMA is producing a series of new metric
standards very similar to those being developed in the U.S.
Furthermore, these standards are mandatory for the Euro-
pean Common Market. Exploratory discussions have been
held with AECMA which may open a fruitful communication
link with the U.S.
U.S. Metric Conversion
Although the U.S. Metric Board was established by legis-
lation at the end of 1975, the Board has not yet been
formed. Nominees to the Board were not approved before
Congress adjourned in 1976.
The American National Metric Council's Aerospace Sec-
tor Committee, which is to be the principal aerospace
interface with the Board, is proving to be an effective forum
for coordinating conversion planning throughout the
aerospace community. The Sector Committee, which was
formed under the auspices of AIA, has representation from
all segments of aerospace; the FAA, DoD, NASA, the
airlines, suppliers, engineering and professional societies,
and labor unions. Primary emphasis is being given to coor-
dinating development of basic metric standards and
specifications. The ASC maintains a log of all aerospace
metric standards projects to provide visibility and avoid
duplication of effort.
The ASC during the year identified basic systems level
documentation requiring conversion and is contacting the
responsible standards making bodies to determine their
metrication plans. Quality assurance documents requiring
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GORDON E. HOLBROOK
General Motors Corporation
Chairman, Aerospace Technical Council
F. A. CLEVELAND
Lockheed Aircraft Corporation
Chairman, Aviation Division
MARTIN KRUPITSKY
Lockheed Aircraft Corporation
Chairman, Transport Airworthiness
Requirements Committee
DR. M. BARON T. GEORGE
AVCO Corporation
Chairman, Technical Specifications
Division
WILLIAM W. DAVIS
The Boeing Company
Chairman, Electronic Systems Committee
AUBERT L. McPIKE
T. E. DUMONT
FRANCIS E. BRYANT
McDonnell Douglas Corporation
United Technologies Corporation
IBM Corporation
Chairman, Aircraft Noise Control Committee
Chairman, Rotorcraft Airworthiness
Chairman, National Aerospace Standards
Chairman, Civil Aviation Advisory Group
Requirements Committee
Committee
WILLIAM W. THOMAS II
RCA Corporation
Chairman, Standardization Management Policy Group
WALTER E. HENSLEIGH
Lockheed Aircraft Corporation
Chairman, Flight Test Operations
Committee
WILLIAM W. METZGER
RCA Corporation
Chairman, Materials and Structures
Committee
J. F. KELLY
IBM Corporation
Chairman, Technical Management Committee
WILLIAM F. SPATZ
The Garrett Corporation
Chairman, Propulsion Committee
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conversion have been identified. An assessment of prob-
lems associated with the adoption of the metric system in
the area of flight operations also is being made.
DoD/Industry Metrication
The DoD issued a directive late in 1976 which sets
policies to introduce the metric system at an evolutionary
pace within DoD. It provides for use of metric units in
design of new weapon systems and equipment when there
are no technical or cost penalties.
Progress is being made on assigned tasks in the joint
AIA/SAE/DoD effort to develop basic metric hardware
standards in anticipation of needs in the early 1980's.
Standards for metric nuts and bolts are soon to be released
by the NASC.
National Aerospace Standards
NAS 10001, Preferred Metric Units For the U.S. Aero-
space Industry, was published late in December ushering
in the new 10000 Series, reserved for metric National
Aerospace Standards.
During 1976, five other new standards were published
and thirty-seven existing standards were revised. In all,
these comprise a series of more than 1,300 voluntary,
industry-established standards defining mechanical and
electrical hardware, structural fasteners, numerically con-
trolled machine tools, cargo pallets, and airport planning.
Civil Aviation
The reorganized Aviation Division, which groups all civil
aviation activities related to development, operations, reg-
ulatory, and environmental functions, has maintained a
high level of activity during its first full year of operation.
A report, "Air Transportation - Comparative Assess-
ment of its Public Benefits," was published in 1976 by the
Aerospace Research Center. The report, which has been
widely distributed, defines major attributes of air transpor-
tation and its'value to the U.S. and other economies.
AIA positions were developed for hearings held by vari-
ous Congressional subcommittees. Of particular interest
were the hearings of the Subcommittee on Aviation and
Transportation Research and Development on the future
of aviation. This Subcommittee's report is now being re-
viewed by AIA.
In meetings with the National Transportation Safety
Board on the possibility of adapting the NASA flight
simulator to accident investigation, AIA has expressed
concern as to the advisability of this move. A joint confer-
ence is planned in 1977 to attempt to resolve the differ-
ences of opinion.
Environmental Considerations
A major commitment of resources was made to prepare
for the Environmental Protection Agency hearings on
proposed aircraft exhaust emission requirements, effec-
tive in varying degree from now until 1979.
The proposed requirements would impose severe
economic and operational penalties on the airlines, includ-
ing a significant increase in fuel consumption. Industry
believes that the technology will not be available in the
1977-1979 time period, which would permit reduction of
emissions to the levels proposed by the EPA. The pro-
posed requirements may possibly be deferred to take. ad-
vantage .of information from current development pro-
grams.
AIA is working with the FAA, International Civil Aviation
Organization (ICAO) and the EPA to develop practical
aircraft noise restrictions. Efforts have been made to-coor-
dinate FAA requirements with the proposed international
requirements of the ICAO.
More efficient growth versions of transport aircraft,
which have traditionally contributed to the orderly de-
velopment of air transportation, could effectively be barred
from airline service by FAA and ICAO proposed noise
changes. Counterproposals providing for equitable treat-
ment of derivative versions of transport aircraft have
gained limited acceptance by ICAO.
Propulsion Systems Regulations
AIA is continuing an effort to develop a rational guide for
the unification and simplification of military service engine
requirements. New developments within the Air Force re-
quire that this activity be continued at least through the first
half of 1977.
An FAA study on rotor burst containment in turbine en-
gines might lead to regulations of major concern to the
propulsion industry. Industry believes that the emphasis
should be on designing rotors for long burst-free life, not on
providing for containment of possible rotor burst. This posi-
tion is supported by airline operating experience.
New amendments to Federal Aviation Regulations are
making turbine engine certification more difficult. An in-
depth study of these new requirements has been made
and recommended changes have been submitted to the
Administrator.
Airworthiness Standards
AIA representatives are working with the Federal Avia-
tion Administration and other organizations to develop air-
worthiness standards for civil transport airplanes and
rotorcraft.
A revision to the transport aircraft fatigue compliance
criteria has been developed jointly, reflecting current in-
dustry practice. This U.S. proposal will be presented for
discussion at an FAA-sponsored international meeting, as
a counterproposal to European recommendations pre-
sented to ICAO which far exceed current U.S. regulations
and practices.
FAA guidelines for certification of structures using com-
posite materials for use in civil transport airplanes and
rotorcraft are being jointly developed in another FAA/
industry program. These guidelines will allow aircraft de-
signers to utilize the advantages of this new materials
technology, such as reduced weight, cost and fuel savings,
while assuring a continued structural integrity equal to or
better than that of conventional materials.
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FAA, NASA and industry organizations are working to-
ward the improvement of interior furnishings materials and
fire protection for the cabins of transport category
airplanes. A combined hazard index is being developed for
cabin materials which takes into account the material resin-
tance to flammability, smoke, and toxic gas emission. AIA
representatives also are providing industry expertise and
recommendations in areas of runway traction, cargo load-
ing devices, system design analysis and reliability, landing
gear components, and thrust control systems.
Electronic Systems
AIA continued in 1976 to participate actively in the tri-
service-AIA-EIA working group for evolutionary updating
and improvement of 36 of the 71 MIL-STD-454 design
standards for electronic systems. Four new standards are
also being developed.
Institutionalizing of the development, coordination and
maintenance of these design requirements in a tri-service-
industry working group has provided a system with several
unique features which, over a 16-year period, has pro-
duced outstanding results.
Some of these unique features are: segmented format;
effective tri-service industry focal point; workload shared
by 12 military service components and AIA and EIA; or-
derly MIL-STD-454 revision on 2-year cycle with partial
revision every six months in form of a specification notice.
AIA has recommended that this system be considered
by the DoD for institutionalizing coordination of other broad
areas of aerospace requirements to provide an effective
focal ' point for meaningful and cost effective tri-service-
industry specification development and coordination.
Microelectronics
With the cooperation of key Government representa-
tives and microelectronic producers, AIA has moved to
reduce the costly proliferation of nonstandard microcircuits
which results from non-availability of MIL-SPEC microcir-
cuits from qualified sources.
Those actions include: issuance of expedited interim
specifications for use pending achievement of full qualifica-
tion; streamlining MIL-SPEC release and procedures for
part qualifications and qualification retention; significant
reduction in the amount of testing required for quality con-
formance inspection, without loss of product verification.
Furthermore, a major revision of Linear MIL-SPECS and
the issuance of a more restricted Preferred Parts List are
being undertaken. The Defense Electronic Supply Center
has increased its manpower for these specification and
qualification actions.
By the end of 1977, industry-wide survey results are
expected to establish both short- and long-range future
microelectronics requirements for systems, parts, and
technologies. Recommendations will also be established
on how these requirements can best be implemented.
Materials and Structures Requirements
Industry review of Government material, process, and
structural design criteria specifications provides the gov-
ernment preparing agencies with current user experience
and advice, and results in acceptable, usable require-
ments at minimum cost.
AIA has been working with representatives of the.Air
Force to incorporate into structural design criteria docu-
ments a "damage tolerant" philosophy that results in an
improved structural integrity and service life at a minimum
cost impact. Current programs include strength criteria,
fleet monitoring, fatigue design handbook, and structural
design criteria for pressurized structures.
The materials and process specification review pro-
gram covered such items as aluminum, steel and titanium
alloys, soldering requirements, plastic laminate and hon-
eycomb materials, corrosion protection, and environmen-
tal criteria. AIA is also assisting the Materials Panel of.the
Defense Material Specifications and Standards Board,
and the National Materials Advisory Board of the National
Research Council in studies to improve specification de-
velopment and utilization of industry resources and docu-
ments.
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The International Service is a guidance
and coordination point for the exporting
segment of the aerospace industry.
Operating through the International
Council, its primary activity is serving as a
medium for the exchange of views
between industry and government
agencies to assist in creating, within the
national interest, the optimum
environment for increasing aerospace
exports.
RONALD M. MURRAY
Hughes Aircraft Company
Chairman, International Committee
(el
The state of international aerospace business during 1976
can be described as double-edge-a high level of sales, an
imposing array of new products, an increasing number of
customers-but steadily tightening controls by govern-
ment.
The total value of aerospace exports in 1976 was $7.9
billion, up from the record $7.8 billion of 1975. However,
the 1977 projection by the Commerce Department is for
$8.4 billion, an increase of 6 percent. As to the breakdown
between civil and military exports, military shipments ac-
count for 28 percent versus 72 percent for civil. Missiles
were the biggest gainer for 1976, projected for the year at
nearly $480 million. Aerospace exports in 1976 provided
for 240,000 jobs. Aerospace imports were valued at $576
million, leaving a projected positive trade balance for
aerospace of $7.3 billion, and again making the aerospace
industry the largest single manufacturing contributor to the
nation's trade balance.
The 1976 Aerospace Export Environment
The national policy promoting international trade almost
disappeared in 1976. Export expansion and promotion
were not in favor in Congress or the Executive Branch. The
President's Council on International Economic Policy was
phased out; the Export-Import Bank policy changed from
one of export expansion to a "bank of last resort" ap-
proach; DISC, the only export tax incentive in the history of
the nation, was drastically cut by Congress; Congress im-
posed further restrictions on military sales; and Congress
and the State Department imposed burdensome reporting
of business details on exports.
Export Control Legislation
Public Law 94-329, "The International Security Assis-
tance and Arms Export Control Act of 1976," was enacted
June 30, 1976, and the two provisions that became sig-
nificant to the aerospace industry were: 1. exceedingly
detailed reporting requirements concerning commissions
and contributions made by prime contractors, subcontrac-
tors, vendors, and agents; 2. programs over $25 million
involving major defense equipment to non-NATO coun-
tries must go through the FMS channel (government-to-
government).
Because of industry concerns about being able to meet
these new requirements and about the dangers to pro-
prietary information (under the Freedom of Information
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Act), AIA took the lead in establishing a Council of Defense
and Space Industry Associations (CODSIA) task group to
represent industry. Subsequently, AIA, on its own behalf,
protested State Department's proposed regulations both
by letter and in a public hearing on the matter. The regula-
tions were changed in three ways: first, the effectivity was
postponed two months to allow time for working out the
mechanization; second, some of the thresholds for report-
ing were raised to reduce the tremendous amount of
paperwork; and third, an escape clause was added which
allows State, at its direction, to issue export licenses with-
out all the detailed data.
equitable tax issue, and recommended that member com-
panies provide the IRS with comments on proposed regu-
lations.
Liaison with Labor
The International Council stepped up its efforts during
1976 to work with labor on mutual problems. Due to the
widespread misunderstanding of military exports, the
Council submitted to the International Association of
Machinists and Aerospace Workers a report (in prepara-
tion for joint discussions) explaining the background and
importance of Foreign Military Sales.
Technology Export
During 1976 the Defense Department presented to the
President's Council on Export Technology a program for
the implementation of the Defense Science Board Report
on controlling strategically critical technologies (also
known as the "Bucy Report"). The program began to iden-
tify the principal technologies that require export control,
and AIA began developing improvements in the adminis-
tration of the export control process.
The International Council developed the aerospace in-
dustry's recommendations on the Export Administration
Act for the House and Senate Committee hearings held
during 1976. This particular legislation dealt primarily with
the export control of civil aerospace products.
The New Tax Law
The Tax Reform Act of 1976 impacted heavily on
U.S. firms whose products require overseas-based U.S.
marketing and technical personnel. In the new law, Section
911 of the Internal Revenue Code reduced the amount of
overseas income which may be excluded, raised the tax
rates on income above the excluded income, and made
ineligible for exclusion income received outside the foreign
country where earned.
These provisions placed an increasing and inequitable
tax burden on U.S. private citizens on foreign assignment,
which in turn presented an expensive problem to their
employers. The end result is the U.S. companies have
become less competitive with foreign companies, which
are not so burdened by their governments. The United
States is the only industrialized country which taxes in-
come earned by its citizens residing and working in another
country.
The International Council sponsored a joint effort with
the Procurement and Finance Council to explore this in-
International Air Shows
The AIA Public Affairs Council proposed the formation
and activation, prior to the end of 1976, of a committee
within AIA to deal authoritatively with officials of major air
shows, foreign and domestic, and to work with U.S. Gov-
ernment agencies to assure equitable treatment of U.S.
exhibitors in such events. This proposal was approved by
the International Council, and was subsequently approved
by the AIA Board of Governors.
ITAR Recommendations
In 1976 the International Council served as the aero-
space industry focal point for developing recommenda-
tions and responding to proposed changes in the Interna-
tional Traffic in Arms Regulations, as administered by the
State Department's Office of Munitions Control. An in-
depth analysis was made of the extensive proposed
changes in these regulations, and AIA submitted com-
prehensive recommendations concerning foreign agents,
fees and contributions, proposed export sales programs,
and the basic methods and procedures for the conduct of
military export programs.
Other Activities
The International Service continued its program of
cooperation with DoD, State, Commerce, NASA, FAA,
Export-Import Bank, Treasury, and other agencies in areas
where government and industry must work in the national
interest. Some of the on-going activities conducted were:
briefings to military and civil air attaches preparing for
foreign assignment; submission of industry studies and
recommendations on specific international trade issues;
dissemination of both industry and government recom-
mendations; and conducting meetings between Govern-
ment and industry in the furtherance of international trade.
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0 n~_ A~N uOTO
The mission of the Office of Public Affairs
is to inform the public about the goals and
accomplishments of the aerospace
industry in support of national security,
space exploration, technological
leadership, civil aviation, commerce,
international trade and other national
goals.
NICHOLAS F. PENSIERO
RCA Corporation
Chairman, Public Affairs Council
The Office of Public Affairs in 1976 continued to center its
information efforts on the relationship of the industry to the
nation's economy and its major role in transportation, de-
fense, space and other aspects of advanced technology.
Special attention was given to exports, the competitive
merits of air transportation and the inflation-created capital
formation problems of aerospace. A substantial level of
media inquiries, particularly on foreign military sales and
industry economics, were serviced during the year.
Following are some of the major efforts:
Publications
Aerospace Magazine: This quarterly magazine covered
a diversity of subjects related or of interest to the industry.
The first issue featured highlights of NASA's study, "Out-
look for Aeronautics," which set forth potential develop-
ments through the year 2000; aspects of applying metrics
to aerospace; and a review of the 1975 economic perfor-
mance of the industry. In late June, a complete issue was
devoted to a photo-and-copy preview of the new National
Air and Space Museum. In September, editorial focus was
placed on economics with an opening article on the lack of
economic literacy by Dr. Murray L. Weidenbaum. The bal-
ance of the issue was devoted to a profile of the economics
of the aerospace industry. The final issue provided a prog-
ress report on the Space Shuttle and a feature setting the
scene for commemorating in 1977 the fiftieth anniversary
of Charles Lindbergh's historic transatlantic flight of 1927.
Aerospace Perspectives: This publication, issued
periodically and presenting a single subject of importance
to the industry, was published three times during 1976. The
first summarized the highlights of a Department of Defense
report to the Congress detailing Soviet technological gains
and the U.S. research and development initiatives required
to counter the challenge. A scenario of aeronautical de-
velopments in the 1980-2000 period ahead and a perspec-
tive on the patent system and the patent rights of govern-
ment contractors completed the 1976 series.
General Media: Five "editorial type" releases were dis-
seminated to the general media covering the following: a
graphic portraying the major areas of federal spending
proposed in fiscal year 1977; a second graphic charting the
contribution of aerospace exports to the U.S. balance of
trade; highlights of a Defense Department analysis of
Soviet vs. U.S. technological strengths; an assessment on
the significance of the Viking missions to Mars; and a
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report on the impact of aerospace activities on education.
In addition to these, extensive media distribution was
given to studies of the Aerospace Research Center on
capital formation and air transportation and a special
"primer" booklet on Independent Research and Develop-
ment.
Other Publications: Publishing assistance was provided
to the Aerospace Research Center for the 1976/1977 edi-
tion of Aerospace Facts and Figures, the economic data
reference book of the industry. It continued to be published
under the commercial, promotion, sales and distribution
agreement with Aviation Week and Space Technology.
Early in January 1976, the 1975 Directory of Helicopter
Operators in the United States, Canada and Puerto Rico
was issued, followed by summer distribution of the 1975/
76 Directory of Heliports in the United States, Canada and
Puerto Rico. The 1976 Directory of Helicopter Operators
was completed by year's end for January 1977 publication.
The annual VTOL Aircraft Designation Chart and other
special material related to helicopters was also dissemi-
nated during the year.
The National Council for Aerospace Education, a na-
tional forum for aviation and space education.
The Directory of Aerospace Education, a source book of
materials and services for aviation and space education.
Thee Journal .'of Aerospace Education, a monthly
magazine for aviation and space education.
The American Society for Aerospace Education, a
membership organization for aviation and space educa-
tion.
In addition to these major efforts, assistance has been
provided to several other programs including the Aviation
Education Resource Center Program.
Staff member Wayne R. Matson who serves as Execu-
tive Director of the new Society, was elected President of
the International Aerospace Education Committee which is
composed of educational representatives of some sixty
member nations of the Federation Aeronautique Interna-
tionale. He is the first American in the 71-year history of the
FAI to be elected to this office.
Education Services
Efforts continue to aid those actively involved in aerospace
education at all curriculum levels. This section of the Public
Affairs staff handles educational correspondence; con-
ducts surveys through the Public Affairs Council as to
company interests and involvement in aerospace, career,
and economic education; communicates and cooperates
with both aerospace and non-aerospace organizations in-
volved in or providing educational services, and continues
to analyze the potential educational resources of AIA staff
and member companies.
Primary emphasis in 1976 was directed toward the crea-
tion and organization of the American Society for Aero-
space Education to serve as the national organization
under which earlier projects will continue and new projects
be initiated. The programs and publications of the new
Society have been very well received.
Since the initiation of the Education Services in 1973,
significant progress has been made in the founding of such
major programs as the following:
Activities of President Harr
The Office of Public Affairs assists Mr. Harr in various
aspects of the Association's public affairs activities. The
President, in turn, attends and participates in numerous
AIA Council and Committee meetings, briefing them on the
major current projects of the Association.
Among Mr. Harr's public appearances during 1976,
were participation in an American Institute of Aeronautics
and Astronautics (AIAA) annual meeting conference on
capital formation and two separate presentations, on in-
dustry economics and the U.S. industrial base, respec-
tively, before the Industrial College of the Armed Services.
He also participated in a government/business discussion
at Washington University and presented an overview of
aerospace at an investment seminar on the defense indus-
try in New York in December.
A number of news releases were distributed during 1976
reporting upon testimony presented to the Congress by
President Harr.
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Traffic Service is responsible for
obtaining economical and efficient
transportation facilities and service for
the aerospace industry. Within its area of
activity the Service represents the Association
before transportation regulatory agencies,
boards, associations of carriers
and the courts.
DONALD NEEDLE
McDonnell Douglas Corporation
Chairman, Traffic Committee
In close coordination with a task force of the American
Association of Highway Transportation Officials and the
motor carrier highway heavy hauler industry, AIA's Traffic
Committee in 1976 formulated a policy which sets forth the
aerospace industry's objectives for obtaining uniformity of
regulations which govern overdimension and overweight
highway shipments.
Existing state regulations are a hodgepodge of conflict-
ing requirements which impede and unnecessarily in-
crease the cost of moving extreme dimension highway
shipments. AIA members have a vital interest in this area
because of their need for highway transportation of ex-
treme dimension shipments in support of defense and
space programs. Aerospace shipments move both on the
equipment of AIA member companies and also on the
vehicles of commercial highway carriers. Throughout the
coming year the Traffic Committee will be working with
state officials and carrier management in an effort to obtain
implementation by the states of AIA's policy statement.
In another industry/government coordinated activity the
Traffic Committee sponsored two seminars which were
participated in by transportation and traffic managers of the
Government. The seminars were held in Seattle,
Washington, and Los Angeles, California, in May and Oc-
tober, respectively. The seminars were participated in by
the Military Traffic Management Command, Air Force Sys-
tems Command, Air Force Space and Missile Systems
Organization, National Aeronautics and Space Administra-
tion, and the Defense Contract Administration Services.
Seminar participants reviewed the extent to which Gov-
ernment policies and requirements present problems to
aerospace shippers.
The Traffic Committee also participated in several rule-
making proceedings before the Department of Transporta-
tion's Materials Operations Bureau. The proceedings were
concerned with regulatory requirements governing the
handling and transportation of hazardous materials. The
Traffic Committee conducted an analysis of the regulatory
requirements and transmitted a statement of its views and
recommendations to the Department of Transportation.
During 1976 the Traffic Committee conducted an
analysis of the regulations of U.S. Customs Service and
identified those which in the opinion of Committee mem-
bers place unreasonable and unnecessary demands or
restrictions on aerospace exporters and importers. The
Committee will employ the material thus identified as dis-
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cussion subjects for an industry/U.S. Customs seminar
which is being planned in 1977.
Litigation
Throughout 1976 Traffic Service concentrated its efforts
on reducing the costs and improving the services of regii .:
lated 'common carriers which are employed by AIA mem-
bers i ' n support of their logistics programs.
The program requires careful screening of carrier rate
proposals and a continuing review of regulatory agency
proceedings so as to permit a determination to be made
whether AIA intervention in specific proceedings is re-
quired. During the past year Traffic Service represented
AIA in 18 cases before carrier rate bureaus, six cases be-
fore the Interstate Commerce Commission, and in three
cases before the Civil Aeronautics Board. During the same
period ad hoc,task forces of the Traffic Committee de-
veloped facts and prepared evidence to support AIA par-
ticipation in cases. Members reported total savings of
$581,378 from the successful completion of such cases in
1976.
The following are representative of cases handled be-
fore the Federal regulatory agencies and carrier rate
bureaus throughout the past year:
Following action taken by household goods motor car-
riers to increase hauling rates three percent by means of
an unlawful tariff publication, Traffic Service filed an op-
position statement with the Interstate Commerce Com-
mission. The ICC concurred in the position stated by AIA
and' ordered the carriers to cease and desist from as-
sessing the unlawful charges.
. In a proceeding before the National Classification Board,
Traffic Service protested the application of increased
discriminatory freight rates which the motor carrier indus-
try proposed to publish for application to shipments of
aircraft tires.; The protest was successful. The proposal
was abandoned.
? Traffic Service filed several pleadings with the ICC and
participated in oral argument in opposition to an ICC
order requiring railroads and motor carriers to assess a
one percent penalty charge against shippers who are
unable to pay freight bills within seven days. The initial
order was stayed pending reconsideration by the Com-
mission. A final decision is pending.
? In another proceeding before ICC, Traffic Service was
successful in obtaining an order requiring motor carriers
to cancel tariff provisions which severely limited their
liability for loss or damage to small shipments.
? In a rulemaking proceeding before the Civil Aeronautics
Board support was given to a Board proposal which will
require airline tariff publishers to adopt procedures to
speed up the transmission of tariff changes to subscrib-
ers. At the present time, airline tariff changes are quite
often received many days after they become effective
and too late to permit the filing of protests with the CAB. A
final order is pending.
At the present time Traffic Service is a participant in
seven active proceedings before transportation regulatory
agencies. Ten AIA cases are in various stages of handling
before carrier rate bureaus.
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MANUFACTURING MEMBERS
ABEX CORPORATION
AEROJET-GENERAL CORPORATION
AERONCA, INC.
AVCO CORPORATION
THE BENDIX CORPORATION
THE BOEING COMPANY
CCI CORPORATION
The Marquardt Company
CHANDLER EVANS INC.
Control Systems Division of Colt Industries Inc.
E-SYSTEMS, INC.
FORD AEROSPACE AND COMMUNICATIONS CORP.
THE GARRETT CORPORATION
GATES LEARJET CORPORATION
GENERAL DYNAMICS CORPORATION
GENERAL ELECTRIC COMPANY
GENERAL MOTORS CORPORATION
Detroit Diesel Allison Division
B. F. GOODRICH COMPANY
Engineered Systems Co.
GOODYEAR AEROSPACE CORPORATION
GRUMMAN CORPORATION
HEATH TECNA CORPORATION
HERCULES INCORPORATED
HONEYWELL INC.
HUGHES AIRCRAFT COMPANY
IBM CORPORATION
Federal Systems Division
ITT AEROSPACE, ELECTRONICS, COMPONENTS
AND ENERGY GROUP
ITT Aerospace/Optical Division
ITT Avionics Division
ITT Defense Communications Division
KAISER AEROSPACE AND ELECTRONICS
CORPORATION
LEAR SIEGLER, INC.
LOCKHEED AIRCRAFT CORPORATION
MARTIN MARIETTA AEROSPACE
McDONNELL DOUGLAS CORPORATION
MENASCO MANUFACTURING COMPANY
NORTHROP CORPORATION
PNEUMO CORPORATION
RAYTHEON COMPANY
RCA CORPORATION
ROCKWELL INTERNATIONAL CORPORATION
ROHR INDUSTRIES, INC.
THE SINGER COMPANY
SPERRY RAND CORPORATION
SUNDSTRAND CORPORATION
TELEDYNE CAE
TELEDYNE RYAN AERONAUTICAL
TEXTRON, INC.
Bell Aerospace Textron
Bell Helicopter Textron
Hydraulic Research
THIOKOL CORPORATION
THE CORPORATION
TRW INC.
UNITED TECHNOLOGIES CORPORATION
VOUGHT CORPORATION
WESTERN GEAR'CORPORATION
WESTINGHOUSE ELECTRIC CORPORATION
Public Systems Company
AVIQUIPO, INC.
FRANK B. HALL AND COMPANY
Parker Aviation Division
BRUKNER, CLAYTON J.
CONDON, CYRIL HYDE
FALES, HERBERT G.
AIR CARRIER SERVICE CORP.
ASSOCIATED AEROSPACE ACTIVITIES, INC.
AVIATION WEEK & SPACE TECHNOLOGY
BRITISH AIRCRAFT CORP. (U.S.A.), INC.
COMMERCE OVERSEAS CORPORATION
COOPERS & LYBRAND
EASTERN AIRCRAFT CORP.
NATIONAL CREDIT OFFICE, INC.
TEXACO, INC.
TRANSAERO, INC.
U.S. AVIATION UNDERWRITERS, INC.
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ORGANIZATIONAL CHART
The Aerospace Industries Association of
America, Inc. (A IA) is the national trade
association of companies in the United
States of America engaged in the re-
search, development and manufacturing
of aerospace systems, including but not
limited to manned and unmanned aircraft,.
missiles and astronautical vehicles, their
propulsion or control units, or associated
equipment.
Association policy is determined by a
Board of Governors consisting of senior
executives of twenty-six member com-
panies and the AIA President. The Pres-
ident, who is also General Manager, is
responsible to the Board for execution of
its policies.
Membership of the Association at the
end of the year totals 65, including 49
Division A (manufacturing) members, 5
Division B members, and 11 affiliate
members.
PRESIDENT
(General Manager)
Karl G. Harr, Jr.
VICE PRES./SECRETARY
(Business Manager)
Samuel L. Wright
TREASURER
(Controller)
George F. Copsey
OFFICE OF PUBLIC AFFAIRS
Julian R. Levine
Vice President
AEROSPACE TECHNICAL
COUNCIL
C. Ronald Lowry
Vice President
*To be succeeded on Feb. 1, 1977
by Jane F. Mackall
AEROSPACE RESEARCH
CENTER
Director
Allen H. Skaggs
OFFICE OF
LEGISLATIVE COUNSEL
Lloyd R. Kuhn
Vice President
GENERAL COUNSEL
M. H. Wilner
AEROSPACE OPERATIONS
SERVICE
Director
Robert D. Worthen
AEROSPACE PROCUREMENT
SERVICE
F. O. Ohlson, Jr.
Vice President
INTERNATIONAL
SERVICE
M. J. Garrett
Vice President
TRAFFIC SERVICE
Director & Attorney
A. J. O'Brien*
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