The Ax for Willow Run

Armed with stacks of statistics, Henry Kaiser and son Edgar appeared before a Senate subcommittee last week to defend their performance in making airplanes at Willow Run. But in the midst of the defense, an aide passed them a note containing some startling news: Air Force Secretary Harold Talbott had just canceled Kaiser's orders for C-119 Flying Boxcars, along with $225 million in orders for 244 assault transports from Chase Aircraft, 49% Kaiser owned. On that note, the hearing abruptly ended.

Next day, the Kaisers laid off 9,000 of their 12,200 workers at Willow Run, where the C-119 Boxcars were made on license from Fairchild Engine & Aircraft, their original designer. Auto production (250 cars a day) had already been halted in the plant a few days earlier, when a strike at Borg-Warner shut off K-F's supply of automatic transmissions and forced a layoff 'of 2,200 men. At week's end, there were only 1,000 K-F workers left, finishing up the last Boxcars and making auto parts for other manufacturers.

The aircraft cancellations came after Senator Styles Bridges' hearings had brought out that K-F needed $1.3 million to build a Boxcar that Fairchild itself is building for only $260,000 each (TIME, June 15). The Air Force denied that this caused the cancellation, but nobody believed it. The Air Force, fighting to restore some of the cuts in its 1954 budget, obviously wanted to drop an operation criticized as wasteful. Henry Kaiser and Edgar had done their best, before the hearings broke up. to acquit K-F of this charge. In a 22-page prepared statement, and an 88-page memorandum passed out to the press, they detailed Kaiser-Frazer's tribulations.

Kaiser Motors, said Henry, had started from scratch on the C-119's, had to learn all about the new job and write off its enormous tooling costs against only 159 planes. The cost of producing the first C-119's was high, as is usual in mass production, but with production increasing, mistakes corrected and short cuts discovered, the cost curve would fall rapidly.

Fairchild, on the other hand, had the advantage of a Government-furnished plant, said Kaiser, with a large part of its tooling costs written off against a great many more planes, specifically 200 C-82's (forerunners of the C-119's) and some 400 Boxcars. It was also unfair to compare costs between the two planemakers. said Kaiser, because the C-119 made by Fairchild is not as difficult to build as the modified C-119 being made at Willow Run.

Kaiser Motors, which has already been paid $150 million for the 55 Boxcars it has delivered, will be permitted to finish eleven more C-119's with parts ready for assembly. On top of what it had paid for the planes, the Air Force had poured $30 million into tooling up for C-123's at Willow Run and committed $40 million more to Chase Aircraft for design and engineering (Kaiser still has subcontracts for plane parts). Whether Kaiser could keep Willow Run going was anybody's guess. There was talk that the plant might start producing parts for Willys Motors (which Kaiser bought for $62 million two months ago). But that prospect was small consolation. In the first half of this year. Kaiser made $2,507,000 working on C-119's and C-123's. But he dropped $8,540,000 making autos.

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