Electronic Blow-Off

One of the most successful and most essential companies in the U.S. aircraft industry is California's Hughes Aircraft Co., owned by eccentric Millionaire Howard Hughes. Concentrating almost entirely on electronics, it is the sole maker of radar for Air Force interceptor planes, the sole builder of fire-control devices for Navy Banshee fighters. It also developed controls for an air-to-air guided missile so accurate that tests of it were stopped because it was destroying too many drone planes.

But last week Howard Hughes, who has had plenty of troubles with RKO and other of his business ventures (TIME, Feb. 23), was hip deep in trouble with his successful electronic company. The top echelon of men who had built up the company had quit, and the Air Force was frantically trying to keep the quarrel from slowing up the building of fighter planes. Hughes Aircraft's rise is partly the work of a onetime Ford industrial management expert named Charles ("Tex") Thornton, who became vice president and assistant general manager, and two of the nation's top electronics engineers, Simon Ramo, who came from General Electric, and Dr.

Dean Wooldridge, who came from Bell Laboratories. On Thornton's advice, Hughes had decided to give up the crowded field of airframe building and concentrate on electronics, reportedly over the strenuous objection of Noah Dietrich, his chief industrial adviser. Ramo and Wooldridge, because of their standing among electronic engineers--and with unlimited funds provided by Hughes--were able to round up many of the top experts in the country. Hughes also persuaded General Harold George, wartime boss of the Air Transport Command, to join the company, and he became vice president and general manager. Sales, which had been about $2,000,000 in 1948, soared to a rate of $200 million this year.

But Howard Hughes, who had provided General George and the others a free hand, soon began to move in on the company's operations. As usual, he could seldom be found when needed, delayed making decisions, kept papers requiring action in his pocket. Dietrich also began putting in his oar. When the top men threatened to quit, Air Force Secretary Harold Talbott visited the plant, reportedly hinted that unless Hughes cleared up the trouble, it might be a good idea for him to sell out to somebody else.

A fortnight ago, Ramo and Wooldridge quit to form their own company; five other executives submitted their resignations. Last week Thornton and George quit, too. Said General George: "I would like to paraphrase Churchill. I do not intend to preside over the liquidation of the Hughes organization, and so help me God, if present policies are persisted in, the liquidation is inevitable." But Howard Hughes disagreed, said that only a handful of his 17,000 employees had left and that production would not be hampered in any way.

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