Aviation

An industry focused on the manufacture, design, development, and operation of aircraft that had its birth in the early years of the twentieth century.
From 1917 to 2002, the American aviation industry consisted of a relatively small number of firms that enjoyed a high degree of government patronage. These industries benefited from a de facto industrial policy: The U.S. government has, subsidized plant construction, funded research and development (R&D;), provided guaranteed markets, protected weak firms, promoted the industry’s global competitiveness, and collaborated with it on strategic planning.
Before 1914, aircraft were essentially produced by hand. The outbreak of World War I precipitated the creation of an aviation industry, which produced some 14,000 aircraft and 20,000 engines from 1917 to 1919 (compared with 411 aircraft in 1916). Government procurement imploded in 1919 with the end of the war, and commercial aviation was as yet economically unavailable. Thus, government contracts to deliver mail by air and to produce military aircraft provided an essential subsidy, constituting 60 to 90 percent of the aviation industry’s total sales between the world wars. This patronage permitted nine airframe and two engine manufacturers to dominate the industry, but it encouraged tremendous innovation in the production of long-range, all-metal monoplanes with excellent engines and instruments.
During World War II, American production rose from 2,141 aircraft in 1939 to 96,318 in 1944. The U.S. wartime total of 300,000 aircraft far exceeded that for the other Allies and for the Allies’ opponents. The aviation industry hired more than 2 million workers (12 percent of the workforce), including many women and blacks, and built massive production facilities, particularly in the South and West. Infrastructure and skilled labor that developed during the war placed American aviation in a commanding postwar position, and companies that produced bombers soon retooled to build passenger transports.
After the war, military aviation sales contracted dramatically, and the workforce shrank to 10 percent of wartime levels. However, the onset of the cold war and expanding commercial markets partly offset these difficulties. Demand for civil aviation doubled in the 1950s and increased again when jet transports entered service in 1958. America produced 87 percent of all jet airliners from 1958 to 1985. Nevertheless, most aerospace firms depended on military contracts for 50 to 90 percent of their business during the cold war. These contracts centered on the production of supersonic fighters, long-range jet bombers, and ballistic missiles. Aerospace companies absorbed 20 to 30 percent of all government R&D; expenditures until 1965, and the aerospace industry became the nation’s largest employer. Aerospace also drove a major expansion of the related computer, communications, and electronics industries, giving rise to the integrated circuit chip, among other products.
The 1990s brought new challenges to the aerospace industry, as military budgets fell after the cold war.Major corporations were forced to merge (e.g., Northrop and Grumman, Lockheed and Martin Marietta) and the workforce declined 40 percent (to 790,000) between 1990 and 2001. Aerospace corporations often “teamed”with ostensible competitors and collaborated with foreign companies to penetrate foreign markets. The industry sought to shift emphasis to commercial production (government contracts accounted for 40 percent of total revenue in 2001, down from 60 percent in 1990), and exports proved particularly important (commercial exports accounted for about 27 percent of aerospace revenue in 2001). This strategy may prove difficult to sustain in the face of increasing competition from heavily subsidized European and Japanese manufacturers.

References
Bilstein, Roger E. The American Aerospace Industry. New York: Twayne Publishers, 1996.
Markusen, Ann, and Joel Yudken. Dismantling the Cold War Economy. New York: Basic Books, 1992.
See also: World War I; World War II.