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General Dynamics

General Dynamics Corporation is a defense conglomerate formed by mergers and divestitures, and as of 2008 it is the fifth largest defense contractor in the world. The company has changed markedly in the post-Cold War era of defense consolidation. The company has four main business segments: Marine Systems, Combat Systems, Information Systems and Technology, and Aerospace. The company's former Fort Worth Division manufactured the F-16 Fighting Falcon, the most-produced Western jet fighter, but that subsidiary was sold to Lockheed in 1993. GD reentered the airframe business in 1999 with their purchase of Gulfstream Aerospace.

History

Electric Boat

General Dynamics traces its ancestry to John Philip Holland's Holland Torpedo Boat Company. This company was responsible for developing the U.S. Navy's first submarines built at Lewis Nixon's Crescent Shipyard, located in Elizabethport, New Jersey. The revolutionary submarine boat Holland VI was built there, its keel being laid down in 1896. Crescent's superintendent and naval architect, Arthur Leopold Busch, supervised the construction of this submarine. After being launched on 17 May 1897, it was eventually purchased by the Navy and renamed USS Holland. The Holland was officially commissioned on 12 October 1900 and became the United States Navy's first submarine, later known as SS-1. The Navy placed an order for more submarines, which were developed in rapid succession and were assembled at two different locations on both coasts. These submarines were known as the A-Class or Adder Class, and became America's first fleet of underwater craft at the beginning of the 20th century. Due to the lengthy and expensive process of introducing the world's first practical submarines, and due to other lesser-known events that occurred at the time, Holland had to part with his company and sell his interest to financier Isaac Leopold Rice, renaming the new firm as the Electric Boat Company on 7 February 1899. Holland effectively lost control of the company and found himself earning a salary of $90 dollars a week as chief engineer, while the company he founded was selling submarines for $300,000 each. Holland resigned from the company effective April 1904. Rice became Electric Boat's first President, remaining there from that time until 1915 when he stepped down just prior to his death on 2 November 1915.

Electric Boat gained a reputation for unscrupulous arms dealing in 1904-05, when it sold submarines to Japan's Imperial Japanese Navy and Russia's Imperial Russian Navy, who were then at war. Holland submarines were also sold to the British Royal Navy through the English armaments company Vickers, and to the Dutch to serve in the Royal Netherlands Navy. The new pioneering craft (originally) developed by the Holland Torpedo Boat Company was now legitimized as genuine naval weapons by the world's most powerful navies.

In the post-World War II wind-down, the Electric Boat Company was cash-flush but lacking in work, with its workforce shrinking from 13,000 to 4,000 by 1946. Hoping to diversify, the president and chief executive officer, John Jay Hopkins, started looking for companies that would fit into Electric Boat's market.

Canadair purchase

They quickly found that Canadair, owned by the Canadian government, was suffering from similar post-war malaise and was up for sale. Hopkins bought the company for $10 million in 1946. Even by the Canadian government's calculations, the factory alone was worth more than $22 million, excluding the value of the remaining contracts for planes or spare parts.

When they purchased Canadair, its production line and inventory systems were in disorder. Hopkins hired Canadian-born mass-production specialist H. Oliver West to take over the president's role and return Canadair to profitability. The effects were astonishing; shortly after the takeover, Canadair began delivering its new Canadair North Star (a version of the DC-4), and was able to deliver aircraft to Trans-Canada Airlines, Canadian Pacific Airlines and British Overseas Airways Corporation (BOAC) well in advance of their contracted delivery times.

As defense spending increased with the onset of the Cold War, Canadair would go on to win many Canadian military contracts for the Royal Canadian Air Force, and became a major aerospace company. These included Canadair T-33 trainer, the Canadair Argus long-range maritime reconnaissance and transport aircraft, and the Canadair F-86 Sabre, which some argue is the best version of that aircraft to be built. Between 1950 and 1958, 1,815 Sabres were built.

General Dynamics emerges

As the aircraft production at Canadair became increasingly important to the company, Hopkins argued that the name "Electric Boat" was no longer appropriate. On 24 April 1952 the name was officially changed to General Dynamics.

Convair purchase

GD was still cash-flush after the Canadair purchase, and given the success of that company they continued to look for new aviation purchases. In March 1953 they purchased Convair from the Atlas Group. The sale was OKed by government oversight with the proviso that GD would continue to operate out of Air Force Plant 4 in Fort Worth, TX. This factory was set up in order to spread out strategic aircraft production and rented to Convair during the war to produce B-24 Liberator bombers. Over time, the Fort Worth plant would become Convair's major production center.

As was the case with Canadair, Convair worked as an independent division within the GD umbrella. Over the next decade the company introduced the F-106 Delta Dart interceptor (the earlier F-102 Delta Dagger being designed before the takeover), the B-58 Hustler and the Convair 880 and 990 airliners. Convair also introduced the first operational intercontinental ballistic missile, the Atlas.

Management churn

Hopkins fell seriously ill during 1957, and was eventually replaced by Frank Pace late that year. Meanwhile, John Naish succeeded Joseph McNarney as president of Convair. Henry Crown became the company's largest shareholder, and merged his Material Service Corporation with GD in 1959.

Naish left in May 1961, taking most of Convair's top people with him. GD subsequently reorganized into Eastern Group in New York and Western Group in San Diego, with the latter taking over all of the aerospace activities and dropping the Convair brand name from its aircraft in the process.

Frank Pace retired under pressure in 1962 and Roger Lewis, former Secretary of the Army and Pan American Airway's CEO was brought in as the new CEO. The company recovered then fell back into the same struggles. In 1971, the board brought in Dave Lewis (no relation) as Chairman and CEO. At the time he was President of McDonnell Douglas. Dave Lewis served until his retirement in 1985.

Aviation powerhouse

During the early 1960s the company bid on the United States Air Force's TFX (Tactical Fighter, eXperimental) project for a new low-level "penetrator". Robert McNamara, newly installed as the Secretary of Defense, forced a merger of the TFX with U.S. Navy plans for a new long-range "fleet defender" aircraft. In order to bid on a naval version successfully, GD partnered with Grumman, who would build a customized version for aircraft carrier duties. After four rounds of bids and changes, the GD/Grumman team finally won the contract over a Boeing submission.

The F-111 first flew in December 1964. The F-111B flew in May 1965, but the Navy said that it was too heavy for use on aircraft carriers. With an unacceptable Navy version, estimates for 2,400 F-111s, including exports, were sharply reduced, but GD still managed to make a $300-million profit on the project. Grumman went on to build the F-14 Tomcat, an aircraft that used many of the innovations of the F-111, but designed solely as a carrier-borne fighter.

Reorganization

In May 1965, GD reorganized into 12 operating divisions based on product lines. The board decided to build all future planes in Fort Worth, ending plane production at San Diego (Convair's original plant), but continuing with space and missile development there. In October 1970, Roger Lewis left and David S. Lewis from McDonnell Douglas was named CEO. Lewis required that the company headquarters move to St. Louis, which occurred in February 1971.

F-16 success

In 1972, GD bid on the USAF's Lightweight Fighter (LWF) project. GD and Northrop were awarded prototype contracts. GD, whose F-111 program was winding down, desperately needed a new aircraft contract. They organized their own "Skunk Works" group, the Advanced Concepts Laboratory, and responded with a new aircraft design that was significantly more modern than the Northrop version.

GD's YF-16 first flew in January 1974, and proved to have slightly better performance than the YF-17 in head-to-head testing. It entered production as the F-16 in January 1975 with an initial order of 650 and a total order of 1,388. The F-16 also won contracts worldwide, beating the F-17 in foreign competition as well. F-16 orders eventually totaled more than 4,000, making it the largest and most successful program for GD, and one of the most successful western military projects, since World War II.

Land Systems focus

In 1976, General Dynamics sold the struggling Canadair back to the Canadian government for $38 million. By 1984, General Dynamics had four divisions: Convair in San Diego, General Dynamics-Fort Worth, General Dynamics-Pomona, and General Dynamics-Electronics. In 1985 a further reorganization created the Space Systems Division from the Convair Space division. In 1985, GD also acquired Cessna.

Henry Crown, still GD's largest shareholder, died on 15 August 1990. Following this, the company started to rapidly divest its underperforming divisions. Cessna was re-sold to Textron in January 1992, the San Diego missile production to General Motors-Hughes Aerospace in May 1992, the Fort Worth aircraft production to Lockheed in March 1993, and its Space Systems Division to Martin Marietta in 1994. The remaining Convair Aircraft Structure unit was sold to McDonnell Douglas in 1994. The remains of the Convair Division were simply closed in 1996. GD's exit from the aviation world was short-lived, and in 1999 they acquired Gulfstream Aerospace.

Having divested itself of its aviation holdings, GD concentrated on land and sea products. GD purchased Chrysler's defense divisions in 1982, renaming them General Dynamics Land Systems. In 2003 they purchased the defense divisions of General Motors as well. It is now a major supplier of armored vehicles of all types, including the M1 Abrams, LAV 25, Stryker, and a wide variety of vehicles based on these chassis.

Government lawsuit and settlement

On August 19, 2008 GD agreed to pay $4 million to settle a lawsuit brought by the US Government claiming a GD unit fraudulently billed the government for defectively manufactured parts used in US military aircraft and submarines. The US alleged that from September 2001 to August 2003 GD defectively manufactured or failed to test parts used in US military aircraft, such as the C-141 Starlifter transport plane. The GD unit involved, based in Glen Cove, New York, closed in 2004.

Timeline

Acquisitions

1899 - Electric Boat was established.
1946 - Canadair purchased from the Canadian government.
1952 - Electric Boat became General Dynamics.
1953 - Convair merged with General Dynamics.
1959 - Henry Crown acquires company and becomes majority shareholder.
1962-1963 - Convair-produced Mercury-Atlas rockets launches four manned Mercury missions into low Earth orbit, including John Glenn.
1971-1985 David S. Lewis, Jr., was chairman and chief executive officer. During his tenure, General Dynamics’ revenues and earnings quadrupled.
1982 - Formed General Dynamics Combat Systems after the acquisition of Chrysler's combat systems.
1995 - Acquired Bath Iron Works from Prudential Insurance.
1996 - Acquired Teledyne Vehicle Systems.
1997 - Acquired Lockheed Martin Defense Systems and Lockheed Martin Armament Systems.
1997 - Acquired Advanced Technology Systems, formerly an operating unit of Lucent Technologies.
1997 - Acquired Computing Devices International, formerly a division of Ceridian Corporation.
1998 - Acquired National Steel and Shipbuilding Company.
1999 - Acquired Gulfstream Aerospace from Forstmann Little.
1999 - Acquired GTE Government Systems, Communication Systems, Electronic Systems and Worldwide Telecommunication Systems Divisions.
2001 - Acquired Galaxy Aerospace Company from Israeli Aircraft Industries (IAI)
2001 - GD Decision Systems formed (and later merged with General Dynamics C4 Systems) after acquisition of Motorola's Integrated Information Systems Group.
2002 - Acquired Advanced Technical Products.
2003 - Acquired GM Defense from General Motors.
2003 - Acquired Steyr Daimler Puch Spezialfahrzeug (SSF) from an Austrian investor group, which bought the company in 1998 from the Steyr-Daimler-Puch-conglomerate. SSF is now part of "General Dynamics European Land Combat Systems" which includes also the Spanish Santa Bárbara Sistemas and the Swiss MOWAG, and has its headquarters in Vienna, Austria.
2003 - Acquired Veridian and Digital Systems Resources.
2003 - Acquired Datron's Intercontinental Manufacturing Company (IMCO) Unit.
2004 - Acquired Spectrum Astro.
2005 - Acquired MAYA Viz Ltd, the primary developer of the US Army's Command Post of the Future software into General Dynamics C4 Systems.
2005 - Acquired Tadpole Computer.
2005 - Acquired Itronix.
2006 - Acquired FC Business Systems.
2006 - Acquired Anteon International.
2007 - Acquired Mediaware International.
2008 - Acquired ViPS, Inc.
2008 - Acquired Jet Aviation.

Divestitures

Coal mining
Building materials
Limestone
Concrete
1967 - General Atomics to Gulf Oil
1976 - Canadair sold back to the Canadian government.
1981 - Following expropriation legislation passed by the government of the Province of Quebec, General Dynamics' Canadian subsidiary sold its 54.6% controlling interest in Asbestos Corporation Limited to the Quebec government-owned creation, Société nationale de l'amiante (SNA).
1991 - Data Systems Division outsourced to Computer Sciences Corp.
1992 - Tactical Missiles Division to Hughes Aircraft Company.
1992 - Cessna to Textron.
1993 - Fort Worth Division, a producer of fixed-wing military aircraft, to Lockheed.
1993 - Space Systems Division to Martin Marietta.
1994 - Convair's aerostructures unit to McDonnell Douglas, (Convair closed in 1996).

Company outline

Marine systems

Combat systems

General Dynamics Land Systems

General Dynamics Robotic Systems

Autonomous Navigation System (ANS)

General Dynamics Armament and Technical Products
General Dynamics Ordnance and Tactical Systems
General Dynamics European Land Combat Systems

Steyr-Daimler-Puch Spezialfahrzeug GmbH (formerly Steyr-Daimler-Puch prior to 1998)

ASCOD AFV (Ulan)

Mowag corporation

Mowag Piranha

Santa Bárbara Sistemas

Leopard 2E
ASCOD AFV (Pizarro)

Information systems and technology

Aerospace

Gulfstream Aerospace

Corporate governance

Current members of the board of directors of General Dynamics are: Nicholas Chabraja, James Crown, Lester Crown, William Fricks, Charles Goodman, Jay L. Johnson, George Joulwan, Paul Kaminski, John Keane, Lester Lyles, Carl Mundy, and Robert Walmsley.

Financials

General Dynamics has about $12 billion in sales, primarily military, but also civilian with its Gulfstream Aerospace unit and conventional shipbuilding and repair with its National Steel and Shipbuilding subsidiary.

In 2004 General Dynamics bid for the UK company Alvis Vickers, the leading British manufacturer of armoured vehicles. In March the board of Alvis Vickers voted in favour of the £309m takeover. However at the last minute BAE Systems offered £355m for the company in what was seen as a move to keep General Dynamics out of its "back yard". This deal was finalised in June 2004.

General Dynamics has tried to acquire Newport News Shipbuilding but been blocked by regulators and competitors, as this would make General Dynamics the sole manufacturer of nuclear-powered ships in the United States.

Controlled subsidiaries of the corporation are donors to the Canadian Defence and Foreign Affairs Institute.

References

Patents owned by General Dynamics Corporation US Patent & Trademark Office. URL accessed on 5 December 2005.
Compton-Hall, Richard. The Submarine Pioneers. Sutton Publishing, 1999.
Franklin, Roger. The Defender: The Story of General Dynamics. Harper & Row, 1986.
General Dynamics. Dynamic America. General Dynamics/Doubleday Publishing Company, 1960.
Goodwin, Jacob. Brotherhood of Arms: General Dynamics and the Business of Defending America. Random House, 1985.
Pederson, Jay P. (Ed.). International Directory of Company Histories, Volume 40. St. James Press, March 2001. ISBN 1558624457. (General Dynamics section, pp. 204-210). See also International Directory of Company Histories, Volume 86. St. James Press, July 2007. ISBN 1414429703 (General Dynamics/Electric Boat Corporation section, pp. 136-139).
Morris, Richard Knowles. John P. Holland 1841-1914, Inventor of the Modern Submarine. The University of South Carolina Press, 1998. (Book originally copyrighted and published by the United States Naval Institute Press, 1966.)
Morris, Richard Knowles. Who Built Those Subs?. United States Naval Institute Press, October 1998. (125th Anniversary issue)
Rodengen, Jeffrey. The Legend of Electric Boat, Serving The Silent Service. Write Stuff Syndicate, 1994. Account revised in 2007.