by T. E. Cruise
Steve said, “Well, as you know, the Stiletto suffered a temporary setback last month—”
“Yes,” Harrison cut in impatiently. “Tell me something I don’t know!”
“My mistake,” Steve said gently. He was gazing inquisitively at Harrison as if to ask: What the fuck is your problem this morning?
“Go on,” Harrison said, regretting his harsh tone as he ducked the unspoken question in Steve’s eyes. Harrison knew he had a bad habit of venting his anger on others when the person he was really mad at was himself.
“As I was saying,” Steve continued, “I was hoping to clinch the deal directly with the Air Force, but the Department of Defense intervened, requiring us to enter the Stiletto into the interservice Lightweight Air Combat Fighter competition. My contact has since notified me that the DOD has received competing submissions from General Dynamics, Dunn-Brower, Amalgamated-Landis, Grumman, and McDonnell Douglas.”
“How many of those are paper airplanes?” Harrison asked.
“I know for sure that Dunn-Brower’s and Amalgamated’s are paper, but the others… ?” Steve shrugged. “It’s been no secret that the Air Force and the Navy have for some time been looking to fill their niche for a cheaper fighter. Those two branches of the military could have been funding research on any number of projects in addition to ours.”
“So now everyone’s thrown their hat into the ring,” Harrison muttered. “Who knows what the others have up their sleeves? By allowing this to turn into a competition, GAT has lost whatever advantage it had in already being able to field a prototype,” Harrison accused.
Steve smiled. “Someone’s gotten up on the wrong side of the bed today,” he said lightly.
Harrison glared at him a moment, and then sighed. “I suppose… I’m sorry. I’m not angry at you.”
“For what it’s worth, a little bird at the Air Force tells me they’re leaning toward the Stiletto,” Steve offered. “The Navy, on the other hand, is said to like something one of our competitors—I don’t know which one—has cooked up.”
“That’s good information,” Harrison said quickly, anxious to make amends to Steve for the way he’d been acting.
“All we can do now is watch and wait,” Steve finished.
“All right,” Harrison signed. “Now on to my baby, the Skytrain Industrie Pont 500 jetliner that GAT has agreed to market in this country.” He sheepishly confessed, “The Pont 500 is the reason why I’m in such a foul mood. I’m having trouble getting a launch customer.”
“I’ve been so busy hawking the Stiletto that I’m still not totally up to speed on the Pont,” Steve said.
“The Pont 500 was originally designed to meet European air-travel needs,” Harrison explained. “But GAT’s fellow members in the Skytrain consortium strongly felt that the jetliner could be positioned to satisfy the U.S. market’s demands for an intermediate-size, wide-body, double-aisle aircraft that is both fuel-efficient and suitable for operation on short trips.” He paused. “You see, every airline wants to own its share of glamorous jumbo jets, but the mainstay workhorse of the industry is the smaller jetliner that can profitably fly short hops.”
“So what’s the problem?” Steve asked. “It sounds to me like we’ve got just what the doctor ordered: a product ready at the right time to meet the customers’ current and future needs. The airlines ought to be lining up to buy the Pont.” He added pointedly, “I wish I had it so easy peddling the Stiletto to the military….”
Harrison struggled to retain his composure, reminding himself that Steve “Caustic Loudmouth” Gold was new to this game. Sure, Harrison knew that he himself had a short fuse, but since Steve had joined GAT the guy had earned himself a reputation for having about as much diplomatic style and tact as a sledgehammer meeting a plate-glass window.
Harrison said tensely, “Selling airplanes on the commercial market is very different from selling them to the military.” He sighed in frustration. “Take it from me, it’s a lot more complicated. For one thing, in your end of the game the military funds start-up costs. For example, the Air Force has bankrolled the to-date R and D on the Stiletto.”
Steve smiled. “The military has always bankrolled its suppliers because the start-up costs are so enormous.”
“As they are in the commercial aviation market,” Harrison replied. “But in the commercial market, the supplier has to absorb all of the start-up costs. Not only that, but those costs can be even higher in the commercial market due to the highly competitive nature of the game. If the military finally does decide on the Stiletto, it’ll lock into GAT for a large number of units over a period of years, right? But the airlines constantly add to their fleets by buying from everybody; they don’t lock into one plane or manufacturer for more than one order at a time, an order they can cancel. Accordingly, if GAT doesn’t keep its commercial customers happy, some other supplier is positioned to be ready to try. That means we have to be flexible and competitive on pricing, on financing, and on modifying our airplanes to suit each customer in order to get them to sign on the dotted line, and stay signed.”
“That’s something else I’ve never understood,” Steve groused. “It seems to me the commercial suppliers have been playing patsy to the airlines for years. You oughtn’t let them dictate price or demand changes in the specs at no additional cost.”
Harrison smiled ruefully. “You don’t understand because you’ve been an Air Force man all your life. Thanks to the taxpayers, the military has deep pockets, something the airlines sadly lack. The airlines survive by pinching pennies, and their most effective way to cut costs is to play one airplane supplier against the other.”
“It sounds terrible.” Steve frowned. “And I’m glad I’m not working your side of the street, but if it’s that bad, then why the hell is GAT even in the commercial game? Maybe we ought to specialize in the military market.”
“Well, the jetliner business does have its up side,” Harrison said, smiling. “Sure the military market’s profitable when you’ve got what the military wants, but things can get pretty lean when your only customer is Uncle Sam and he turns his back on you. For the sake of this discussion, let’s say GAT was only in the military business, and the Stiletto happened to lose out in this fighter competition the DOD has going. We’d be in pretty tough shape trying to survive until the next contract competition came around.”
Steve nodded. “But in the commercial aviation business, you can always go knocking on another door if one customer freezes you out.”
“That’s right.” Harrison leaned back in his chair. “And there are also real satisfactions to be found in the design aspects of the commercial end of the business….” He trailed off, fondly remembering back to the days when he could concentrate on his drafting board and let Herman Gold assume the primary worry of selling what Harrison and the rest of the design department dreamed up. “Sure, the military demands state-of-the-art technology, but so do the airlines, in their way.”
“What could be more state-of-the-art than a high-performance fighter?” Steve challenged.
Harrison countered, “A jetliner designed to carry hundreds of people in comfort and safety every day over fifteen or twenty years. Meeting the commercial market’s demand for reliability is every bit as challenging as meeting the military’s demand for cutting-edge performance. As a matter of fact, as an engineer I can tell you that in many ways the military’s challenge is the easier one to meet: The military doesn’t expect to get more than a thousand or so hours of flying time out of its warbirds. We can pack all of that cutting-edge stuff into an airplane like the Stiletto because we know that the thoroughbred fighter will spend so much time in the shop being fine-tuned to function briefly but superbly in a war that hopefully will never come. If a GAT commercial jetliner were ever to suffer that much downtime, the airlines’ legal departments would be on us like ugly on an ape.”
“I never thought of it that way,” Steve admitted. “But getting back to the Pont, why can’t GAT
find a launch customer?”
“There’s two basic reasons,” Harrison remarked. “One applies to the market in general. The other specifically to the Pont. In general, the airlines are waiting to see which supplier will come up with the most attractive financing package. Dunn-Brower has an intermediate size fuel-efficient jetliner it’s trying to peddle. Boeing and some others are trying to fill the niche as well. It’s no secret these various airplanes are all essentially similar to the Pont. Any one of them would fulfill the airlines’ requirements. Price is the airlines’ main concern at this point.”
“You said there was a specific reason for the lack of sales pertaining to the Pont?”
“Yeah, right,” Harrison said, feeling disgusted. “The airlines’ purchasing agents have been waving the Stars and Stripes, objecting to the fact that the Pont is European.” Harrison made a face. “The airlines have been asking me why they should buy foreign when there are so many ‘American-built’ jetliners on the table.”
“Wow, that’s a tough objection to overcome,” Steve remarked.
“It’s bullshit,” Harrison dismissed it. “This has nothing to do with patriotism. All the airlines are trying to do is soften us or our competition for a price break. As I told you, the airlines like nothing better than to sit back and watch companies like GAT, Boeing, and the others undercut each other’s prices to the fucking bone.”
Steve looked unconvinced. “Nevertheless, the politicians, the public, and the airline industry’s unions might have something to say about the notion of the airlines buying European instead of American.”
That’s a very perceptive comment, Harrison thought appreciatively. “That’s good thinking. I’m sure you’ll be pleased to know that GAT had anticipated that particular argument. The Pont may be foreign-born, but she’s got a lot of America in her bloodline. GAT designed and currently builds the Pont wing, which is the most important part of the airplane, and we required that all Ponts destined for the American market undergo final assembly and quality-control testing right here in Burbank. Most important, we mitigated the European origins of the airplane by requiring that Skytrain award Rogers and Simpson the contract to design and build the Pont engine.”
“That was especially smart concerning the engines,” Steve said. “Rogers and Simpson is right up there with Pratt and Whitney and General Electric as one of America’s premier aviation engine-building concerns. The airlines can’t question Rogers and Simpson’s reputation for reliability and for providing good after-sales service and an extensive spare-parts inventory.”
Harrison nodded. “That reputation proved to be necessary, since the Pont has only two engines, and the airlines’ engineers complained that they wanted a trijet to satisfy their own and the public’s concerns about safety in the event of an engine failure.” Harrison paused. “But Rogers and Simpson’s reputation didn’t come cheap. They didn’t like the idea of designing a new engine for a foreign airplane. They’d been approached by Dunn-Brower concerning building the engines for the new D-B plane, and they were leaning that way when I prevailed upon the firm to go with Skytrain. I reminded Rogers and Simpson of their long association with GAT, and finally got them to come aboard the Pont project by under-writing their engine research-and-development costs.”
“Holy shit,” Steve breathed. “Engine R and D can cost almost as much as airplane R and D. No wonder you’re sweating not being able to scare up a launch customer for the Pont. The only bright spot is that the Skytrain consortium is absorbing the Pont’s start-up costs.”
“It might seem so, wouldn’t it?” Harrison nodded wryly. “Trouble is, GAT is responsible for fifty percent of those costs. Our share comes to around one billion in American dollars.”
Steve looked aghast. “We’re carrying half of Skytrain’s and Rogers and Simpson’s nut? How the fuck did that happen?”
“There was precedent for the Skytrain part of the arrangement,” Harrison said hastily. “From the start of The GAT/ Skytrain transatlantic partnership, GAT has periodically played banker to the consortium. Back in 1957, when your father originally entered into the agreement with the British aircraft firm of Stoat-Black and the French firm Aérosens Aviation to form Skytrain, it was GAT that financed the lion’s share of the costs to build a first-generation short-hop jetliner for the European market.”
“That was the Pont I,” Steve volunteered.
Harrison nodded. “It was important to Herman Gold that GAT establish a beachhead in the European commercial market. At the time I disagreed, but in hindsight I must say I’ve come to see the wisdom of your father’s actions. Skytrain Industrie had made GAT a lot of money, and earned the company a lot of international goodwill. Our partnership with the Europeans is going to be even more important in the future if GAT wants to be a major player in the rapidly expanding Third World market.”
“Yeah, I suppose…” Steve grinned. “The second thing a banana republic does do after designing its flag is set up its airline.”
Harrison continued: “And our partnership abroad will remain vital in the face of our own country’s softening domestic economy and our industry’s ever-escalating start-up costs. Finding a way to spread the burden of those crippling start up costs is especially crucial since our own government, concerned about monopolies, has seen fit to forbid American-owned aircraft concerns to enter into partnerships with each other. “
“But all that doesn’t explain why we’re taking it up the ass dollars-wise concerning the Pont 500,” Steve interjected.
Harrison, nodding, sagged back in his chair. “I’m afraid that I wasn’t at my sharpest when I negotiated the agreement with Skytrain concerning the Pont 500. You see, your father had just suffered his second heart attack and I was feeling overwhelmed here in the office.” He anxiously tried to read some reaction into Steve’s poker-faced expression. “But I realize that’s no excuse,” he added hastily. “I totally blame myself for the unfavorable terms that GAT has ended up with.”
“Hey, that’s my father you’re talking about,” Steve said evenly. “I’d be mad at you if his illness hadn’t upset you. Now, then, what bad terms are you referring to, besides mortgaging the farm to build the Pont, that is?”
Harrison looked down, unable to face Steve as he said, “I let the French and British structure the deal so that GAT would receive its share of revenue from the sale of the Pont in Europe on a sliding scale, a scale that is dependent on the number of airplanes sold in America. In other words, partner, we don’t get back a dime unless we can sell the airplane in this country.”
“Goddammit, Don!” Steve exclaimed, making Harrison flinch. “European sales of the jetliner were the only sure thing in the deal! Government ownership of most of the European airlines guaranteed Skytrain’s home countries sales!”
Harrison mutely nodded, feeling like an ass. “At the time, it didn’t seem like such a bad arrangement.” He sighed. “The Vietnam thing was winding down, this Watergate business hadn’t yet started, and who could have anticipated the Arabs’ oil embargo against the West? I felt confident that with Rogers and Simpson on board, the Pont was going to be a grand success here in America.” He shrugged. “But at this point, what I thought then is no longer important. The reality now is that GAT doesn’t start to recoup until the Pont penetrates the U.S. market. The only bright spot is that at that point we do recoup at an accelerated schedule.”
“So everything really does come down to getting a launch customer,” Steve mused.
“There’s more,” Harrison muttered. “You might as well know it all. Skytrain wanted a British engine firm to supply the Pont with its fan power plants. I knew how essential it would be to the U.S. airlines that an American company supply the engines, so in order to get the consortium to endorse Rogers and Simpson, I had to trade off some of GAT’s Third World profits on the Pont.
“Jesus,” Steve groaned. “Why didn’t you just put on a pair of black fishnets and charge people to screw you?”
“Ta
ken by itself, it was a reasonable arrangement,” Harrison said defensively. “GAT had to compensate Skytrain because the consortium had to in turn compensate the foreign and Third World airlines. Skytrain had to cover those airlines’ cash outlays concerning the cost to them for the American engine spare-parts inventory they would have to carry in order to keep their Ponts airborne.”
“So GAT had to pay Rogers and Simpson to come into the deal, and had to pay the deal to let Rogers and Simpson in,” Steve said slowly. “All of that, in addition to GAT shouldering half the Pont’s start-up costs, while putting itself at the very end of the line when payday came around. Talk about getting it coming and going…”
“I took a risk,” Harrison admitted.
Steve burst out laughing. “Talk about understatement! You call this a risk? Then what’s your idea of a long shot: playing Russian roulette with a fully loaded gun? You’ve put this company on the brink! We’ve got to be in hock up to our necks?”
“Okay, so I took a large risk.” Harrison sulked, thinking that if Steve knew more about this business he’d know that it was a cutthroat game of poker that called for the guts to put everything you had on the table to back up your hand. Harrison had not been flying totally on instruments when he’d entered into this deal. Part of his strategy had been to recruit Steve into GAT, and he’d succeeded in that. The fly in the ointment, the “unk-unk” as aviation engineers called those unknown and unforeseen problems that can crop up in a design, was the unexpected move by the DOD to run a fighter competition. Harrison had been counting on an ex-Pentagon heavyweight like Steve being able to muscle the Air Force into buying the Stiletto. That influx of Air Force dollars, combined with another stock offering propelled by the after-burn of positive publicity surrounding the new military contract, was to have temporarily pulled GAT out of the red until the Pont could be successfully launched in America.
