Last of the Navahos

The budget ax that hangs over every U.S. planemaker fell with swift and painful force. In the first big cutback of the current economy drive, the Air Force last week issued a curt announcement that North American Aviation's rocket-and-ram-jet Navaho intercontinental guided missile was being washed out of the U.S. defense program. Down the drain went a project that has taken eleven years and between $500 million and $700 million to bring the Navaho within a few weeks of full-scale test flight. With it went the promise of another $1 billion in contracts for North American had the missile gone into full production.

For the Air Force, the decision was a simple matter of economy. Though the Navaho showed promise (about 2,300 m.p.h. speed, high altitude and 5,000-mile range), it was designed to carry bulky atomic weapons, and it is still years from production. Now with more compact warheads and with better missiles such as the Atlas and Titan ICBMs, which travel at 16,000 m.p.h. coming along more rapidly than expected, the Navaho would probably be obsolete before it ever got into operational use. Instead, the Air Force decided to produce Northrop's pilotless Snark bomber, a much slower (650 m.p.h.) but more nearly operational missile, as an interim weapon until the huge ICBMs are in production.

As a result, North American said it might have to lay off 15% of its work force at the Missile Development, Rocketdyne and Autonetics divisions in the Los Angeles area--10,000 employees in all. While the Navaho cut will not affect North American's balance sheet greatly in its current fiscal year (ending Sept. 30), it will mean a 15% or more reduction in the company's $1 billion annual sales in future years unless the company finds a replacement soon.

Actually for 1957, North American will post record sales topping $1 billion and record profits of more than $32.5 million after taxes. Its Autonetics division has sizable contracts for airborne computers and other military electronic hardware, and its booming Rocketdyne division makes the rocket engines for a handful of big missiles. The big trouble is the company's aircraft backlog. Though it stands at more than $900 million, much of that is for relatively old planes approaching the end of their production.

To fill the gap left by the Navaho, North American pins its hopes on a trio of new planes on the drawing boards. In competition with Boeing, North American designers are at work on the WS-110 chemical-fuel bomber planned as a supersonic successor to the B-52 heavy bomber. It has also won the design competition for a new long-range interceptor and is working on a jet utility trainer that may also find a civilian market as a high-speed executive transport. Said a top North American executive: "We were disappointed, naturally, but we don't have any doubts about North American's future."

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