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General Motors Corp., Buick-Oldsmobile-Pontiac assembly divisionEstimated General Motors Corp., Buick-Oldsmobile-Pontiac assembly division Estimated

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material costsContinued

Part No.

37W 43070-1
37W 43070-2
37W65200-1
37W 65201-1..
37W65202-1.
37W65203-1
37W 65203-2
37W65204-1
37W65204-2
37W65205-1
37W 65205-2
37W65206-2
37W65228-1
37W 65228-2
37W65250-1.
37W65250-2
37W65284-1..
37W65284-2
37W65301-1..
37W65335-11.
37W65350-500
37W65427-1
37W 73205-1
37W73205-2
37W 73303-501.
37W75110-3.
37W 751104.
37W 75110-5.
37W75110-6.
37W75110-7R.
37W 75110-8R.
37W 78342-11.
37W 78342-12
37W78343-11.
37W 78343-12
37W79000-503
37W 79000-504
37W 79300-501R.
37W79300-502R.
37W82776.
38F38706
38F38710.
38F38714.
38F38716.
38F38720
38F65904
38F65912
38F65913
38P61010
A-19.
A-24 A-9430
AN-5786-1.
B-26
BLX-86-1.
BLX-122-1
D-6A.
EA-745-Ab-2
EA-915-BA-1.
EA-1060B-818A
EA-1060B-819 A
EA-1060 B-820 A
EA-1060B-822A
EA-1060 B-823A
EA-1060W-821 A
EA-1061 B-817A
EA-1061 B-824A
F-15-2
MS-28023-1.
MS-28700-3.
RAC-00001
TF-54200-2
TF-55300-1.
TF-55500-1
53-G-1.

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36. 55
1, 900.00
1,900.00
2, 410.00
2, 410.00
457.00

70.00 285.00 315. 60 84.00 36. 28 97.00 61. 80 33.92 26.72 49.00 95.00 51. 14 47.00 90.84 219.81 116.00 318.00 346.00 57.00 57.00 57.00 57.00 57.00 61.00 61.00 61.00 346.00 33. 75 77. 55 582. 43 413. 20 358. 66 227.80 99. 45

399. 50 399,50 230.00 237.00 254.00 215.00 215.00 480.00 480.00 204.00 204.00 285.00 44. 23 34. 50 38. 09 38. 09 15. 55 15. 55 25. 45 28. 28 545. 00 290.00 32. 78 32. 78 28. 56 137. 50 137. 50 137. 50 137.50 139.05 139.05 42. 05 42. 05 36. 55

36. 55 1, 900.00 1,900.00 2, 410.00 2, 410.00 457.00

70.00 285.00 315, 60 84. 00 36. 28 85.00 61. 80 33. 92 26.72 49.00 94. 60 44.90 47.00 90.84 130. 48 116.00 318.00 346.00 57.00 57.00 57.00 57.00 57.00 61.00 61.00 61.00 359.00 33. 78 69.90 582. 43 418. 29 358. 66 232. 63 99. 45

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do
Clock

See footnotes at end of table.

material costs-Continued

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97, 530.00

83, 704.00

2,900.00

2, 900.00

Subtotal, outside ma

terial.
Other items of material cost
not detailed above:
Aluminum, steel and

other raw materials.
Other forgings (not ma-

jor items).
other purchased parts

(not major items).
Rivets, paints, chemi.

cals, oils, fuel etc. Aft fuselage parts....-

2, 700.00

2, 700.00

16,030.00

14, 175.00

750.00

750.00

8,500.00

11,000.00

Grand total, outside

material,

128, 410.00

115, 229.00

1K. C. Make.
1 As required.
2 Kansas City make.

EXHIBIT III

General Motors Corp., Buick-Oldsmobile-Pontiac assembly division-Analysis

of incurred cost through May 11, 1954

Total inven-
tory on hand

Cost 71
planes

Cost of
spares

Total expenditure

Allied
Outside
Freight.

$6,883, 050
20, 830, 952

119, 175

$59, 053, 393
19, 781, 399

164, 273

$287, 990 3, 146, 626

15, 371

$66, 224, 433 43, 758, 977

298, 819

Total material and freight
Labor
Burden.
Overtime
Night shift
Cost of living
Flight
Engineering changes..

27,833, 177
3,065, 795
9, 254, 407

301, 168
174, 783
296, 236

8, 929
1, 100, 833

78, 999, 065

7,072, 116 22, 464, 710 1, 169, 923

395, 637 1, 304, 319

197, 435 2,880, 524

3, 449, 987

141, 105 453, 455 22, 358 5, 435 14, 568

110, 282, 229 10, 279, 016 32, 172, 572 1, 493, 449

575, 855 1, 615, 123

206, 364 3,981, 357 160, 605, 965 22, 867, 599 1, 750, 065 1, 234, 742

42, 035, 328

4,086, 908

Total factory cost less startup-
Preproduction.
Rearrangement
Installation
Tools:

Purchased
GM make

114, 483, 729
22, 867, 599
1, 750, 065
1, 234, 742

5,886, 683
7,621, 598

5, 886, 683
7,621, 598

42, 035, 328

4,086, 908

Total factory cost
Factory cost adjustment.
General and administrative

153, 844, 416
1 (277, 532)
1, 603, 892

i (11,726)

199, 966, 652 1 (289, 253) 1,618, 801

14, 909

Total cost.

42, 035, 328

155, 170, 776

4,090, 091

201, 296, 195

1 Credit.

General Motors Corp., Buick-Oldsmobile-Pontiac assembly division-Average

unit cost of factory completed airplanes

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General Motors Corp., Buick-Oldsmobile-Pontiac assembly division-Analysis

of burden by quarters, period June 1, 1953, through end of contract

Actual

June, July,

and Au-
gust, 1953

September,
October, and
November,

1953

December March, April, 1953; Janu

and May, ary and Feb- 1954 ruary 1954

Indirect labor and salaries.
Operating supplies.
Expense tools.
Utilities.
Maintenance.
Employee insurance, taxes.
Losses, errors, and defects.-
Fixed charges
Sundry manufacturing expense.
Clearing, credit accounts.

$3, 460, 981

225, 525
424, 219

97, 589
648, 311
711, 687
212, 528
115, 794

393, 758
1 (323, 277)
5, 967, 115

$3, 135, 082

188, 483
338, 596
100, 026
509, 497
624, 092
174, 121
116, 564
291, 558
1 (345, 416)

$3,532, 480

275, 437 413, 967 138, 671 721, 609 796, 333 215, 604 127, 670 394, 863

$3, 741, 426

325, 309 485, 404

126, 873 1, 026, 694

988, 845 357, 898 226, 092

374, 794 1 (260, 545) 7,392, 790

1 (268, 800)

Total..

5, 132, 603

6,347, 834

Forecast

June, July,

and Au-
gust, 1954

Spetember,
October, and
November,

1954

December March, April,
1954; Janu-

and May,
ary and Feb-

1955 ruary 1955

June 1955 to
completion

Indirect labor and salaries.
Operating supplies.
Expense tools.
Utilities
Maintenance
Employee insurance, taxes.
Losses, errors, and defects.
Fixed charges.
Sundry manufacturing expense.
Clearing, credit accounts.

Total..

$3, 866, 420

350, 100
519,000

131, 200
1,085, 200
1, 086, 200

238,000
207, 000

399, 880
1 (268, 000)
7,615, 000

$3,805, 200

383, 600
571, 000

139, 700
1, 110, 900
1, 168,000

290,000
223, 000

387, 600
1 (240,000)

$3, 761, 000

378, 300
534, 000

131, 400
1,080, 400
1, 269, 500

273, 000
216,000

360, 400
1 (206, 000)
7,798, 000

$3, 662, 200

370, 700
510,000

131, 200
1,068, 600
1, 233, 200

180,000
186, 000

339, 100
1 (126, 000)

$2, 679, 450

221, 150 285, 300

83, 900 675, 300 656, 200

63, 400 148, 700 232, 000 1 (63, 400) 4,982, 000

7,839,000

7, 555, 000

1 Credit.

AFTERNOON SESSION

The subcommittee reconvened at 2 p. m., Hon. F. Edward Hébert, chairman of the subcommittee, presiding with the following members present: Mr. Bates and Mr. Hardy.

Mr. HÉBERT. The committee will be in order.

Members of the committee, when we recessed this morning Mr. Bates had asked a question concerning the profit of Republic in connection with the manufacture of this particular aircraft.

Mr. Courtney at that time was to obtain the figures from the records of the hearings of last year.

Mr. Courtney, have you those figures ?

Mr. COURTNEY. I have the figures, Mr. Chairman, from the proceedings of the subcommittee. I am referring now to page 2389, commencing on page 2389. Republic had 6 contracts, 3 of which were for the F-84F.

In answer to the question as to the rate of profit, I think we should first preface it by saying that all of these contracts were fixed price that we are discussing—incentive-type contracts, with the breakage of 80–20; that is, 80 to the Government and 20 to the contractor, over target.

Mr. BATES. In this case there were none of that 80–20?
Mr. COURTNEY. No.
Mr. BATES. Excepting on redetermination.
Mr. GORDON. Redetermination.

Mr. Bates. On redetermination, in a sense you accomplish the same thing

Mr. POWER. Yes. The split is
Mr. COURTNEY. Well, the split, of course, does not come into play.
Mr. GORDON. No.

Mr. BATES. But on their prior experience, where new factors and new figures come into play, then we make the adjustment.

Mr. COURTNEY. That is right.
Mr. GORDON. That is right.

Mr. BaTEs. But you arbitrate and negotiate, rather than have a formula of 80–20 ?

Mr. GORDON. That is correct.

Mr. COURTNEY. Now the first contract I won't give the number because I am referring to the page and the detail is all in here. On page 2390: 510 aircraft were produced on an incentive-type contract, the initial contract at $586,348 per unit. The unit profit was $36,604, which is 6.7 percent.

Mr. HÉBERT. Is that before taxes or after taxes?
Mr. COURTNEY. That is before taxes.
Now, in answer to a question as

to the range of profit in the 6 contracts, only 3 of which were for F-84F, the answer was given: The profit is 6.7, 7.5, 8, and 8.5 percent, varying within that range.

The Treasurer answered a further question as to the situation in 1954, which was the last day of reporting, the last calendar year of reporting, that at that time they had negotiated on an 8-percent basis, and he states, “We currently have on our contracts.”

Now, on a second order of 900 planes, 903 F-84F's, which was commenced in 1952, early in 1952, a follow-on contract, the unit price

was $244,381, with the unit profit of $18,102, which is within the percentage range that has been discussed.

There was another follow-on contract dated November 1951, for 903 F-84F's, in which the unit price was $325,307.

Mr. BATEs. Now, that first figure was $586,000?
Mr. COURTNEY. That was on the first contract; yes.
Mr. BATES. On the 510 ?
Mr. COURTNEY. Yes.
Mr. BATES. And that compares with this price up here.
Mr. COURTNEY. It doesn't compare with that price, because this is
599. Neither does the 244 compare with this.

Mr. BATES. No. I am talking about the net figure anyway.
Mr. COURTNEY. We can reduce that, if you wish.

Mr. Kuhn. If you would like to reduce this to a quantity of 510, the average unit cost, of course, would go up, to a figure around Republic's or maybe even higher, if you take them off of the end.

Mr. COURTNEY. In other words, you take the last 99 planes off and you get a difference in result.

Mr. Kuun. The quantity of production is important.

Mr. BATES. I understand that. Why don't you see what you can do after the meeting to work out some figures for us on that? Mr. KUHN. All right. (The information referred to above is as follows:) If you remove the last 89 airplanes from this contract, the total price to the Government would be $321,166,315; the average unit price would be $629,738.

Mr. BATEs. Did you have something to say? Mr. MARK. I might add: The average of the F-84F from BOP was $574,000, which would be about $14,000 below the $586,000 for a similar quantity. And our low price, I think, for the 599th, was about $271,000, which would compare very favorably, I think, with

Mr. COURTNEY. One unit.
Mr. MARK. Per unit; that is right.
Mr. BATES. You had another figure of $244,000.
Mr. COURTNEY. That was on 903.

Mr. MARK. I looked it up this noon, and it is an add-on for another 589, which was on top of 510.

Mr. COURTNEY. That is right. Mr. MARK. Or considerably larger number of units. Mr. COURTNEY. That is right. That was 880-some-odd units. be over $600,000 average; isn't that correct? Mr. KUHN. If you took the last 89 units off your contract, it would Mr. MARK. No. If you took all the 599, the average would be Mr. KUHN. Yes. I am saying if you reduced the quantity to 510, to have comparable quantities, and took the last 89 planes off of your contract, it would run the unit average up over $600,000.

Mr. MARK. It would be $271,000, which would be the fixed price for the last 99 units on that contract. Mr. COURTNEY. No, no. Mr. MARK. The 599th plane was billed to the Government at

$574,000.

$271,165.

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