PLANNED CLOSING OF OVERHAUL AND REPAIR DEPARTMENT, CORPUS CHRISTI, TEX. Mr. MAHON. You are aware, Admiral, that there has been a rather heated controversy in regard to the proposed closing of the O. & R. shop at the Navy base at Corpus Christi? Admiral DIXON. Yes, sir. Mr. MAHON. I attended a meeting at which you were present over at the other side of the Capitol not long ago at which time this whole matter was discussed in detail. Efforts were made to convince the Navy that the closing of the O. & R. shop at Corpus Christi was not in the best interest of the Navy and not in keeping with practices for economy and efficiency of operation. At this meeting to which I refer, you were requested to defer action on the closing of O. & R. shop at Corpus Christi for a period of time in order that this matter might be further explored. What has been the decision of the Navy with respect to that request? Admiral DIXON. Mr. Chairman, the Navy fully considered that request and has decided to proceed with the closing. Mr. MAHON. To what extent have you proceeded at this time? Admiral DIXON. On February 23 approximately 1,200 of the 3,000 people there were released, and since that time there have been varying numbers, Mr. Chairman. I could not give you the exact figure as of today. Mr. MAHON. Are you now irrevocably committed to the closing of the O. & R. facilities at Corpus Christi? Admiral DIXON. We are, sir. Mr. MAHON. You do not propose to modify plans previously announced with respect to that facility? Admiral DIXON. No, sir; we do not. Mr. MAHON. The closing of a facility like this has a tremendous impact on a town like Corpus Christi, of course. You are aware of that. Admiral DIXON. We certainly realize that, Mr. Chairman. Mr. MAHON. At this meeting to which I refer, I did not hear any evidence which would convince me this would save the Government any money over the long pull or the short pull. It was claimed by the Secretary of the Navy that some savings would be made, but I did not think a good job was done identifying those savings, and I thought a better job was done in presenting the case that this was not a wise move from the standpoint of defense or economy. What is your reaction to that assertion by me? Admiral DIXON. As the Secretary of the Navy stated in this meeting to which you refer, it is very difficult when an establishment of this character is closed to immediately identify the actual savings that will be generated. In this case, we will have 1,200 fewer people in the employ of the O. & R.'s in the next fiscal year. In other words, our total employment will be reduced by that amount. Another major item, Mr. Chairman, as you are well aware, is the fact that we have to keep our Shore Establishment in proper proportion to the operating forces. As our aircraft program goes down, and it has been going down steadily, it is obvious that we have to make retrenchments in the Shore Establishment. Otherwise we would be completely out of balance. The time at which this out of balance occurs is a very debatable point, but we felt that the reduction in the operating program of naval aviation dictated a reduction in the Shore Establishment. Unfortunately Corpus Christi was the one chosen. Mr. MAHON. I would not be one to say that for economic reasons, that is for the purpose of supporting the economy of a town or locality, we should keep defense establishments open. Defense establishments do not exist for that purpose. They exist for the defense of the country. I do not want to be placing this matter out of focus. Also, I do not care to rehash the long discussion which previously had taken place with respect to this matter. Do you feel personally the Navy has done the right thing with respect to the closing of this O. & R. shop? Admiral DIXON. I do, sir. Mr. MAHON. Of course, a relatively small amount of O. & R. work is done outside the Navy by contract? Admiral DIXON. That is correct, sir. Mr. MAHON. Do you intend to place more and more of this work into contract status? Admiral DIXON. Mr. Chairman, before this budget was formed we had made plans, and this was before any consideration of the size of the O. & R. establishment was determined upon, to increase our allocation to commercial contract maintenance work in fiscal 1960 by some $10 million. In this present year we are spending $26.6 million; in 1960 we expect to spend $36 million. This was not a consideration that dictated the closing of the O. & R. shops at Corpus Christi, sir. Mr. MAHON. As I say, I do not want to rehash all the things that already have been discussed with respect to this matter, and these matters have been discussed with you and with the Secretary. Do you mean to say that the O. & R. shops in the Navy are working at a much reduced load in aviation? Admiral DIXON. No, sir. As our program went down our utilization of each plant went down somewhat, also. They averaged below 70 percent utilization. Mr. MAHON. They are capable of much greater production. Admiral DIXON. That is correct, sir. Mr. MAHON. In view of that fact, therefore, you have closed the one at Corpus Christi? Does your plan envisage the closing of other O. & R. shops! I assume you will close them if you think the closing is in the interest of efficiency and economy. What is your view on that? Admiral DIXON. Do I envision any more closings? Mr. MAHON. Yes. Admiral DIXON. Mr. Chairman, I think if our operating program were to continue to shrink we would have to close more shore establishments. Mr. MAHON. How many do you have? Admiral DIXON. We have no plan at the present time and it would depend Mr. MAHON. How many did you have? Admiral DIXON. We had nine. Now we will have eight. Mr. MAHON. It seems to me to be clearly indicated that other O. & R. shops, while they are not budgeted for closing in fiscal 1960, will be considered for closing later on the same basis as the one closed at Corpus Christi. O. & R. CLOSINGS RELATED TO COMMERCIAL CONTRACTING Admiral DIXON. Depending entirely on the size of the operating program, Mr. Chairman. Mr. MAHON. Off the record. (Discussion held off the record.) Mr. SIKES. Admiral, I have listened to what you say with much interest. If there is a possibility that other O. & R. facilities must also be closed, and since in fact you have found it economical to close the O. & R. facility at Corpus Christi, how can you justify increasing the contract O. & R. work by $10 million? Admiral DIXON. Mr. Sikes, our policy has always been that we must overhaul our combatant types in our overhaul shops in order to insure fleet readiness, with proper respect to fleet demands which vary every day. We have always held we must do our combat overhaul in our own shops. The additional work we are putting out in fiscal 1960 are commercial types, and in these commercial types we have always contracted for a portion of the overhauls. It so happens that in 1960 we are increasing the number of contract reworks of our commercial types. Our policy has not changed. Mr. SIKES. Should not this work be done in service facilities rather than face the prospect of further reduction of those service facilities? Admiral DIXON. May I answer that this way, Mr. Sikes, and say we think it probably can be done more fittingly in commercial shops rather than commercial shops doing the combatant aircraft. Commercial shops are more likely to be tooled for, and have capability for, transport and trainer types than for combat aircraft. Mr. SIKES. If you are faced with the prospect of further reductions in total O. & R. activities in the Navy, why is there a justification for expanded contract O. & R. activities. Admiral DIXON. Mr. Sikes, we have to take a look at the overall economy of the whole operation, which is a very large operation. Mr. SIKES. Is the total O. & R. budget going to increase this year? Admiral DIXON. Somewhat; yes, sir. Mr. SIKES. How much? Admiral DIXON. The comparative estimate for 1959 was $246 million. For this vear it is $268 million. Mr. SIKES. Would most of that be found in the $10 million you propose to put into additional O. & R. contracts? Admiral DIXON. No, sir. The $22.6 million increase in this budget reflects combined effects of an increased complexity of engines and increased numbers required to support the program. We are doing more reworks rather than overhauls. We are reworking our combat aircraft at the end of 12 months. In other words, we will perform two reworks and one overhaul in a 3-year period rather than one overhaul every 18 months. Mr. SIKES. The fact remains that the additional work you propose to do by contract could be done within existing service facilities. Mr. MAHON. It could be done at Corpus Christi. Admiral DIXON. It could be done, sir. I am not sure that this particular work could be done, in the long run, as economically in our own facilities as commercially. Mr. SIKES. This is something we will explore in greater detail later. I will defer further questions. Mr. MAHON. I will ask Mr. Sheppard to take over the committee at this point. Mr. SHEPPARD. Because of the time, Mr. Chairman, unless there is objection, we will stand adjourned until 10 minutes to 2 o'clock. AFTERNOON SESSION Mr. SHEPPARD. The committee will be in order. REPORT OF INVESTIGATIONS STAFF ON OVERHAUL OF AIRCRAFT At this time, Mr. Reporter, we shall insert in the record the report on a study made by the Surveys and Investigations Staff on overhaul of aircraft by the Department of Defense. The study was made for the committee upon the request of the chairman the early part of last OVERHAUL OF AIRCRAFT BY THE DEPARTMENT OF DEFENSE A REPORT TO THE COMMITTEE ON APPROPRIATIONS, U.S. HOUSE OF REPRESENTATIVES, BY THE SURVEYS AND INVESTIGATIONS STAFF, FEBRUARY 1959 SUMMARY AND TABLE OF CONTENTS I. Introduction. A. Directive. B. Scope of Inquiry. II. The depot maintenance systems. A. Army. The Army has no aircraft overhaul depots but accomplishes its aircraft overhaul by commercial contracts and cross-servicing agreements with the Air Force and Navy. B. Air Force. The Air Force depot-level maintenance is a function of the Air Materiel Command which discharges its maintenance responsibilities through eight Air Materiel Areas, each having a maintenance depot. The Air Force depots occupy more than 15 million square feet of covered work space, employ 62,540 personnel and represent an aggregate facility and tooling investment of $306,800,000. C. Navy. The Navy depot-level maintenance is a function of the Bureau of Aeronautics which exercises management control over the maintenance operations performed by the Overhaul and Repair (O. & R.) Departments located at each of nine Naval Air Stations. The Navy O. & R. Departments employed 30,230 civilians at August 31, 1958, currently occupy more than 12,200,000 square feet of covered work space and represent an aggregate cost in buildings and equipment exceeding $225,000,000. III. Aircraft maintenance industry. Contract maintenance is performed by two segments of the aircraft industry: aircraft manufacturers and maintenance contractors. A. Prime manufacturers. The plants of two aircraft manufacturers were visited by the staff. Information relating to their manufacturing and maintenance activities, together with plant capacities, is set out in this section. B. Maintenance contractors. Nine aircraft maintenance contractors' plants were visited by the staff. Information concerning the capabilities of maintenance contractors and their diversification of plant activities are set out in this section. |