Extended Overview of General Dynamics

¶ … extended overview of General Dynamics Corporation. A throughout view of its history, activities, technologic development, its mergers and divestitures, as well as short summary of its financials will be summarized within this paper. Company overview General Dynamics represents today a market leader within the aerospace and defense industry, designer of products and services aiming at meeting the needs of most demanding customers all over the world, thus creating great value for its shareholders.

With a global base of more than 83,500 employees, General Dynamics operates today in four main segments: Aerospace, Combat Systems, Marine Systems and Information Systems and Technology. Its customers are represented by the national security entities of the U.S. And its allies, their defense and intelligence communities and select commercial organizations within these countries, to which the company is offering the best results in fulfilling their mission-critical requirements. Its headquarters are located in Falls Church, Virginia.

The company as it stands today has been formed by a significant number of mergers and divestures, becoming in 2008 the fifth largest contractor of defence products and services in the world (Defense News). 3. Company History The end of 19th century and the first half of the 20th century The Electric Boat The beginnings of General Dynamics can be traced to Holland Torpedo Boat Company, ownership of John Philip Holland.

At the end of 19th century, the company developed and subsequently built at Lewis Nixon's Crescent Shipyard (Elizabethport, New Jersey) the U.S. Navy's first submarines. It was there that the revolutionary submarine boat named Holland VI was build, with its keel being actually laid down in 1896. After its official launch on 17 May 1897, the submarine was finally purchased by the Navy and subsequently renamed USS Holland. On 12 October 1900, USS Holland was officially commissioned and became the U.S. Navy first submarine, being known later as the SS-1.

The Navy has placed orders for more submarines afterwards, and they were developed and assembled at a fast pace at two locations on both coasts. It was these submarines that were known as the Adder Class - or the a-Class, and formed the first fleet of underwater craft of the U.S. At the beginning of the 20th century.

There were various issues that made Holland part with his company and sell his ownership interest to Isaac Leopold Rice, financier who renamed the new firm as the "Electric Boat Company" on 7 February 1899. Thus, Holland found himself as chief engineering within the company he created years before, earning a $90 dollars a week, while the submarines sold for $300,000 each. In April 1904, Holland resigned from the company, and Rice became Electric Boat's first President, until just prior to his death in November 1915.

During Rice presidency, Electric Boat had gained an unfortunate reputation for unscrupulous arms dealing during 1904 and 1905, when it sold submarines to both Japanese Navy and the Imperial Russian Navy, powers in state of war at that time. Other powers buying Electric Boat's submarines were the English armaments company Vickers - for the British Royal Navy, as well as the Royal Netherlands Navy.

It was like this that the new pioneering craft, which has been originally developed by the Holland Torpedo Boat Company, was legitimized as genuine naval weapons by some of the most powerful navies in the world In the wind-down following the Second World War, the company, despite being cash-fluid, was lacking demand, and its workforce shrank from 13,000 to 4,000 by the year 1946.

In a vivid desire to diversify activity, the President and CEO, at that time - John Jay Hopkins - started to look for companies that would pertain to the same market as Electric Boat Canadair In his research, Hopkins found that Canadair, company owned by the government of Canada, was confronting the same type of post-war problems and it was up for sale.

In 1946 Hopkins purchased the company for only $10 million, a very good deal, as only the factory alone had been calculated by the Canadian government to worth more than $22 million, without considering the value of the planes and spare parts contracts the company had ongoing. At the time of the purchase, Canadair had its production line and inventory system in a total disorder, and for this reason, Hopkins hired Canadian-born H. Oliver West, mass-production specialist, to take over on the role of president and make Canadair profitable again.

Indeed, shortly after the takeover, the effects seen were significant, Canadair having begun the delivery of its new version of DC-4, called Canadair North Star. Additionally, it was also able to deliver such aircrafts well in advance of the contracted delivery times to companies such as Canadian Pacific Airlines, British Overseas Airways Corporation (BOAC) and Trans-Canada Airlines.

The 50's and the birth of General Dynamics Once with the Cold War increase in defense spending, Canadair won many contracts with the Canadian military for their Royal Canadian Air Force, thus becoming a major aerospace company. The orders included Canadair Argus long-range maritime reconnaissance and transport aircraft, the Canadair T-33 trainer and the Canadair F-86 Sabre, which "was to become the RCAF's (Royal Canadian Air Force's) most famous and unanimously well-liked, operational fighter.

RCAF Sabre squadrons were a force to be reckoned with in the European skies" (Canada's Air Force). Between 1950 and 1958, the company built 1,815 F-86 Sabre. The birth of General Dynamics - once with the increased aircraft production at Canadair becoming significant to the company, Hopkins decided that the name of the company, "Electric Boat," was not appropriate any longer. Thus, on 24th of April 1952, the company's name was officially changed into "General Dynamics." Another purchase made by General Dynamics in the 50's was that of Convair.

Continuing with its "cash-flush" status even after the purchase of Canadair, and encouraged by its big success, General Dynamics purchased Convair from Atlas Group in March 1953. The sale was allowed by the government only after General Dynamics agreed to continue its operations out of the Fort Worth Airforce Plant 4, in Texas. This factory had been set up in order to facilitate the spread out of strategic aircraft production, and had been rented to Convair during the war, for their B-24 Liberator bombers' production.

In the meantime, Fort Worth plant had become Convair's main production center. With the same strategy applied in the case of Canadair, Convair continue its activity as an independent division of General Dynamics, and introduced aircrafts such as F-106 Delta Dart interceptor, the B-58 Hustler and other crafts such as the Convair 880 and 990 airliners during the next decade. In this same period, Convair had also introduced the Atlas, "the first operational intercontinental ballistic missile" (Wikipedia). Issues with Management Churn appeared at the end of the decade.

During 1957, Hopkins fell very ill, and it was eventually replaced later in the year by France Pace. In the meantime, John Naish was the successor of Joseph McNarney as the president of Convair, while Henry Crown had become the largest shareholder of the company and merged his own Material Service Corporation General Dynamics in the year 1959. The 60's and 70's Unfortunately, Naish left the company in May 1061 and took with him most of Convair's top people.

Subsequently, General Dynamics reorganized itself into the Eastern and Western Groups, the first located in New York and the second in San Diego, this latter one also taking over all of the aerospace activities. The Convair brand was dropped from its aircraft in this process. Frank Pace was pressured to retire in 1962 and the new CEO, Roger Lewis, was brought. He had been Secretary of the Army and CEO of Pan American Airway.

After its entry as CEO, the company knew a slow process of recovery, nevertheless, by the end of the decade had commenced to fall back again in the same type of struggles. In 1971, the board brought as Chairman and CEO Dave Lewis (no relation with Roger Lewis), who was at that time the President of McDonnell Douglas. He served in this position until 1985 when he retired. The same decades of 60's and 70's have made out of General Dynamics an aviation powerhouse.

It was during the early years of 1960s, that General Dynamics bit on the Tactical Fighter, eXperimental project of United States Air Force's TFX, aiming at the development of a new low-level "penetrator." The new installed Secretary of Defense, Robert McNamara, had forced a merger of TFX with U.S. Navy plans regarding a new model of long-range "fleet defender" aircraft.

In order to insure a successful bid for a naval version of an airplane, General Dynamics partnered with Grumman, who would be responsible then for building a customized version for aircraft carrier duties. It took four rounds of bids and as many changes to have the General Dynamics and Grumman win the contract, against a Boeing submission. The aircrafts resulting from this bid, F-111 and F-111 B, launched in 1964 and 1965, were considered "too heavy for use on aircraft carriers" by the Navy.

With such result, estimates for the 2,400 F-111 (including their exports) were significantly reduced, but nevertheless, General Dynamics still managed to obtain a $300 million profit with this project. Grumman started also to build the F-14 Tomcat, using many of the F-111 innovations, but build solely for its purpose of serving as a carrier-borne fighter. General Dynamics Reorganization - it was in May 1965 that the company reorganized its activities into 12 operational divisions, having as a base their production lines.

The board took the decision to have all future planes built in Fort Worth and thus ended the plane production in San Diego, which had been Convair's original plant. At the San Diego location the production of space and missile development continued. The second CEO in this period, David S. Lewis required the headquarters of the company to be moved to St. Louis, event that took place finally in February 1971. The success of F-16. - in 1972, General Dynamics posted its bid on the USAF's LWF project (Lightweight Fighter).

Both General Dynamics and Northrop had been awarded prototype contracts. With its F-111 program winding down, General Dynamics needed urgently a new contract for aircraft. The company organized its own "Skunk Works" group (the Advanced Concepts Laboratory) and managed to come up with a new aircraft design, which was considerably more modern than the Northrop version. General Dynamic's YF-16 had its first flight in January 1974 and showed to some extent a better performance than the YF-17 in their head-to-head testing.

In January 1975 entered production under the name F-16, with an initial order of 650 units, and a total of 1,388. The F-16 also beat F-17 it its worldwide number of contracts, its total orders eventually summing up to more than 4,000 and transforming the aircraft into the largest and most successful General Dynamics had ever developed, and additionally in one of the most successful projects of the western military after the World War II.

The 80's Changing Focus to Land Systems - in 1976, General Dynamics decided to sell the troubled Canadair back to the Canadian government, at the price of $38 million. By 1984, the company had four divisions: General Dynamics - Fort Worth, Convair - San Diego, General Dynamics - Pomona and General Dynamics - Electronics. In the next year, a new reorganization created from the Convair Space Division the new Space System Division. It was also in 1985 that General Dynamics acquired Cessna. The 90's Still General Dynamic's largest shareholder, Henry Crown died on 15 August 1990.

Following his death, the company started to divest rapidly the divisions that were considered to be underperformers. Consequently, Cessna was sold again to Textron in the first month of 1992, while the San Diego missile production division was sold to General Motors - Hughes Aerospace only five months after, in May 1992. The Fort Worth aircraft production was sold to Lockheed in March 1993, and the Space System Division was sold one year later to martin Marietta.

During the same year, the remaining Convair Aircraft Structure unit was also sold to McDonnel Douglass, while the remains of the Convair Division have been closed in 1996. But this exist of General Dynamics from the world of aviation was not meant to last for long time. In 1999, the company acquired Gulfstream Aerospace. In the period of its aviation divesture, General Dynamics concentrated on its land and sea products, purchasing the Chrysler defense division in 1982 and renaming it General Dynamics Land Systems.

The 2000's Continuing its focus on the Land Systems, in 2003 the company acquired also General Motor's defense divisions and today is considered a major supplier of all types of armored vehicles, including names like M1 Abrams, LAV 25, Stryker and a large variety of such vehicles based on these chassis. Government issues - the lawsuit and its settlement It was on August 19, 2008 that General Dynamics finally agreed to pay $4 million in order to settle a lawsuit which had been brought by the U.S. government.

The company was accused of having one of its units fraudulently billed the government for parts defectively manufactured and that had been used in U.S. military submarines and aircraft. The U.S. accused that from September 2001 until August 2003; General Dynamics had defectively manufactured or even failed to test several parts that have been used in the assembly of U.S. military aircraft (e.g. The C-141 Starlifter transport plane). The General Dynamics unit involved was based in Glen Cove, New York and closed in 2004 (Washington Post, p.D4). 4.

Financials of General Dynamics As the website of the company presents, several events affected the Stock Price of General Dynamic Shares: History of Events affecting Cost Basis of General Dynamics Shares Date Reflected in Stock Price Detail on Event 09 March 1955 100% stock dividend 10 November 1956 50% stock dividend 10 January 1969 Cost basis of GD shares reduced 7.0553% (due to pay out of Liquid Carbonic shares) 19 February 1979 2.5 for 1 stock split 17 November 1980 for 1 stock split 30 March 1993 Cost basis of GD shares reduced 17.43% (due to $20 per share Special Distribution) 15 June 1993 Cost basis of GD shares reduced 18.4% (due to $18 per share Special Distribution) 22 September 1993 Cost basis of GD shares reduced 12.02% (due to $12 per share Special Distribution) 08 April 1994 for 1 stock split 02 April 1998 for 1 stock split (distributed in the form of a stock dividend, payable 24 March 2006) Source: General Dynamics Corporation, retrieved online at http://www.gd.com/ These events can be noted on the graph below, showing the General Dynamics Stock Prices from 1972 until today.

The graph was customized on the site of Morningstar, www.morningstar.com, a Institutional Equity Research Company, on its Charts section within Tools page. Source: Morningstar, www.morningstar.com, The last Stock Quote information registered for the company looks as it follows: 10/10/08 4:01 P.M. ET GD (Common Stock) Exchange:NYSE (U.S. Dollar) Price Change Today's Open Intraday High.