The impact of costs on procurement decisions.

[Nick Sumner]

Some years ago I went to Hendon and looked up all they have on costs. (The price books, which are basically the cost contracts.) They don't have all of them but most of the major types are covered. There's odd bits of info about man hours too. Just so's you know, a Spitfire didn't cost much more than a Hurricane and a Tempest didn't cost much more than a Typhoon once production got into its stride. If anyone would like a copy of my findings (Word Doc or PDF) email me.

nick (at) nicksumnerphoto (dot) com

A warning, the prices are for airframes and final assembly not engines, gunsights, armament or clever bits like H2S etc which was done under separate contracts. Another warning; UK 1940-45 all money was funny. Costs did not necessarily reflect effort let alone value.

 

[pinehilljoe]

Some years ago I went to Hendon and looked up all they have on costs. (The price books, which are basically the cost contracts.) They don't have all of them but most of the major types are covered. There's odd bits of info about man hours too. Just so's you know, a Spitfire didn't cost much more than a Hurricane and a Tempest didn't cost much more than a Typhoon once production got into its stride. If anyone would like a copy of my findings (Word Doc or PDF) email me.

nick (at) nicksumnerphoto (dot) com

A warning, the prices are for airframes and final assembly not engines, gunsights, armament or clever bits like H2S etc which was done under separate contracts. Another warning; UK 1940-45 all money was funny. Costs did not necessarily reflect effort let alone value.

Yes, the prices you usually see for aircraft are less GFE Government furnished equipment.

 

[Dinger]

Does anyone have actual costs. I believe a Mosquito cost no more than a Spitfire to build.

I see the thread has moved on somewhat since this request- but I'll throw this into the mix anyway. From the book "Spitfire Odyssey" by C.R. Russell (pub 1985). regarding the initial Spitfire order. - He's talking here about the price put on Spitfire's by "Spitfire funds".

"The £5,000 Spitfire price was not far out, if it is taken as the return to Vickers Supermarine for their part only. It must be remembered that the Rolls-Royce engines, the De Havilland [sic] propellers and spinners, as well as all the other 'Embodiment Loan' items - radio, instruments etc. - were purchased separately by the Ministry and provided to the industry. Of the original 310 order, the first batch of 49 were settled at a price of £8,783 each, the next batch of 26 at £5,782 each, then 31 at £5,768 each and the balance at £5,696 each. After that, subsequent small price adjustments were made, dependent on the 'Mark' or modifications incorporated. Unfortunately, figures for Castle Bromwich production are not, as yet, available."

The production order for 310 Spitfire Mk I fighters was placed on 3rd June 1936 at which time the dollar/pound exchange rate was not far off 5 dollars to the pound. At the start of the war it briefly fell as low as to 3.25 dollars to the pound and then in March 1940 it was pegged to 4.03 dollars to the pound, where it stayed throughout the war years

C.R. Russell joined Supermarine at the age of 14 as a "handy lad", then became an apprentice and a skilled metalworker, working at Woolston until the bombing of Sept 1940 and then at various of the dispersed production sites. After the war he ended up heading the "rate fixing" department at Airspeeds and then then back at Supermarine costing up the production of Swift and Scimitar jets, so he should be regarded as being a fairly authoritive source. - If you read his book "Spitfire Odyssey" and the follow-on "Spitfire Postscript" he has a particular bugbear with Castle Bromwich, saying that the unions there got their workers much higher pay than the workers at the Southern sites for doing the same job (Castle Bromwich used the midland car-workers piecework scheme whereas most of the established aircraft industry used variations on the "Halsey-Rowan" bonus scheme).

 

[Kevin J]

I see the thread has moved on somewhat since this request- but I'll throw this into the mix anyway. From the book "Spitfire Odyssey" by C.R. Russell (pub 1985). regarding the initial Spitfire order. - He's talking here about the price put on Spitfire's by "Spitfire funds".

"The £5,000 Spitfire price was not far out, if it is taken as the return to Vickers Supermarine for their part only. It must be remembered that the Rolls-Royce engines, the De Havilland [sic] propellers and spinners, as well as all the other 'Embodiment Loan' items - radio, instruments etc. - were purchased separately by the Ministry and provided to the industry. Of the original 310 order, the first batch of 49 were settled at a price of £8,783 each, the next batch of 26 at £5,782 each, then 31 at £5,768 each and the balance at £5,696 each. After that, subsequent small price adjustments were made, dependent on the 'Mark' or modifications incorporated. Unfortunately, figures for Castle Bromwich production are not, as yet, available."

The production order for 310 Spitfire Mk I fighters was placed on 3rd June 1936 at which time the dollar/pound exchange rate was not far off 5 dollars to the pound. At the start of the war it briefly fell as low as to 3.25 dollars to the pound and then in March 1940 it was pegged to 4.03 dollars to the pound, where it stayed throughout the war years

C.R. Russell joined Supermarine at the age of 14 as a "handy lad", then became an apprentice and a skilled metalworker, working at Woolston until the bombing of Sept 1940 and then at various of the dispersed production sites. After the war he ended up heading the "rate fixing" department at Airspeeds and then then back at Supermarine costing up the production of Swift and Scimitar jets, so he should be regarded as being a fairly authoritive source. - If you read his book "Spitfire Odyssey" and the follow-on "Spitfire Postscript" he has a particular bugbear with Castle Bromwich, saying that the unions there got their workers much higher pay than the workers at the Southern sites for doing the same job (Castle Bromwich used the midland car-workers piecework scheme whereas most of the established aircraft industry used variations on the "Halsey-Rowan" bonus scheme).

Thanks for this very informative post. So far from what I've seen the RAF could get a fully equipped fighter for the same price as just the shell of an American one.

 

[pbehn]

Thanks for this very informative post. So far from what I've seen the RAF could get a fully equipped fighter for the same price as just the shell of an American one.

As soon as war is declared, costs become almost meaningless nominal figures, it is no longer business as we know it. How do you price in the cost of air raids. By the summer of 1940 the British government was the client of Supermarine but also the owner of its factory and had told it to disperse production from the south coast. The Spitfire was perhaps the most wanted piece of equipment by the RAF and British military at the time, but a successful invasion would mean the whole enterprise would be worthless to everyone except the Germans in a month.

 

[Shortround6]

Thanks for this very informative post. So far from what I've seen the RAF could get a fully equipped fighter for the same price as just the shell of an American one.

It rather depends on the fighter/aircraft doesn't it?

The initial contract for P-40s in the Spring of 1939 called for a unit price of $22,929.30.
The P-40E rose to $34,809 and the P-40K to $42,490

Higher wages or more "stuff" included in the price?

Unit price for a P-40M was $36,157 without GFE, why the $6000 reduction in price I have no idea.

While you don't buy aircraft by the pound the weight of airframes manufactured was used as a measure of production to try to compensate for the differences in single and multi-engine planes and small or large aircraft of the same category.

You don't get an airframe capable of holding a P&W R-2800 (Or Sabre) engine for the same price as one using an Allison or Merlin.

 

[swampyankee]

To a first approximation, until the electronic-heavy aircraft of the recent era, cost was pretty well correlated to empty weight.

 

[pbehn]

To a first approximation, until the electronic-heavy aircraft of the recent era, cost was pretty well correlated to empty weight.

If you compare to an F-22 the empty weight cost of all WW2 aircraft was nominally the same maybe a B-29 would be an exception.

 

[Dinger]

Some years ago I went to Hendon and looked up all they have on costs. (The price books, which are basically the cost contracts.) They don't have all of them but most of the major types are covered. There's odd bits of info about man hours too. Just so's you know, a Spitfire didn't cost much more than a Hurricane and a Tempest didn't cost much more than a Typhoon once production got into its stride. If anyone would like a copy of my findings (Word Doc or PDF) email me.

nick (at) nicksumnerphoto (dot) com

A warning, the prices are for airframes and final assembly not engines, gunsights, armament or clever bits like H2S etc which was done under separate contracts. Another warning; UK 1940-45 all money was funny. Costs did not necessarily reflect effort let alone value.

Thanks for your document. It really is a treasure-trove of information. It must have taken you ages to do collate it all. What an outstanding job. Thank you very much. One thing that really stands out is how much the size of the order has a bearing on the per-airframe cost, no doubt reflecting that the investment in tooling-up for large production runs paid off.

 

[pbehn]

Thanks for your document. It really is a treasure-trove of information. It must have taken you ages to do collate it all. What an outstanding job. Thank you very much. One thing that really stands out is how much the size of the order has a bearing on the per-airframe cost, no doubt reflecting that the investment in tooling-up for large production runs paid off.

Between the declaration of war and the summer of 1940 the Spitfire went from being an order for circa 600 aircraft to an order for as many as could be made for the foreseeable future, which turned out to be pretty much the duration of the war.

 

[Kevin J]

Such an interesting document from Nick. So Hurricane about £4k, Spitfire £5k, Typhoon/Tempest £6k plus 50/100% for all added equipment. Times 4 for $. Makes American fighters look pricy. Beaufighter and Mosquito below £10k. Whirlwind overpriced for what it does.

 

[pbehn]

Such an interesting document from Nick. So Hurricane about £4k, Spitfire £5k, Typhoon/Tempest £6k plus 50/100% for all added equipment. Times 4 for $. Makes American fighters look pricy. Beaufighter and Mosquito below £10k. Whirlwind overpriced for what it does.

It looks the way it looks because that's the way you made it look. Just look at the specification for the first Hurricanes and the last Tempests.

 

[Kevin J]

It looks the way it looks because that's the way you made it look. Just look at the specification for the first Hurricanes and the last Tempests.

What are you getting at?

 

[pbehn]

What are you getting at?

As others have pointed out, just because the manufacturer of an aircraft doesn't actually charge for something doesn't mean the purchaser doesn't pay for it. How much more does a 5 blade or six blade contra rotating prop cost than a two blade fixed pitch wooden one? How does a Merlin single stage engine compare to a Griffon twin stage including all extra plumbing and radiators. During its life the Spitfire got different engines, props, rivets, fasteners, wing beams (stainless steel), weapons (cannon) It was plumbed for drop tanks and bombs. It is easy to see the actual cost of a late model Spitfire being more than twice the cost of an early one. It is also easy to see the engine in a Typhoon or Tempest costing more than twice what an early Mk 1 Hurricane. An early Hurricane had no armour fitted, a Typhoon had 700Ibs of it in a "bath" around the radiator, under and behind the pilot.

 

[Dinger]

Between the declaration of war and the summer of 1940 the Spitfire went from being an order for circa 600 aircraft to an order for as many as could be made for the foreseeable future, which turned out to be pretty much the duration of the war.

I appreciate that fully. After 1940 the whole country was working as one and prices are largely irrelivant. However when Supermarine/Vickers got the first letter of intent for 310 Spitfires back in 1936 they had no way of knowing that they would end up producing 21,000 of them. So they had to recoup the whole cost of tooling up and setting up jigs in their cramped Woolston factory in that first order. To complicate matters they got a big order for Walrus aircraft at the same time. They had no space left to make the wings of the Spitfire themselves so they subcontracted that to General Aircraft (who fell behind on delivery and held up the whole programme). If Supermarine/Vickers had known in 1936 that they would have to produce 1,000 Spits, let alone 21,000 they would have invested in a brand new factory to build them in and bought in lots of drop press equipment to stamp out the panels and other components, letting unskilled operatives do the work that was undertaken by skilled metalworkers who shaped all the parts by hand. They would have built the wings themselves (which they did end up doing later after the dispersal following the bombing of Woolston). That would have all meant extra cost to recoup but in the end the cost savings bought about by the extra investment would have made the Spitfire even less expensive. But hindsight is a wonderful thing - At the other extreme you have de Havilland who got an order for 250 of their Don trainers and went to great expense to jig up their factory in the anticipation of getting even more orders after that, only for the order to be cut to 50, of which only 30 were to be built to flying condition.

It's often forgotten just how "hand built" British aircraft like the Spitfire and Hurricane were, the panels from one aircraft would not fit onto any other aircraft since they had been "filed to fit", this meant each panel had to have the aircraft serial number on it - a boon to modern aircraft archeologists when they dig up buried parts and have to identify them. Whereas the major US and German fighters of WW2 were built from the start on the understanding that thousands would be required, so the investment in tooling was so much greater, so panels from one aircraft would usually fit on any other of the same Mark. The difference in costs between British and American aircraft Kevin J highlights is really quite amazing. - You would have expected the superior tooling and production equipment available to the American factories to have made their product cheaper. Was it just Labour costs?

Addition - I've done a bit of quick research online and found this document - Wage Rates in the California Airframe Industry, 1941 : Bulletin of the United States Bureau of Labor Statistics, No. 704 | FRASER | St. Louis Fed - Taking some figures from it and what I know about pay rates in the UK at the time it would suggest that indeed, in 1941 US aircraft workers got almost twice the pay of the equivilant British worker - a skilled British worker would be lucky to get 2 shillings an hour (10 pence in modern money) - about 40 cents. Whereas in the Californian aircraft industry pay rates were about 90 cents an hour, pushing 1 dollar and going up every month. Indeed the difference may have been even greater than that since the figure of 90 cents per hour seems to apply to unskilled workers. In the UK there was government controlled pay restraint whereas in the US the boom in war production pushed up pay to unprecedented levels.

 

[Kevin J]

I appreciate that fully. After 1940 the whole country was working as one and prices are largely irrelivant. However when Supermarine/Vickers got the first letter of intent for 310 Spitfires back in 1936 they had no way of knowing that they would end up producing 21,000 of them. So they had to recoup the whole cost of tooling up and setting up jigs in their cramped Woolston factory in that first order. To complicate matters they got a big order for Walrus aircraft at the same time. They had no space left to make the wings of the Spitfire themselves so they subcontracted that to General Aircraft (who fell behind on delivery and held up the whole programme). If Supermarine/Vickers had known in 1936 that they would have to produce 1,000 Spits, let alone 21,000 they would have invested in a brand new factory to build them in and bought in lots of drop press equipment to stamp out the panels and other components, letting unskilled operatives do the work that was undertaken by skilled metalworkers who shaped all the parts by hand. They would have built the wings themselves (which they did end up doing later after the dispersal following the bombing of Woolston). That would have all meant extra cost to recoup but in the end the cost savings bought about by the extra investment would have made the Spitfire even less expensive. But hindsight is a wonderful thing - At the other extreme you have de Havilland who got an order for 250 of their Don trainers and went to great expense to jig up their factory in the anticipation of getting even more orders after that, only for the order to be cut to 50, of which only 30 were to be built to flying condition.

It's often forgotten just how "hand built" British aircraft like the Spitfire and Hurricane were, the panels from one aircraft would not fit onto any other aircraft since they had been "filed to fit", this meant each panel had to have the aircraft serial number on it - a boon to modern aircraft archeologists when they dig up buried parts and have to identify them. Whereas the major US and German fighters of WW2 were built from the start on the understanding that thousands would be required, so the investment in tooling was so much greater, so panels from one aircraft would usually fit on any other of the same Mark. The difference in costs between British and American aircraft Kevin J highlights is really quite amazing. - You would have expected the superior tooling and production equipment available to the American factories to have made their product cheaper. Was it just Labour costs?

Addition - I've done a bit of quick research online and found this document - Wage Rates in the California Airframe Industry, 1941 : Bulletin of the United States Bureau of Labor Statistics, No. 704 | FRASER | St. Louis Fed - Taking some figures from it and what I know about pay rates in the UK at the time it would suggest that indeed, in 1941 US aircraft workers got almost twice the pay of the equivilant British worker - a skilled British worker would be lucky to get 2 shillings an hour (10 pence in modern money) - about 40 cents. Whereas in the Californian aircraft industry pay rates were about 90 cents an hour, pushing 1 dollar and going up every month. Indeed the difference may have been even greater than that since the figure of 90 cents per hour seems to apply to unskilled workers. In the UK there was government controlled pay restraint whereas in the US the boom in war production pushed up pay to unprecedented levels.

I imagine it's the labour costs. The French found similar price differences between the Hawk and the Bloch.

 

[Kevin J]

As others have pointed out, just because the manufacturer of an aircraft doesn't actually charge for something doesn't mean the purchaser doesn't pay for it. How much more does a 5 blade or six blade contra rotating prop cost than a two blade fixed pitch wooden one? How does a Merlin single stage engine compare to a Griffon twin stage including all extra plumbing and radiators. During its life the Spitfire got different engines, props, rivets, fasteners, wing beams (stainless steel), weapons (cannon) It was plumbed for drop tanks and bombs. It is easy to see the actual cost of a late model Spitfire being more than twice the cost of an early one. It is also easy to see the engine in a Typhoon or Tempest costing more than twice what an early Mk 1 Hurricane. An early Hurricane had no armour fitted, a Typhoon had 700Ibs of it in a "bath" around the radiator, under and behind the pilot.

Like I said +50/100% on the cost of building plane. In 1940 you are looking at about 50% on the price of A Spitfire or Hurricane. So I'm allowing an extra 100% by wars end. As I've constantly said, my estimates are guesses. So Spitfire in 1940, $37.5k, Hurricane $34k, Typhoon maybe $40k at start, Tempest $50k at end. Forget the Whirlwind as it's too expensive compared with the Hercules Beaufighter or Merlin Mosquito.

 

[Dinger]

Such an interesting document from Nick. So Hurricane about £4k, Spitfire £5k, Typhoon/Tempest £6k plus 50/100% for all added equipment. Times 4 for $. Makes American fighters look pricy. Beaufighter and Mosquito below £10k. Whirlwind overpriced for what it does.

The Whirlwind is an interesting case which illustrates some of the developing themes in this thread well. In the Western world today there are less and less people who have actually worked in a factory and appreciate what goes on inside one. Go back to the 40s and 50s and virtually everyone worked in a factory at some time in their lives. So there is growing disconnect about what a production process actually entales. The two great towering figures of industry in the USA and Britain in the first half of the 20th Century were Henry Ford and William Morris (Lord Nuffield) respectively. Neither were great engineers in terms of inventing new devices, instead they were great PRODUCTION ENGINEERS a term that many people today would struggle to identify. They took an expensive, hand-built product, the motor-car, redesigned it to simplify production, cut down the number of operations needed to make it and introduced the production line to speed up processes. Wherever possible they replaced the need for skilled men by unskilled labour by designing out the processes that were complicated. They used economies of scale to bring down costs -why have 20 different sizes of nut-and-bolt in a car when you can redesign it to use only one size - then squeeze your supplier to sell you those at a reduced price, better still take over the supplier! - Using these methods the prices of motor-cars fell dramatically during the first half of the century.

What was true of motor-cars was also true of aircraft. It is not appreciated that alongside the great designers such as Mitchell and Camm were production engineers. The prototype aircraft would be built by a set of highly skilled men, virtually everything would be built by hand. But then, once an order had been placed the production engineers would take over. They would look at the prototype piece by piece and work out how to make it most economically, how to fit the pieces together best. - Sometimes the size of the order and any expected follow-on production run would not warrent any investment in extra plant and machinery to simplify production and production would go ahead using skilled craftsmen to hand-make all the parts (this was how Supermarine survived the lean depression years, making small orders of flying boats). For larger orders investment in metal extrussion technology and drop-presses paid dividends in doing away with the need to use skilled labour.

So we come to the Westland Whirlwind - It was designed by W.E. Petter, now best remembered for the Canberra, Lightning and Gnat Jets and regarded as somewhat of a genius. However he started out at Westlands (it helped that his father owned the business!). He made his name with the Lysander which went into production for the RAF, being overseen by the established Westland production engineers. At some stage Petter fell out with his production engineering department and he either had them fired or they left. - The result was that when the Whirlwind was selected for production by the RAF Westland had no experienced production engineers to redesign it for production, so it was put into production virtually as a copy of the prototype. The result was a disaster, although undoubtably an excellent flying machine it was a pig to produce (and expensive as you say) and an even bigger pig to service. No proper inspection ports, myriads of screws and fasteners to undo for even the simplest of jobs, metal edges that would cut a lacerate the hands of armourers struggling to change the cannon magazines - tyres that took teams of men hours to change. - All things that a good production engineering team would have resolved.

A good set of production engineers that are free to redesign a product to make it easier to produce and are able to invest in the tooling needed to produce a design more economically can bring down the cost of a product in remarkable ways, and keep on making economies over the lifetime of the production run. And economies of scale always count.

Which brings us back to the very start of the thread - Did costs influence procurement decisions? by this I take you to mean did the low cost of he Hurricane explain why the RAF bought so many of them? - I would be tempted to say it was the other way round - The large orders placed for the Hurricane allowed economies of scale that in turn drove down costs. - I think the RAF payment records provided by Nick bear that out - high initial costs for the first few orders of a particular type when the companies recoup the costs of setting up production lines and tooling up - then much lower costs for the follow on orders when they can literally knock them out "at cost price" because all the initial costs have already been recovered and all you have to do is cover material and labour costs. - Having said that this is only applying to airframes, the engines, guns and electronics that go into the airframes also have to be factored in - and although these are going to increase as things get "more complicated" they in turn will also be affected by economies of scale - Take one example that pbehn states - Would a two blade wooden prop for a Spitfire Mk I cost the same as a five bladed prop for a 6 bladed conta prop? - Well actually the Wooden prop would cost more - It was made by hand by skilled tradesmen - At de havilland they had automated the entire process of prop production bringing down costs tremendously. Engine production in particular saw big reduction in costs as production ramped up - The price of Merlins fell when the Glasgow and Manchester plants came on-stream.

 

[XBe02Drvr]

in 1941 US aircraft workers got almost twice the pay of the equivilant British worker - a skilled British worker would be lucky to get 2 shillings an hour (10 pence in modern money) - about 40 cents. Whereas in the Californian aircraft industry pay rates were about 90 cents an hour, pushing 1 dollar and going up every month.

In 1941, lean and hungry depression era American manufacturers were suddenly expanding on a prodigious scale, creating a labor shortage and generating high training costs as the pool of skilled aircraft workers was rather small, and wartime wage controls were not yet in effect.
Add to that the peacetime American standard of living was considerably higher than wartime Uboat constrained UK. American aircraft workers tended to live in relatively modern housing equipped with telephone, toilet, typewriter, PRIVATELY OWNED radio and central heating, while I suspect that was less so in UK.
Cheers,
Wes

 

[pbehn]

Having said that this is only applying to airframes, the engines, guns and electronics that go into the airframes also have to be factored in - and although these are going to increase as things get "more complicated" they in turn will also be affected by economies of scale - Take one example that pbehn states - Would a two blade wooden prop for a Spitfire Mk I cost the same as a five bladed prop for a 6 bladed conta prop? - Well actually the Wooden prop would cost more - It was made by hand by skilled tradesmen - At de havilland they had automated the entire process of prop production bringing down costs tremendously. Engine production in particular saw big reduction in costs as production ramped up -.

I would dispute that a wooden twin blade prop costs more than a contra rotating propeller. Considering the few numbers made a contra prop was also made by skilled craftsmen with a lot of precision machined parts and bearings but that is not really my actual point. An early Hurricane started life with dope covered wings and a twin blade prop and had metal skinned wings and a variable pitch prop fitted later, so it had both, and later metal ailerons. At no point was financial cost a factor in the decision.