FORT WORTH – In a harshly worded letter to top management, the Air Force has asked General Dynamics Corp. to correct problems in F-16 production in Fort Worth that the Pentagon says could hinder the company’s efforts to build its primary jet fighter on schedule.

According to a scathing May 3 letter from Gen. Ralph Graham, the Air Force’s F-16 program director, to Herb Rogers, general manager of GD’s Fort Worth Division, production on GD’s mile-long assembly line is in a “negative spiral” and the blame “rests squarely on the shoulders of top GD management.”

A copy of the letter was obtained yesterday by the Fort Worth Star-Telegram.

Rogers, 65, who is also GD’s vice chairman, said he has personally become involved in seeing that Graham’s concerns are dealt with and that the problems will not force F-16production off schedule for the second time in the jet fighter’s history.

“Sure, he (Graham) has expressed his dissatisfaction and I don’t blame him,” said Rogers. “We need to keep him happy and we intend to do that.

“He asked me to become personally involved. I have been personally involved and I will be more personally involved.”

Graham noted in the letter that he had recently read GD chairman William Anders’ remarks about improving the defense giant’s value to shareholders, customers and employees, in a company publication.

“Well, as one of your biggest customers, I was very disappointed when I reviewed critical manufacturing indicators for April and became deeply concerned about the failure of your managers to permanently improve the Fort Worth Division’s performance on the F-16program,” Graham wrote.

“Despite excellent written policy statements and several great initiatives from Bob Schwalm (GD’s division vice president for manufacturing), there is little evidence of correction to systematic problems which plague production performance.

“It seems that each new day brings new revelations of defective engineering on the pilot airplanes for Block 50 and Peace Marble III (an Israeli-ordered F-16).

“The production operation is in a negative spiral. In my opinion, this situation rests squarely on the shoulders of top GD management.”

Graham said in the letter that the division could do a better job of planning its production process and that it has tooling problems and parts shortages, among other problems.

He also said that the division’s production control system is “incapable of functioning properly.”

In November 1989, GD acknowledged that F-16 production had fallen as many as 20 planes behind schedule because of production problems. The problems cost GD millions of dollars in delayed government payments, contract adjustments and overtime pay.

GD said in October that the setback had been corrected and that the program was actually back on schedule two months ahead of time.

Dain Hancock, GD vice president for F-16 programs, could not be reached yesterday.

Graham – who is stationed at Wright-Patterson Air Force Base in Dayton, Ohio – and other Air Force officials could not be reached for comment on the letter, which has been circulated widely among employees at GD’s Fort Worth Division.

Rogers said that the problems noted by Graham all deal with production efficiency and quality control and that he has already taken steps to meet the Air Force’s demands.

“We have already instituted some new planning and control systems and we are instituting some changes in the production arrangement in the shop,” said Rogers, in a rare interview.

“We are making changes to improve our efficiency.”

Much of the problem, Rogers said, is also due to the wide variety of F-16s now being produced at the Fort Worth Division, which is building about 16 Falcons a month.

The Air Force has several equipment variations on order, and other countries receive several different configurations of the aircraft.

Rogers also said yesterday that the company might consider diversifying into commercial projects in Fort Worth, especially if GD is teamed with McDonnell Douglas Corp. to build its next-generation passenger jet, the MD-12.

He added that he was not among those GD executives who recently received lucrative cash bonuses under the company’s new and controversial executive bonus plan. Rogers also said he has not set a date for his retirement, although he said he likely will step down this year.

Rogers also said the company will consider diversification into some commercial aircraft production at the Fort Worth Division if the opportunity fits the firm’s business interests.

That could include production of major portions of the McDonnell Douglas MD-12, although Rogers called that unlikely.

McDonnell Douglas is said to be looking for a place to build a $750 million assembly plant for the giant passenger aircraft and Alliance Airport is said to be in the running.

“McDonnell Douglas has not yet decided that they are going to do the MD-12,” said Rogers. “They are considering it.

“In the process, I’m sure that they are looking at teaming partners to both share the work and share the investment. We would be one of those to be considered.”

Rogers said that if McDonnell Douglas selects GD, which already produces a the fuselage for the MD-11 jetliner at a GD plant in San Diego, location of the work would depend on where the plane is assembled.

“If they were going to assemble it at Alliance Airport we would do it here,” he said. “If they were going to assemble it in Long Beach, Calif., why would we do it here? We’d have to ship parts halfway across the United States.”

Working on the plane at the Fort Worth Division would likely require a special lease arrangement with the Air Force for use of a portion of Air Force Plant 4, GD’s Fort Worth assembly plant.

“It’s interesting,” Rogers said. “But as far as the people here in the community are concerned that is just way, way out in the future and it’s very much pie in the sky.”

On another topic, Rogers said he was not one of 25 top GD executives who recently received an average cash award of $300,000 because the firm’s stock price remained $10 above $25.56 for 10 consecutive days.

The bonus plan and a new stock-option plan have drawn criticism from some investment analysts and rank-and-file workers at the Fort Worth Division.

Rogers, who earned a salary of $576,922 in 1990, said he received no bonus for last year because of the problems encountered by the Fort Worth Division.

The division dropped seriously behind schedule and over budget on the Navy’s A-12 program. The A-12 was canceled by the Pentagon in early January and 3,500 local employees were terminated.

“Basically, because I am retiring and because of the problems the division is in, I’m not part of the gain sharing program,” he said.

Rogers said he has not yet set a retirement date. He said that Anders is reviewing a list of candidates to replace him.

When that selection is made, Rogers said, he will retire.

Copyright 1991, 1994 STAR-TELEGRAM INC.

Author: Michael D. Towle; Star-Telegram Writer

Publication Date: May 17, 1991