Selling What We Make.

Stavatti generates revenues and net shareholder earnings through the design and production of major fixed wing aircraft and aerospace vehicles, like Lockheed Martin and Boeing. Stavatti is owned by shareholders who elect a board of directors who in turn appoint executive officers to manage the daily business affairs of the corporation, like Lockheed Martin and Boeing. Unlike Lockheed Martin and Boeing, Stavatti is a privately held corporation that develops the majority of new aerospace defense products as privately financed, corporate initiatives.

A fundamental difference separating the Stavatti business model from that of all other domestic aerospace defense prime contractors is the Stavatti focus upon Selling What We Make rather than Making What We Sell. The majority of domestic military aircraft manufactures are not responsible for the conception, requirements specification, design, development and testing of new aircraft types. The government user agency, be it the Air Force, Navy or Marine Corps, which issued the contract is. Domestic government user agencies are responsible not only for providing the congressional funding for new weapon system development, but for total program origination and management with the SPO serving as a principal element in program administration.

Contractors compete for the opportunity to participate in the user agency program and serve as designated end manufacturer of a new weapon system. Contractors win contracts based upon their ability to satisfactorily convince the government user agency that they can produce a product whose design aspects are yet to be specified to satisfy not yet thoroughly assessed system requirements within a specific time-frame at a specific total procurement cost. Contractors “sell” the government on their ability to make a new weapon system and then are responsible for actually making that which they just sold. Occasionally this practice, known as a Total System Contract, works. Often it does not, and the resulting air weapon system comes in at a significantly greater cost than originally envisioned and long overdue, not to mention overweight, underpowered and generally far less capable than originally specified. The A-12, F/A-22 and F/A-35 JSF programs are excellent examples of the shortcomings associated with Making What We Sell. Making What We Sell has been the standard aerospace industry practice for a number of decades and in the case of the aerospace industry, has been the only method by which relatively new weapon systems can receive development dollars.

The practice of aircraft manufacturers serving to satisfy total system military contracts rather than develop products at corporate expense and attempt to commercially market those products can be traced to the late 1920s during the transition from wood to all metal aircraft whereby “normally, the cost of producing a prototype were met by the manufacturer. In the era of the wood, wire and fabric biplane, this system did not usually impose a great strain on company resources. However, with the advanced technology involving the widespread use of metal in airframes, not all companies could sustain the investment necessary for such a gamble.”, Robert J. Serling, Legend and Legacy.

The use of metal, and advanced composites, however, has become an extraordinarily well defined science and is currently far more cost effective than creating hand-built wooden aircraft. Furthermore, unlike the shareholders responsible for backing major aircraft makers of the 1920s, ’30s and ’40s, today’s investor understands complex technology, manufacturing, the value of investing in long-term, strategic enterprises and of course, free enterprise. Today, advancements in computer aided design and modeling, as well as extremely accurate numerical simulation techniques, enable the development of modern aircraft, even those destined for sustained hypersonic cruise, with far less risk than ever before. Combined with sophisticated wind tunnel testing and a far greater understanding of aeronautical design methods, building a modern aircraft is a far less challenging endeavor than it was fifty years ago when the practice of government funding for the total RDT&E program was instated.

By Selling What We Make Stavatti retains complete control of all new aircraft programs, from conception to mass production. Prior to quoting a unit flyaway price to a customer, Stavatti has already developed, flight tested and qualified the product. Responsible for the conception of a product to address anticipated air defense needs, Stavatti is able to develop a product to meet or exceed real requirements on time and within budget. Employing the basic tenants of capitalism and free enterprise, Selling What We Make allows Stavatti to remove the government from the creation of new aircraft. Instead, governments, both domestic and worldwide, are responsible only for the procurement of new aircraft. In so doing, governments can afford to purchase far more aircraft than they could before when they were responsible for entire development as well as production costs.

Although the concept of Selling What We Make may appear radical and unnecessary in an industry where the customer is willing to pay for development, it must be realized that the rules have changed. The government is no longer able to pay for new weapon development. Major Prime Contractors are struggling with this fact and are gradually realizing that development contract money for entirely new weapon systems is simply not there and they must change their business model.

Interestingly enough, from a historical standpoint, application of a commercial approach to aerospace defense is not new. Throughout the history of military aircraft, numerous successful aircraft programs were started as corporate initiatives, rather than contract initiatives. Focusing upon one specific example, it is best to quote a renowned source, USAF General Curtis E. LeMay, as so stated in Mission with LeMay, Pages 475-476: