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Well, I think part of the problem is the size of their market. How many more people do you think would buy Mach 6 spy planes if the cost could be reduced by a couple orders of magnitude? Government would buy a few more, but John Q. Public doesn't really have a need for a vehicle that can fly him to 100 kilofeet (even if it only costs a couple hundred grand). So, unlike the car business, where you expect to sell tens of thousands to hundreds of thousands of units per year, the best you can ever expect in the airplane business is a few hundred to a thousand over the total useful life of the model. To further put this in perspective, Honda (not the biggest automobile manufacturer) sells almost as many Accords (not their most popular model) in just one month as total number of 172's (the most-produced civilian aircraft) that Cessna has ever sold in all of history. Note that the wikipedia page on this topic (http://en.wikipedia.org/wiki/List_of_most_produced_aircraft) is dominated by military aircraft produced for WWII, as well as pre- and immediatly-post-war civilian aircraft. What this means is that you can't just hand-wave away the costs of building tooling (for making forged parts with complex shapes, for example) and optimizing the assembly line. Fixed, upfront costs do not get amortized to a near-zero per-unit cost they way they do with software and most consumer electronics. This is also part of the reason avionics prices always seem to be so badly out of step with consumer electronics: As an avionics manufacturer, the maximum theoretical size of your market is tens to hundreds of thousands, (there are on the order of half a million civilian airplanes in the world today) and your suppliers usually want you to go through a distributor for orders that size. There was a company, named Eclipse, that recently tried to revolutionize the way aircraft are produced. Among other things, they badly mis-estimated the size of the Very Light Jet market (which they more-or-less invented) and failed to over-deliver (some would say they over-promised). Suppliers, creditors, customers, and investors got soaked, though the firm is apparently still a going concern. One data point doesn't make a trend, and Eclipse faced fairly daunting macroeconomic conditions, but the fact remains that the manufacturer using the most "modern" production techniques had to go through bankruptcy. One final point: The aviation market also tends to be cyclical. Loans don't go away, but you can have your employees work fewer hours. |