Filmmaker, Aviator, Innovator, and Eccentric Billionaire
Howard Hughes founded the Hughes Aircraft Company in 1932 as a subsidiary of Hughes Tool Company, a venture that was born primarily out of his passion for aviation racing. It first operated out of a rented hangar in Burbank, but soon outgrew this facility, so Hughes expanded operations to the Grand Central Terminal in Glendale. It was at the Grand Central Terminal that Hughes’ own racer, the H-1, was designed and developed.
This was only one of the numerous aviation feats Hughes would achieve. His achievements gave him the ability to compete for government contracts to finance his company’s aviation experiments.
The developing war in Europe and the increasing likelihood of U.S. intervention in the 1930s created a boom for aircraft manufacturing, and Hughes Aircraft began research and production on the D-2 medium range bomber. The plane was designed to have a record-breaking speed of 450 miles per hour, hold a crew of five, and be constructed of plywood. Despite not having a government contract for the development of the aircraft, Hughes was confident that the D-2 would launch the success of Hughes Aircraft. Research and development for the D-2 continued after the U.S. entered the war in 1941, and while it was not used in the war, it would eventually be redesigned as the XF-11 and become an innovative photo-reconnaissance plane.
in 1940 for the construction of a larger facility. On July 4, 1941, Hughes Aircraft moved into its new facility. The complex, now recognized as the Hughes Industrial Historic District, would eventually grow to 1,300 acres in size. Hughes invested millions of dollars in the fledgling company, its new site, and its experimental aircraft.
Despite the growth of Hughes Aircraft, the development of the D-2 did not go smoothly, and the company could not secure a contract for the plane. The company was viewed by outsiders as still nothing more than Hughes’ hobby, insignificant in comparison with industry giants, such as Lockheed and Douglas Aircraft. With the onset of U.S. involvement in World War II, Hughes sought to upend these negative perceptions.
Through his wealth and social contacts, Howard Hughes was able to secure military contracts despite past failures. His most famous commission during World War II was for the production of three “Flying Boats,” large wooden boats that, as the name suggests, could fly. Hughes named the prototype plane “Hercules,” though due to a series of missteps and failures in its development, it became widely known as the “Spruce Goose,” a name by which Hughes himself was not amused.
In addition to the Flying Boat deal, Hughes Aircraft secured another military contract during the war. Taking advantage of his wealth and social contacts, he invited Elliott Roosevelt, Air Force pilot and son of the U.S. president, to Los Angeles to view the company’s facilities and the experimental D-2 bomber. Roosevelt was enormously impressed with the innovative atmosphere at Hughes Aircraft, and several weeks after his visit, the Air Force asked the company to produce 100 D-2 planes, renamed as XF-11’s, for use as photo-reconnaissance planes. Unfortunately, Hughes Aircraft lacked the leadership and organization to produce the planes and fell behind on delivery. After Germany surrendered in May of 1945, the government canceled the XF-11 contract.
Though its experimental aircraft projects during World War II proved largely unsuccessful, Hughes Aircraft was responsible for several other important technological advancements, including flexible feed shoots for machine guns on the B-17 bomber and electric booster drives, which made the guns less likely to jam.
After the war the company began to experience greater success as it developed military electronics under the direction of its new general manager Harold C. George, a retired Air Force lieutenant general. Hughes turned his attention to other ventures, leaving the day-to-day operations of the company to George. By this time Simon Ramo and Dean E. Wooldridge, two young, talented scientists from the California Institute of Technology with backgrounds in electronics research, had joined the company. Their first development, a microwave radar search system, provided missiles with the ability to electronically search for and destroy enemy targets. This led to a contract for the development and production of the Falcon air-to-air missile, the most sophisticated military technology of the time.
It became clear to company leadership that their future was in advanced military electronics, not in aircraft manufacturing. Soon Hughes Aircraft began attracting some of the brightest scientific minds in the country, and in a few years the company had hired over 1,000 scientists for its research laboratory.
Two years later, with the increased need for electronic weapons interceptor systems brought about by the Korean War, that number had grown to 15,000. In three years their net earnings jumped from $400,000 to $5.3 million. Hughes was delighted at the success of his company and praised his brilliant young scientists. As an inventor himself, Hughes encouraged the experimental research of his staff. This led to an atmosphere of creativity and innovation that fed the company’s success.
The success of the company in the early 1950s created a demand for more space. Despite opposition from his managers and high-ranking scientists, Hughes wanted to build a new research laboratory near Las Vegas, which would allow him to avoid higher taxes in California. Ramo, Wooldridge, and others opposed the move because they doubted that the top scientific minds would find the location appealing. Though he eventually approved the laboratory expansion on the current site, the issue, as well as Hughes’ increasingly erratic behavior and management, drove a wedge between Hughes and his two leading scientists. At the same time the Air Force quietly began persuading Ramo and Wooldridge to leave the company.
Ramo and Wooldridge left Hughes Aircraft in 1953 to start their own firm, which later became TRW, a significant developer and manufacturer for the defense and aerospace industries.
The departure of Hughes Aircraft’s top scientists created a dire situation within the company. General Manager Harold George resigned, and the entire scientific advisory council, more than two dozen of the company’s senior scientists, threatened to follow suit. The Pentagon swiftly intervened to diffuse the crisis. Secretary of the Air Force Harold Talbott gave Hughes 90 days to solve his administrative problems or risk losing all of the company’s government contracts, which would have essentially put it out of business.
Hughes’ complex solution to the problem was to divest himself of controlling interest and grant profits to the Howard Hughes Medical Institute (HHMI), which would reform Hughes Aircraft into a subsidiary of the foundation and funnel proceeds into medical research. A new executive team was chosen to run the company. By 1953, Hughes was no longer involved in active management of the company.
The departure of Ramo and Wooldridge and the removal of Hughes from management signaled the end of an era at Hughes Aircraft; however, the company went on to pioneer several innovations in satellite technology, producing the first synchronous satellite, and many of the first communications and weather satellites. Hughes spacecraft have circled the earth hundreds of times and have gone to Mars and Jupiter. In 1970, Hughes Aircraft formed a subsidiary company called the Space and Communications Group.
The diversification of the company caused the expansion of corporate offices, research labs, and manufacturing plants.
By 1983, the company was the largest industrial employer in California, and the largest employer in the Los Angeles area. It had become the nation’s largest defense electronics contractor, and the seventh largest overall Pentagon contractor.
In 1972, four years prior to his death, Howard Hughes sold his tool division and formed the Summa Corporation, a holding company for his remaining interests. When he died in 1976, he had no will or succession plan in place, leading to multiple claims to his estate. The Summa Corporation and HHMI still owned large shares of Hughes Aircraft Company and its subsidiaries. Following Hughes’ death, they began to slowly sell these shares to larger corporations.
The Summa Corporation first sold Hughes Helicopters to McDonnell Douglas, which continued operations under McDonnell Douglas Helicopters until shutting down in early 1994 after production tapered. HHMI, under pressure from the IRS, sold Hughes Aircraft Company to General Motors in 1986. With the revenue from the sale, HHMI shed its old reputation as a tax dodge for Hughes–and its accompanying IRS scrutiny–and became a leader in the field of medical research.
Hughes Aircraft, under General Motors, merged with Delco Electronics to form Hughes Electronics Corporation, which later formed Hughes Network Systems in 1987 and introduced DirecTV in 1994. In 2003, Hughes Electronics, Hughes Network Systems and other remaining electronics subsidiaries were purchased by NewsCorp and renamed The DirecTV Group. The remaining aerospace and defense operations subsidiaries under the original Hughes Aircraft Company were sold by GM and merged with Raytheon in 1997. Hughes Space and Communication Company, the last of Hughes’ original assets to remain independent, was ultimately purchased in 2000 by Boeing.
For additional reading on the Hughes Industrial Historic District, Howard Hughes, the Spruce Goose, and the history of aerospace in Southern California, see the following sources, which were used in the preparation of this website.