WWII Defense Contractors Convert to Peacetime Economy While Maintaining Pentagon Subsidies and Infrastructure

Following Japan’s surrender ending World War II, major defense contractors including Boeing, Lockheed, General Dynamics, and converted automotive manufacturers face the challenge of transitioning from massive wartime production to peacetime economy. The War Production Board, which directed $185 billion worth of armaments and supplies from 1942 to 1945, quickly lifts most production restrictions and is abolished on November 3, 1945, transferring remaining functions to the Civilian Production Administration. American aerospace industry produced over 300,000 military aircraft during WWII, with companies like Boeing increasing B-17 bomber production from 60 per month in 1942 to 362 per month in 1944 through focused industrial mobilization. This enormous productive capacity, built with massive federal investment and cost-plus contracts guaranteeing profits, represents infrastructure corporations seek to preserve.

The conversion period reveals tensions over whether wartime industrial mobilization represents temporary emergency measures or permanent structural transformation. Defense contractors demonstrate that “the Pentagon’s propensity to protect its big prime contractors outweighed the inclination to hold them to the terms of their contracts,” establishing patterns of preferential treatment. Companies including Lockheed, Litton, General Dynamics, Chrysler, and Grumman maintain core defense operations while diversifying into consumer markets. Boeing and Lockheed leverage their aircraft manufacturing expertise into commercial aviation, while maintaining defense divisions. The companies’ wartime experience creates technical capabilities, workforce skills, and manufacturing infrastructure that makes them indispensable for future military production.

The 1945-1947 conversion period proves temporary as Cold War tensions, the 1947 National Security Act, Truman Doctrine, and eventual NSC-68 policy ensure sustained defense spending. From 1947 to 1991, the Cold War era shifts military priorities toward “strategic warfare, especially nuclear capabilities, missiles, and space systems,” creating new markets for defense contractors. The Korean War’s outbreak in 1950 ends any pretense of returning to pre-war military budgets, as spending explodes from $13.5 billion to $50 billion. The conversion experience demonstrates that major contractors successfully navigate peacetime transitions by maintaining defense capabilities while pursuing commercial markets, creating diversified corporations that can extract sustained government subsidies. The pattern establishes that defense contractors, once created through wartime mobilization, become permanent features of the political economy with sufficient political influence to ensure ongoing military spending justifies their continued existence.