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plants. One contains 300,000 square feet and is now the primary manufacturing plant, and the other, which was acquired in 1957, has 36,000 square feet, is a modern, well-equipped component test laboratory located adjacent to the manufacturing plant. This facility, which is an adjunct to the Detroit Research Division, is expected to play a vital part in the development of advanced projects.

During the past five years, the Company's facilities have been expanded to meet the growing requirements.

PLACE IN THE TURBINE ENGINE FIELD

CONTINENTAL AVIATION occupies a unique position in the field of small shaft turbines, turbojets, ducted fan engines, and ram jets. Since the introduction of jet engines in this country, a high percentage of the development effort has been directed towards large, high output engines. This left the smaller turbine field wide open and, with the acquisition of the Turbomeca patents in 1951, C.A.E. was in a position to develop a family of outstanding small jet engines in this field for a variety of applications. At the present time, CONTINENTAL AVIATION dominates this field and should remain a leader for some years to come.

Now in volume production at Toledo are the J-69 gas turbine, the Model 141 air compressor, and the MA-1A starting unit for large jets, of which the Model 141 is the heart. The J-69 is built in three versions—the T-9, powering the Temco TT-1 single-engine Navy jet trainer; and the T-19A, powering the Ryan Q-2A Firebee target drone. The T-37A is now in operational use at Bainbridge Air Force Base, and is scheduled for much wider applications in 1958. The TT-1 is undergoing Navy evaluation tests, and the Q-2A is in operational use at Vincent Air Force Base. 

The basic advantages of the turbine engines now being produced by C.A.E. are their light weight, simplicity of design, low fuel consumption, high component efficiencies, minimum use of critical materials, and excellent growth potentiality. Now that certain models have proved themselves, and have been accepted by the Air Force and the Navy, further research and development work should open up new avenues for increasing sales. Last year, the new and improved MA-1A air compressor was developed, resulting in new orders. The first of these new models is expected to be delivered this month. The J-69 engine also has been improved with the current model producing a greater thrust from less fuel and with less weight. 

RESEARCH AND DEVELOPMENT

The research and development activities at C.A.E. are very important and are responsible for the eventual sales volume. Over a period of time, the Company has built up a development staff of about 1000 people at its Detroit and Toledo component test facilities, of which approximately 400 are engineers, aero-dynamists, and physicists. In addition to this regular staff, CONTINENTAL AVIATION also employs several outstanding specialists as consultants. 

In recent years, CONTINENTAL AVIATION has changed over largely from a development company to a production operation. The following table reveals the relative importance of the two classifications in the Company's operations in the last eight years: 

[[3column table]]
|...|Production|Development|
|1950..............|$ 787|$2,603|
|1951..............|1,627|4,456|
|1952..............|5,867|3,394|
|1953..............|9,204|5,320|

Years Ended October 31
(000 omitted)

[[3column table]]
|...|Production|Development|
|1954..............|$ 5,368|$ 5,968|
|1955..............|10,226|6,678|
|1956..............|11,249|9,552|
|1957..............|25,577|12,087|

The learning and development period of CONTINENTAL AVIATION now is in the past, and the basic knowledge and techniques with respect to turbine engines acquired over the last five or six years by the re-