Hughes Dynamics

Hughes Dynamics, Inc. was an American computer-services and management-technology company created as a wholly owned subsidiary of Hughes Tool Company. It operated for only a few years, emerging publicly in 1962 and effectively disappearing after the dismantling of its businesses between 1964 and 1965. Its brief existence reflected the period's growing interest in applying large-scale computing, operations research, systems analysis, and information management to commercial and government problems. The company was established in the Hughes organization while Hughes Tool remained primarily known for manufacturing oil-well drill bits and related products. Hughes Dynamics was intended to broaden that industrial base into technical, scientific, and management services. Its initial activities included data processing, computer programming, systems design, market research, credit-information processing, and consulting on advanced business methods. The company maintained a principal base in Los Angeles and offices or operations in Houston, Texas, and other locations. It also operated central computing facilities obtained from C-E-I-R and used IBM System/360 mainframes in Los Angeles. Hughes Dynamics expanded rapidly during 1962 and 1963. Some capabilities originated inside the wider Hughes organization, including a critical-path-method and program-evaluation-and-review-technique group formed with personnel associated with Hughes Aircraft. That unit advised aerospace, construction, and other organizations and also taught project-management methods. The company simultaneously pursued acquisitions. These included Electrada Corporation's Advanced Information Systems unit, whose software included the Generalized Information Retrieval and Listing System and its later Mark II and Mark III versions; an option involving Dashew Business Machines, a computer-peripherals manufacturer; Automated Systems International, which developed computer-operated information systems for automotive businesses; Consumer Credit Clearance, a credit-information service; and Tellertron, a real-time transaction-processing system for savings banks. The expansion was ambitious but difficult to manage. Contemporary and later accounts described a large acquisition program, with estimates ranging as high as approximately 30 acquired businesses and substantial Hughes Tool investment. The precise role of Howard Hughes remains disputed. Some histories portray the venture as part of his interest in entering computer services, while accounts based on testimony from Hughes associate Robert Maheu state that Hughes Dynamics was organized without Hughes's knowledge and that he learned of it only later. The disagreement is part of the broader uncertainty surrounding decision-making inside the secretive Hughes business empire. By early 1964, Hughes Dynamics was being reduced rather than expanded. Reports indicated substantial layoffs, and Hughes headquarters sought to terminate the company even though several units still had customer and government contracts. To preserve those obligations, the critical-path-method business was separated into CPM Systems, Inc., while Advanced Information Systems was transferred to Informatics, Inc. Consumer Credit Clearance was sold in December 1964. The relationship with Dashew Business Machines continued into 1965 but ended amid financial and managerial difficulties, including bankruptcy reorganization. By 1966, Hughes Dynamics could still be listed among Hughes Tool subsidiaries, but there is no indication that it retained meaningful operating activity. The company is therefore best understood as a short-lived and ultimately unsuccessful diversification experiment in early commercial computing.

Hughes Dynamics arose during the early-1960s expansion of corporate computing. Its parent, Hughes Tool Company, was principally an oil-field equipment manufacturer, especially known for drill bits, but the Hughes organization also contained aerospace, engineering, and other technical interests. Hughes Dynamics was intended to use those technical capabilities in a commercial services business based on computers, operations research, information systems, and management science. The first public traces appeared in 1962 through recruitment advertisements and notices for data-retrieval seminars in Louisiana and Texas. The company was publicly announced around September of that year. John E. Hodges, previously a Hughes Tool Company vice president, was identified as its general manager. The initial mission emphasized technical, scientific, and management services for the oil and transportation industries. The principal base was in Los Angeles, with additional activity in Houston and other locations. Central computing facilities acquired from C-E-I-R provided IBM System/360 mainframe capacity in Los Angeles. Hughes Dynamics combined internally developed activities with purchased businesses. A CPM Systems Department was assembled partly from Hughes Aircraft personnel under Russell D. Archibald. It applied critical path method and program evaluation and review technique practices to aerospace, construction, and other projects. The unit provided consulting and service-bureau work and offered week-long training programs in Los Angeles, Houston, and New York. Its activities represented an effort to commercialize project-management techniques already used within parts of the Hughes organization. The company also pursued an aggressive acquisition strategy. In 1963, Electrada Corporation's Advanced Information Systems unit joined Hughes Dynamics. Led by John A. Postley, the unit developed non-numerical information-processing software whose Generalized Information Retrieval and Listing System evolved into Mark II and Mark III products, with municipal-government applications. Hughes Dynamics also obtained a ten-year option concerning majority ownership of Dashew Business Machines, a computer-peripherals manufacturer founded by Stanley Dashew. Other acquisitions included Automated Systems International of Detroit, Consumer Credit Clearance, and Tellertron, a real-time transaction-processing system for savings institutions. Accounts differ on the exact number of businesses involved, but some descriptions put the total at approximately 30. The parent company's investment and the motives behind the venture remain subjects of historical uncertainty. One estimate described approximately $9.5 million in Hughes Tool Company funds being committed. Some writers have connected Hughes Dynamics to Howard Hughes's personal interest in computers and a possible ambition to challenge established industry leaders. Other accounts, relying on testimony from Robert Maheu, state that F. William Gay organized the subsidiary without Hughes's knowledge and that Hughes reacted angrily when he later learned about it. Because Hughes's business empire was unusually secretive and authority was often difficult to trace, the precise chain of responsibility cannot be established confidently. The expansion was short-lived. By March 1964, reports of layoffs and contraction were appearing. Hughes headquarters reportedly instructed units to terminate staff, but managers warned that immediate closure could breach contracts with cities, states, federal agencies, and other customers. As a result, some operations were separated or sold rather than simply abandoned. The CPM business became CPM Systems, Inc. in March and April 1964, with Archibald as president. Advanced Information Systems was sold to Informatics, Inc. in May 1964; the transaction involved Informatics assuming customer obligations and Hughes Dynamics paying an amount to facilitate the transfer. Later descendants of the Mark software line included Informatics's MARK IV system, although that later product was not itself a Hughes Dynamics offering. During the same period, trade reporting indicated that the company was shifting emphasis from software toward hardware and that only a small portion of its workforce might remain. Consumer Credit Clearance was sold in December 1964. The Dashew relationship continued into 1965, when Dashew Business Machines entered bankruptcy reorganization. Hughes Dynamics, which had acquired 41 percent of Dashew's stock, supplied additional funds during the reorganization, but the business relationship ultimately failed. The exact legal endpoint of Hughes Dynamics is unclear. A 1966 account still listed it among Hughes Tool Company subsidiaries, yet there is no evidence that it maintained significant operating activity by then. Its historical importance lies less in lasting products than in showing how quickly a large industrial group attempted, and then abandoned, diversification into commercial computing and information services during the mainframe era.

• 1966

  Listed as a Hughes subsidiary despite apparent inactivity

  [1]Hughes Dynamicsen.wikipedia.org

  Hughes Dynamics was still named among Hughes Tool subsidiaries in a contemporary account, although operational activity was no longer evident.

• 1965

  Dashew Business Machines enters reorganization

  [1]Hughes Dynamicsen.wikipedia.org

  The peripheral-equipment company entered bankruptcy reorganization while Hughes Dynamics remained a significant shareholder.

• 1964

  CPM unit separated

  [1]Hughes Dynamicsen.wikipedia.org

  The critical-path-method business was spun out as CPM Systems, Inc. to preserve customer work during the parent venture's shutdown.

• 1964

  Advanced Information Systems sold to Informatics

  [1]Hughes Dynamicsen.wikipedia.org

  The software and information-systems unit was transferred to Informatics, Inc.

• 1964

  Consumer Credit Clearance divested

  [1]Hughes Dynamicsen.wikipedia.org

  The credit-information business was sold to a new company operating under the same name.

• 1963

  Advanced Information Systems joins Hughes Dynamics

  [1]Hughes Dynamicsen.wikipedia.org

  The company acquired Electrada's Advanced Information Systems unit and its Mark-series information-retrieval software.

• 1963

  Expansion through technology and information-service businesses

  [1]Hughes Dynamicsen.wikipedia.org

  Hughes Dynamics acquired or entered arrangements involving Dashew Business Machines, Automated Systems International, Consumer Credit Clearance, and Tellertron.

• 1962

  Hughes Dynamics begins appearing in public records

  [1]Hughes Dynamicsen.wikipedia.org

  Recruitment advertisements and seminar notices indicate that the new Hughes computer-services venture was operating by mid-1962.

• 1962

  Company publicly announced

  [1]Hughes Dynamicsen.wikipedia.org

  Hughes Dynamics was publicly introduced around September as a provider of technical, scientific, and management services.

Hughes Dynamics positioned itself as a technical and management-services provider applying computers, operations research, systems analysis, and information-processing methods to oil, transportation, aerospace, construction, government, financial, and other business applications.

• Management consulting and project control · 1962

  CPM and PERT services

  The CPM Systems unit applied critical path method and program evaluation and review technique methods to aerospace, construction, and other complex projects. It delivered consulting and service-bureau work and taught week-long courses to production managers, government contractors, private organizations, and building-industry groups. The business was later separated from Hughes Dynamics as CPM Systems, Inc.

• Information-retrieval software · 1963

  Mark II and Mark III information-retrieval systems

  Developed by the Advanced Information Systems unit, these systems descended from the Generalized Information Retrieval and Listing System, a non-numerical computing product intended to organize, retrieve, and list information. The software was used or marketed particularly for municipal-government applications before the unit was transferred to Informatics, Inc.

• Credit information services

  Consumer credit-information processing

  Through Consumer Credit Clearance, Hughes Dynamics operated a credit-information service that had existed before the acquisition. The business processed and supplied consumer credit information and was later sold during the dismantling of Hughes Dynamics.

• Financial transaction-processing system · 1963

  Tellertron

  Tellertron was a real-time transaction-processing system for savings banks. Hughes Dynamics acquired the system from Stone Laboratories in 1963 as part of its effort to assemble a portfolio of applied information-processing technologies.

• 1962CPM and PERT training program

  United States

  Hughes Dynamics promoted critical-path and program-evaluation techniques through week-long educational sessions in Los Angeles, Houston, and New York for aerospace, government-contracting, construction, and private-sector audiences.

  Outcome. The training and consulting activity continued through the company's contraction and was ultimately separated into CPM Systems, Inc.

  Source

• 1965

  Support Dashew Business Machines during reorganizationOther

  Background

  Dashew Business Machines faced bankruptcy reorganization after reported financing and management problems.

  Action taken

  Hughes Dynamics, which held 41 percent of the company's stock, supplied additional funds during the reorganization.

  Aftermath

  The investment did not restore Hughes Dynamics' broader computer-business strategy, and the Dashew relationship remained unsuccessful.

  Source

• 1964

  Begin dismantling the computer-services ventureStrategy

  Background

  The rapidly expanded subsidiary produced poor immediate results, while its numerous units still carried customer and government obligations.

  Action taken

  Hughes organizations initiated layoffs, closed or transferred activities, separated the CPM business, and sold Advanced Information Systems and Consumer Credit Clearance.

  Aftermath

  Hughes Dynamics lost most of its operating businesses and was effectively inactive by the mid-1960s.

  Source

• 1964

  Transfer Advanced Information Systems to InformaticsM&A

  Background

  The unit's software and customer contracts could not simply be abandoned when Hughes Dynamics was being terminated.

  Action taken

  Hughes Dynamics transferred Advanced Information Systems to Informatics, Inc., with Informatics assuming customer obligations.

  Aftermath

  The Mark software lineage continued under Informatics, later contributing to the company's MARK IV product family.

  Net payment associated with the transfer. $38,000 paid by Hughes Dynamics (May 1964)

  Source

• 1964

  Sell Consumer Credit ClearanceM&A

  Background

  Hughes Dynamics was reducing its portfolio and disposing of businesses outside its remaining activities.

  Action taken

  The consumer credit-information business was sold to a new firm using the Consumer Credit Clearance name.

  Aftermath

  The business continued outside Hughes Dynamics.

  Sale price. $2,050,000 (December 1964)

  Source

1. 1Hughes Dynamicsen.wikipedia.org