RUBLE-DOLLAR RATIO FOR SOVIET AIRCRAFT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79S01046A000800030001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 15, 2016
• Document Release Date: October 22, 2003
• Sequence Number: 1
• Publication Date: August 1, 1960
• Content Type: REPORT

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SECRET N?
ECONOMIC RESEARCH AID
RUBLE -DOLLAR RATIO FOR SOVIET AIRCRAFT
CIA/RR A.ERA 60-9
August 1960
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
USAF review(s) completed.
SECRET
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":Phis material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
":Title 18, USC, Sees. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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SECRET
ECONOMIC RESEARCH AID
RUBLE-DOLLAR RATIO FOR SOVIET AIRCRAFT
CIA/RR A.ERA 60-9
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
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Sufficient data are not available to permit the direct valuation
of Soviet aircraft in rubles. Costs of Soviet aircraft are based on
estimates of the cost to the US aircraft industry to produce the So-
viet aircraft as they are built in the USSR. The dollar valuation of
Soviet aircraft can be converted to rubles if the available data on
the cost of Soviet aircraft are adequate for ascertaining a ruble-
dollar ratio that is reasonably firm. The purpose of this research aid
is to establish such a ruble-dollar ratio.
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Page
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I. Introduction
. . . . . . . . . . . . . . . . . . . . .
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III. Learning Curve . . . . . . . . . . . . . . . . . . . .
IV. Ruble-Dollar Ratio for the Cab Aircraft . . . . . . . .
V. Ruble-Dollar Ratio for the Fagot Aircraft . . . . . . .
VI. Ruble-Dollar Ratio for the VK-1 Aircraft Engine . .
VII. Ruble-Dollar Ratio for the VK-lA Aircraft Engine . . .
VIII. Conclusions . . . . . . . . . . . . . . . . . . . . . .
Appendix
Production of Cab (Li-2) Aircraft at Tashkent Airframe
Plant No. 84 . . . . . . . .... . . . . . . . . . . . . . .
Tables
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1. Contract Prices of the US C-47 Aircraft, 1942-45 . . .
2. Cumulative Average Price of the Soviet Fagot (MIG-15)
Airframe If Produced by a US Manufacturer . . . . .
3. Estimates of Cumulative Production of Fagot (MIG-15)
Aircraft in Soviet Airframe Plants, 1948-49 . . . .
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Charts
Following Page
Figure 1. Average Price Curve for the US C-1+7 Air-
craft . . . . . . . . . . . . . . . .
Figure 2. Production of the Soviet Cab (Li-2) Air-
craft at Tashkent Airframe Plant No. 84,
1945-51 . . . . . . . . . . . . . . . . . 4
Figure 3. Cumulative Average Price Curve for the
Soviet Fagot (MIG-15) Airframe If Pro-
duced by a US Manufacturer . . . . . . 4
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RUBLE-DOLLAR, RATIO FOR SOVIET AIRCRAFT*
Summary
The ruble-dollar ratio for Soviet aircraft from 1950 through 1954,
based on prices of US counterparts, is about 5.5 to 1. This ratio may
be used in approximating the price of both Soviet aircraft and aircraft
engines. The ratio, however, is not intended to establish a precise
relationship, because the cumulative number of aircraft for which Soviet
prices are quoted is unknown.
I. Introduction
This research aid compares quoted prices for the Soviet Cab (Li-2)
aircraft and for the Fagot (MIG-15) aircraft, without its engines,
with the prices that US manufacturers would charge for these aircraft.
The Soviet prices for the VK-lA aircraft engine are compared with the
prices charged for its US counterpart. A ruble-dollar ratio is thus
obtained for Soviet aircraft prices.
The analysis follows the steps given below.
1. Similar aircraft and aircraft engines are compared.
2. The effect on prices of different quantities pro-
duced is considered, and adjustments are made
empirically, based on historical learning curves.
* The estimates and conclusions in this research aid represent the
best judgment of this Office as of 15 July 1960.
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III. Learning Curve
When the price of an aircraft produced at one plant is compared
with the price of a similar aircraft manufactured at a different
plant, the comparison must be made at the same number of units pro-
duced, for the price decreases in relation to the number of units.
By the use of the learning curve, the successive decreases in
production effort per unit are related to the number of units pro-
duced. The learning curve is a geometric progression that expresses
the decreasing cost-required to accomplish any repetitive operation
as the operation is continued. The cost may be in terms of dollars
or in terms of man-hours. The learning curve forecasts that the cost
required to produce an article will decrease each time that article
is produced and that the amount of decrease will be less with each
successive unit. The slope of the curve is expressed as a percentage,
which is the expression of the ratio between the cost per unit at any
number of units and the cost at twice that number of units. For ex-
ample, on an 80-percent learning curve, if the cost of the first unit
is US $100,000, the cost of the second unit is US $80,000 and the
cost of the fourth unit is US $64,000. Thus the learning process con-
tinues.
IV. Ruble-Dollar-Ratio for the Cab Aircraft
The Cab aircraft is the Soviet model of the US C-47 aircraft.
Therefore, the prices of the C-47 were used for comparison with the
prices of the Cab. Soviet airframe plants are roughly comparable
to US airframe branch plants because many functions performed by the
parent plant in the US are normally performed in Moscow for the en-
tire Soviet serial-production airframe -industry. Consequently, the
prices of the C-47 aircraft used for comparison are those prices for
the C-47 aircraft built at abranch :plant of a US aircraft company.
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Inasmuch as there is no price index for US aircraft to adjust for
changes in dollar purchasing power, the wholesale price index for
metals and metal products as given each year in the economic report
of the President to the Congress was used as a price index for US air-
craft. On the basis of price data furnished by a US aircraft manu-
facturer, there seems to be a correlation between fluctuations in the
price index for metals and metal products and fluctuations in aircraft
prices. The lack of a price index for US aircraft is, however, one
of the major weaknesses in the attempt to establish a ruble-dollar
ratio for aircraft.
The prices of the C-47 aircraft in 1945 US dollars were plotted
in Figure l** against cumulative aircraft production, and an average
price curve was fitted to these prices by use of the method of least
squares. After the price curve of the C-47 aircraft had been worked
out, the next step was to decide what cumulative aircraft numbers
were to be'used in determining the ruble-dollar ratio of the prices
of the Cab aircraft quoted by Tashkent Airframe Plant No. 84.
The cumulative production of Cab aircraft at Tashkent Airframe
Plant No. 84 was estimated to be 2,540 aircraft as of 1 January 1947
and 2,610 aircraft as of 1 July 1947. The average unit price of the
70 C-47 aircraft from unit 2,540 through unit 2,610 was computed to
be US $84,000. This price was converted to 1947 US dollars as fol-
lows:
US $84,000 x Price Index for 1947 = US $84,000 x 91.3 - US 116,000
Price Index for 1945
Table 1 follows on p. 5.
Following p. 4.
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The cumulative production of Cab aircraft at Tashkent Airframe
Plant No. 84 was estimated. to be 3,270 aircraft as of 1 July 1949
and 3,440 aircraft as of 1. January 1950. The average unit price of
the 170 Cab aircraft from unit 3,270 through unit 3,440 was computed
to be US $81 000. 1 ::1
25X1 The price of the C-47 then was converted
to 1950 US dollars as follows:
US $81,000 x Price Index for 1950 = US $81,000 x 110.3 = US $136,000
Price Index for 19i5 75.9
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V. Ruble-Dollar Ratio for the Fagot Aircraft
Unlike the Cab aircraft, no US counterpart exists for the Soviet
Fagot aircraft. A US aircraft manufacturer has estimated that if the
Fagot aircraft had been produced in his plant, the cumulative average
price at the 1,000th Fagot airframe would have been 1954 US $102,000.
The slope of the cumulative average price curve for airframe unit 100
through 2,000 would be abcut 87 percent. The cumulative average price
for the indicated airframe number is given in Table 2,* and the cumu-
lative average price curve is shown in Figure 3.**
Table 2 follows on p. 6.
Following p. 4. (Text continuedon p. 6.)
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Contract Prices of the US C-4+7 Aircraft
19+2-45
Unit Price
Price of Government-
Unit Price
Price Index
Unit Price
Cumulative
Average Price
Contract
Quantity
of C-47 Furnished Equipment
Airframes on C-47 Aircraft /
of C-47
Aircraft b
of Metal of c-47
Products Aircraft c
of c-47
Aircraft
Number
Year
(Units)
(Current US
$) (Current US $)
(Current US $)
(1947-49 = 100)
(1945 US
(1945 US $)
AC-28405
1942
1,800
71,631
27,911
99,542
64.9
101,000
101,000
AC-40652
1943
2,000
52,771
28,508
81,279
64.8
82,700
91,400
AC-2032
1944
966
49,441
30,692
80,133
64.8
81,500
89,400
AC-2929
1945
264
43,122
27,674
70,796
65.9
70,796
88,4oo
a. Prices of government-furnished equipment less 60 percent of the price of electronic equipment.
b. Column 4 plus Column 5.
c. Unit price of C-47 aircraft in current US dollars converted to 1945 US dollars by use of the index in Column 7.
d. Unit price of C-47 aircraft in 1945 US dollars multiplied by quantities produced in each year divided by cumulative production up to and during the respective
year.
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Cumulative Average Price
of the Soviet -Fagot (MIG-15) Airframe
If Produced by a US Manufacturer
Airframe :Number
100
200
400
8oo
1,000
1,600
2,000
Price
(1954 US $)
166,000
140,000
124,000
107,000
102,000
94,700
90,800
The prices furnished by the US manufacturer did not include
government-furnished aircraft equipment. ATIC estimated the price
of government-furnished aircraft equipment on the Fagot to be
US $38,800 in 1953 prices.
Estimates of Cumulative Production
of Fagot (MIG-15) Aircraft in Soviet Airframe Plants
1948-49
Plant Number
Location
Cumulative Production
(Units)
1
Kuybyshev
770
21
Gor'kiy
20
153
Novosibirsk
120
292
Saratov
9o
126
Komsomol'sk
0
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us $187,000 x 0.80 = us 1954 $150,000
This price then was converted to 1950 prices, giving
US $150,000 x Price Index for 1950, US $150,000 x 110.3 = US $129,000
Price Index for 195 2F
Next, the price of equipment had to be added to the price of the air-
frame. The price of equipment in 1950 prices was found to be
US $38,800 x Price Index for 1950 = US
Price Index for 1953
38,800'x 110.3 = _ us
12 J79
Thus the price of the Fagot aircraft without engines would be
us $163,000 in 1950 prices,
33,700
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If, however, the assumption is made that the price charged the
military was based on the average price of the Fagot aircraft pro-
duced in the USSR through 1949, a ruble-dollar ratio of 6.3 to 1 is
obtained. If the price charged for the Fagot is assumed to be based
on the average price of the first 40 aircraft, a ruble-dollar ratio
of 4.3 to 1 is obtained.
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VI. Ruble-Dollar Ratio for the VK-1 Aircraft Engine
The J -P- aircraft
engine was chosen as e closest equivalent of the Soviet VK-1 air-
craft engine. Both the Soviet and the US engines were developed from
the British Rolls Royce Nene turbojet engine. The two engines are
comparable in both weight and maximum thrust, as follows:
1,930 pounds weight _ 0.32+ pound
5,950 pounds thrust pound thrust
J )+8-P-6: 2 00000 pounds weight = 0.320 pound
6,250 pounds thrust pound thrust
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The prices of US aircraft engines do not follow a learning curve:
prices are the same for the first engine as for later engines.
The price of the J 48-P-6 aircraft engine as of March 1955 was
US $55,600. The price of the engine in 1950 prices was found to be
Price Index for 1950 110.3
= US $~+~+,900
US $55,600 x Price Index for 1955 US $55,600 x 13677
VII. Ruble-Dollar Ratio for the VK-lA Aircraft Engine
The J L-P- is the closest US equiva-
lent of the Soviet VK-1A. The two engines are compared in both weight
and maximum thrust, as follows:
VK-lA: 2,010 pounds weight _ 0.287 pound
7,000 pounds thrust pound thrust
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J 48-P-8? 2,050 pounds weight ,= 0.283 pound
7,250 pounds thrust pound thrust
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The price of the J 48-P-8 was US $58,700 in 1954 prices.
VIII. Conclusions
The ruble-dollar ratio for Soviet aircraft appears to range from
a low of about 4.3 to 1 to a high of 6.3 to 1. The ruble-dollar ratio
for Soviet aircraft engines is approximately 5.5 to 1. The ratio of
5.5 to 1 is recommended for the pricing of Soviet military aircraft
and aircraft engines produced from 1950 through 1954.
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