Keeping a factory alive is not free. If you have committed to delivering a certain product for the next 30-50 years, you need to be able to deliver that product even in year 49. Even if it's only three parts and the factory is only profitable when producing thousands a year.

Some costs that will crop up even without investing in R&D and maintenance: - Factory maintenance. The lights need to stay on, the floors need to be swept and the bearings need to remain greased. Things like ISO and security certifications also need to be kept up to date. - The longer a product runs, the more likely it is that the original employees on the production line retire or leave for another job. This means you'll need to be able to find and train new people for a job that uses tools and methodologies no longer used anywhere else. It will probably be more expensive to hire for those jobs than for jobs where people learn transferable skills that they could use in the rest of their careers. - After 40 years, many of the components in the production machinery will be difficult to come by. A CNC machine from that time might use the (then brand new) 286 processor. If it breaks, where would you source extra 286 processors? Alternatively you can redesign the process to use up-to-date components, but that costs a lot of extra money. - Usually the demand for components drops off over time as the world moves on to something more modern. For example, demand for components of older fighter jets will slowly drop off as new airframes are no longer being built and the existing ones slowly get taken out of service. This means you'll need to spread the fixed costs of the above points over fewer and fewer components over time. - Finally, the need for R&D and marketing doesn't actually go away. If you only focus on producing (say) targeting processors for the F16, your company will go out of business at the latest when the last F16 leaves service. Your shareholders will probably not be happy about that, so it's still important to invest in gaining new contracts too.

> Even if it's only three parts and the factory is only profitable when producing thousands a year.

If that is the case you manufacture more than enough and put them on a shelf.

> Some costs that will crop up even without investing in R&D and maintenance

Obviously. You put those costs in the contract and make the costumer pay for them.

If they want to fab 3 chips a year that is going to cost them dearly. This is not a property of the old processes. This is a property of low volumes.

You have to manufacture enough parts for if wwiii breaks out even though odds are it won't and even if it does the military will probable notewant those parts - but they might.

Ok. Built in (reasonable) assumption which I was missing - demand decreases very significantly.