Main Engine Cut Off - T+108: Layoffs and Launch Sites

Episode Date: January 21, 2019

I wanted to spend some time breaking down a few news items from last week that may be leading indicators of trends for 2019: layoffs at Stratolaunch, Tethers Unlimited, and SpaceX, and Relativity signed a lease for Launch Complex 16 at Cape Canaveral. This episode of Main Engine Cut Off is brought to you by 35 executive producers—Kris, Pat, Matt, Jorge, Brad, Ryan, Jamison, Nadim, Peter, Donald, Lee, Jasper, Chris, Warren, Bob, Russell, John, Moritz, Joel, Jan, David, Grant, Mike, David, Mints, Joonas, Robb, Tim Dodd the Everyday Astronaut, Frank, and six anonymous—and 216 other supporters on Patreon. Stratolaunch space venture cuts back sharply on operations – GeekWire Tethers Unlimited lays off 20 percent of staff due to NASA shutdown – GeekWire SpaceX laying off 10 percent of its workforce - SpaceNews.com In blow to Los Angeles, SpaceX is moving some Mars spaceship and booster work to Texas - Los Angeles Times Relativity to Operate Cape Canaveral Launch Complex 16 - Main Engine Cut Off Email your thoughts and comments to [e-mail] Follow @WeHaveMECO Listen to MECO Headlines Join the Off-Nominal Discord Subscribe on Apple Podcasts, Overcast, Pocket Casts, Spotify, Google Play, Stitcher, TuneIn or elsewhere Subscribe to the Main Engine Cut Off Newsletter Buy shirts and Rocket Socks from the Main Engine Cut Off Shop Support Main Engine Cut Off on Patreon

Hello and welcome to Main Engine Cutoff. I am Anthony Colangelo. A little bit of good news today, a little bit of bad news today. I wanted to spend some time talking about two stories that have been going around recently. One, on the bad news side of things, there was a wave of layoffs and departures from a handful of space companies in the last week or so.

And on the good news side, Relativity Space, one of the new launch vehicle companies here in the US, secured a lease on a launch site. So I thought those were both worth spending some time on, because I think that each of them are potentially leading indicators of trends that we're about to see happen over the next year or two years or so. So I thought it was worth a couple of minutes on

each topic. So let's start with the bad news side of things, the layoffs. The long and short of it is that we saw, for a variety of reasons, a couple of different layoffs. Number one, we had a big one at SpaceX, where SpaceX laid off 10% of its workforce, mostly due to the shift in strategy that they're hitting in this period of their existence, where they're shifting from development of Falcon 9 and Heavy into operations, more reusability, and looking forward to the future to Raptor and Starship and all things like that. Then we had a much smaller company in Tethers Unlimited have to lay off 20% of their staff due to some financial issues they're having, somewhat tied to the shutdown or mostly tied

to the shutdown if you are taking the press releases at face value and not thinking that there's anything else going on there, I guess. And that's a really interesting one as well, because it's a company that I've been very excited about watching their projects develop. They're a much smaller company than a lot of the ones that we talk about day to day. So that's worth a little bit of discussion. And the third round of layoffs was Stratolaunch. Stratolaunch was the Paul Allen company who unfortunately passed away back in October. I was developing this biggest plane to ever fly or will fly soon, I guess. Uh, and that was going to be the basis

for an air launch system. Uh, they announced that they are ending their engine and launch vehicle development programs. And, uh, if you ask me, it sounds like this will be it for Strata Launch. So I want to break down each of these three things. So we'll start. Let's go in reverse order, actually. Strata Launch was something that I've always been a little bit skeptical about. I'm not the biggest air launch fan. I can see that there are certain advantages, but I have yet to be convinced that there are significant enough advantages to make it the supreme choice for a launch vehicle. And I was particularly not thrilled with what Stratolaunch had in mind when they were planning on solely launching Pegasus XL vehicles from Northrop Grumman. They were going to take three up at a time and do a launch.

And then last year, they announced and unveiled a line of launch vehicles that they were developing themselves. These were small launch vehicles or a couple thousand kilograms to orbit, a couple different configurations. They showed off this engine that they were developing, the PGA engine. They seemed to be making good progress. They were testing that engine, at least components of it, and then larger and larger components, longer and longer tests. And we were watching this whole trend over the year. And they announced now that they're actually going to be shutting down all of that. And per some sources that Alan Boyle of GeekWire talked to, there's only about 20 employees staying on to work on the plane side of things. So the plane's been doing taxi tests. Last week, there

was a test that was a high speed test down the runway where the nose side of things. So the plane's been doing taxi tests. Last week, there was a test that was a high-speed test down the runway where the nose gear lifted off, and that's typically the last test before you actually take flight of a new aircraft. So the first flight of this big plane seems to be coming soon, and in the wake of Paul Allen's death, it seems like those that have the financial backing of Strata Launch purely want to see the plane fly to honor Paul Allen, and then that'll be it for the company. If nobody else is staying on to work on any launch vehicle development or even integration with Pegasus, there's really not a lot left there for Strata Launch. So this was a much quicker turnaround than I think people thought there would be with

Strata Launch. But from what it sounds like here, this will be it for straddle launch. So we'll see a nice flight. And then who knows what they'll do with the plane. I do find it kind of interesting. The plane itself, over the years out in Mojave, picked up a couple of nicknames like the Carbon Goose and the Composite Goose, referencing the Spruce Goose, which was a Howard Hughes invention that flew once and then has now resided in a museum forever. And I'm pretty sure this nickname is going to be entirely accurate of the Carbon Goose, which was a Howard Hughes invention that flew once and then has now resided in a

museum forever. And I'm pretty sure this nickname is going to be entirely accurate of the carbon goose or composite goose, that it's going to get one flight and then go somewhere. Where that is, you know, whether it be a museum, whether it be a boneyard, whether it be another company, that'll be really interesting to see. Maybe there's, you know, this is a plane that has a hell of a lift capacity in it. So, you know, maybe does Virgin Galactic see a bigger future, a bigger product line that they want to develop and they could maybe acquire this and, you know, keep it in storage, keep it in operational storage, but maybe expand on it in the future? Does somebody else pick it up? Does some other DoD dod program you know that wants rapid launch maybe there's somebody there that's trying to angle for some launch vehicles

maybe north of grumman themselves is angling for more rapid launches of pegasus or whatever else it is i can't see this being that much cheaper to operate than their l1011 vehicle that they currently launch pegasus with um but you know, I wouldn't be surprised if this thing goes up for sale and somebody scoops it up. It could be very interesting to see what turns into that. But all in all, I don't think this particular one, this particular story is a worrying trend for the industry. I sort of expected this in the wake of Paul Allen's passing because Strata Launch itself always seemed a little bit focused on the plane and not on the full package. That was always my feeling on it. And I guess it was not as stable

as people wanted to say that it was, as the other companies that are backed by these internet billionaires. Those seem a lot more stable than Stratolaunch did. So sad that they're not going to continue with their program because I did find it, you know, I was starting to turn the corner on Strata Launch and I found it interesting that they were developing their own launch vehicles, their own engines. And now that's not the case. Tethers Unlimited is another case that is more worrying to me. This was a much smaller company, only, you know, this was a 20% of their workforce off, and that was 12 engineers. So that gives you an idea of the scale here. Much smaller than a SpaceX or somebody else like that. And what this was tied to was not being paid for some contracts that they had been working on for the previous

few months due to the government shutdown. They didn't get invoices paid in time to be able to sustain staff. In a Planetary Radio interview, the CEO, Rob Hoyt, said that they have enough cash through February or something like that. So a very short timescale, or else a company that's been around for something like 25 years is going to close up shop. So that is more worrying, especially because Tethers Unlimited had a couple of projects going on that were really interesting for future spaceflight, future space architectures. They just flew up to the ISS a project called Refabricator that's going to recycle plastic waste from the space station, turn it into printable filament, and then print it into new things on the ISS.

So there are projects like that that Tethers are working on that could be very fundamental projects in architecture over the next decade or so when we're talking about going out to the moon and staying out in space longer. They've had a bunch of other projects going on similar to that. They had these hydros thrusters that are supposed to fly pretty soon here. That is a water-based propellant for small satellites. They had a bunch of things going on. They had this whole project where they would construct large architectures in space, but in a 3D printer kind of style way. So there's just really amazing things that they were working on as such a small company. And if those kinds of things are hitting a point when they're going to

close up shop, that could be a trend. If we see a couple of small companies like this close up shop over the next six months to a year, this could be a trend that that space bubble that people had always talked about the last couple of years might be bursting. Everyone said, oh, the money's too much right now. There's too much venture capital. There's too much growth in areas that are not that useful. It feels like a bubble again. And there was a contingent of people in the industry that said, no, no, this time is different because X, Y, or Z. If you start seeing these smaller companies shut down, that to me is a leading indicator

that the bigger ones are going to be in trouble in not too distant future. So let's keep an eye on these kind of companies. And honestly, let's keep an eye on Tethers over the next couple of weeks, because that could be a really bad ending. You know, a thing that didn't have to happen this way. So it's pretty worrying to see that. How much it's due to the shutdown itself is probably up for debate. If I knew more of the internal details, we could probably have that debate that, you know, yes, unfortunate timing. Yes, they had these backlog of payments that didn't come through because of that government funding. But were there other factors that put them in that spot where they were vulnerable to that sort of situation? That's a question I'd

love to have answered, but I just don't have enough of the details from the inside on that. And the SpaceX one, let's get to the SpaceX one. So they announced that they're laying off 10% of their workforce. And like I said up front, this is really due to the fact that they are at a pivotal point in their existence where they're shifting from years of development and production of Falcon 9, Falcon Heavy, Dragons even at this point. And now they're shifting into this mode of operations and reusability is really, you know, it's been around for a couple of years. But this is the point at which that is beginning to impact how much production they need to have within the company. Dragons are being reflown up to the ISS.

Dragon 2 is obviously starting to fly in the next few months. And that will be a different story. But those are much lower rate of production than the original dragons were. The Falcon 9s, the first stages were getting them back. Almost every flight, there was one anomaly on Sierra 16. But in general, that's a reliable enough situation that they are planning to reuse those first stages a lot. And that's really cutting down the amount of first stages they need to manufacture, which by that way cuts down the amount of Merlins they need to manufacture because they don't need to produce that many new Merlins for that many first stages anymore. So that is significantly reduced production need on SpaceX's side. They still have to produce upper stages. They still have to

produce the Merlin vacuum engines. So it's not like they're eliminating the entire Falcon production line, but they do hit the point where they have to scale down because they just don't need as much production anymore. And, um, before we get into the future-phasing stuff of Raptor and Starship, this is a,

it proves the point that is always talked about by people like Arianespace, who, youespace, the leaders of Arianespace. They always say, well, we can't do reusability because of the workforce. And that similar thing has resonated around NASA, where there's these organizations that are not looking to be the streamlined, well-oiled machine that SpaceX is, but are subject to different needs. Government programs are subject to different needs. Europe, they are convinced that they need homegrown launch vehicles. They need to keep a workforce in Europe that knows how to do that thing for their own good. And that investment is worth it to them.

So they don't want to have reusability because then they would need less people. And they would just have people sitting around not doing anything. So this is a really good indication that that is true. People will criticize Arianespace for that, but you got to look at the differences of incentives that these organizations have. And in Arianespace's case, that's Europe's feeling on it. The leaders of Europe think that that is a need that they need to grow internally and that they need to sustain, much in the way that there are politicians here in the US that think that's the case and wrote into law a decade ago that

when the shuttle shut down, we needed to use the similar contractors, the similar architecture, the similar technologies to keep that workforce in existence. Now, when you have all of the growth in the US that you've seen in the last 10 years, and you have this burgeoning industry, at a certain point, you can't justify keeping certain things open on a solely government level to retain workforce when the private workforce is growing so substantially. So there is a tipping point at some point. And here in the US, we're much closer to that tipping point. But this one-off SpaceX story really says that that whole mantra of we can't have reusability because we need the workforce is true at the end of the

day. So I think a lot of the layoff here for SpaceX is related to that shift in mindset. And that's a really good sign. If you want SpaceX to do the things that SpaceX said they were going to do, if that's something that you're interested in seeing, this is a really good sign in that way, because it means that their usability plans are working out and they can scale down production and work on flying a fleet rather than producing a new vehicle every two weeks. Now, looking forward, they are also at a point where they are shifting focus as a, the future of their company, they are shifting focus to Starship, to Raptor, rather than Falcon and Merlin.

And during this same period of time when this layoff happened, there was a report out of the LA Times that said that SpaceX is moving the production of Starship from the port of LA, where they previously had signed a lease, to Boca Chica to develop it on, or to, sorry, produce it on site in Texas, and then fly them from there. The development and the technology development and all of that initial work is going to happen out of headquarters in Hawthorne, but the actual production of Starship would be shifted to Texas. And this is in not any way surprising to me. I was not surprised to hear that. I kind of expected it because given the size of Starship, it seemed pretty weird to build it out at LA and then

get it somewhere else in the East Coast mostly. They're not going to fly these things to polar orbits right off the bat. So they would need to get them to Texas or Florida. And, you know, taking that all the way through the Panama Canal seemed a little excessive to me. So, you know, if they can produce this in a different spot closer to the launch site, then that's good. So part of the layoff is probably due to that as well. You know, they have they don't need people that are going to build the production hardware in L.A. They need them in Texas. They don't need people that are going to produce the carbon composite, carbon fiber body and tankage in LA because they've switched Starship to stainless steel, as we talked about with Chris Gabehart on the last episode of

the show. They switched to stainless steel, so they need different abilities in their workforce as they would have if they stuck with carbon. So both of those things definitely add to this layoff scenario. Now, the one thing that I will caution about here is that if they're going to build this entire production facility down in Boca Chica, Texas, that is a very, very far away location from a lot of talent in the space industry. Specifically, you have a lot of people in certain areas, right? And that's why you get clusterings of space companies in LA or in Seattle or on the space coast or in Texas. You have these clusters of locations that have a lot of... Colorado is another good one, Alabama, Louisiana, they've got a lot of the production from the NASA facilities

there. So you see a lot of the focus on facilities in these spots. If they think that they can convince enough people to move to Boca Chica, Texas, which if you have not recently pulled up Google Maps and put in some driving times from anywhere to Boca Chica, I would suggest doing it because it is really far, really far down there. So I'm not going to say right up front that they're going to have a problem, but that is a worry of mine if they're going to base production there, that that's going to be harder to attract talent to than somewhere closer to a center of industry. So I wouldn't even go so far as saying that production is for sure going to be in Boca Chica. I'm going to say that it would be somewhere within the realm of the Gulf of Mexico. And I would not at all be surprised if they set up shop right next door to the Blue Origin factory out in Huntsville. So one last thought on all the layoff situations here.

You know, this is definitely trying time on a personal level for people that are part of these layoffs. But this is the sort of situation that leads to cross-pollination throughout the industry, right? You have these people leaving SpaceX, leaving Tethers, leaving Stratolaunch, and going out to work at other places in the industry. And with them, they bring a little piece of what they worked on at SpaceX, a little piece of the knowledge that they got when they were there. This certainly has happened the other way in the past from ULA layoffs in the past. Some of those have certainly ended up at different places

like Blue Origin, SpaceX, and so on. So this is the way that that kind of talent and knowledge makes its way through the industry and brings pieces of culture to other places. So we could see some really cool effects from this as well. It hurts in the meantime, but once everybody finds a new spot to settle in and find some new projects to pick up, we could see some really interesting effects from this amount of talent all at one time going out into the industry. Now, on the other hand, is this a sign, like I said with

the Tethers little spiel that I did, is this a sign that 2019 is going to be a tough year for the space industry? Is this a sign that we're going to hit some sort of bubble bursting or whatever the case? Is it going to be a rough year for the space industry in 2019? Are we going to see more rounds of this? That's the part that I would be concerned about when you see three of these in a week. And we can rationalize this away and say each of them had their own reasons. Two were funding decisions, one was an operational decision. We can rationalize that away. But if you start to see a lot of these clumping up in the early parts of the year, I would start getting fairly worried about the industry here. And that itself could have repercussions throughout space policy here in the US. Globally, there's a lot of talk that

China is hitting a recession of sorts right now, so that we could see some effects of that on their side of things. So I'm keeping my eyes peeled the next couple of months to see how this shakes out, to see if we see other effects like this throughout the industry, because that could be a really big story of 2019. Now, I want to get into a very short thing of good news before we get out of here for the day. But before I do that, I need to say a very huge thank you to all of you who support Main Engine Cutoff over at patreon.com slash Miko. There are 251 of you supporting this podcast every single week, and I could not be more thankful for your support. This episode was produced by 35 executive producers. Chris, Pat, Matt, George, Brad, Ryan, Jameson, Nadim, Peter, Donald, Lee, Jasper, Chris, Warren, Bob, Russell, John, Moritz, Joel, Jan, David, Grant, Mike, David, Mintz, Eunice, Rob, Tim Dodd, The Everyday Astronaut, Frank, and six anonymous executive producers.

Thank them for making this episode possible because I could not do it without their support and everybody else at patreon.com slash Miko. Don't forget over there, $3 a month or more, you get access to the headline show that I do every single weekend. You get a special little RSS feed. You drop that right in the player that you're listening to right now. And every weekend you get a little show

of me running through the headlines. I say little, this week was about 30 minutes long because there was just so much to get through. But it's a great way to stay up on all that space news all week. Let me do the work so you don't have to. I think it's a really, really great thing that we've done over the last year or so, and it's been a lot of fun to do it. So go check that out if you want to help support the show. All right, one little bit of good news here so we don't end on a sour note for this episode of Main Engine Got Off. We had an

announcement this week about Relativity Space. This is the company that wants to create a small launch vehicle, about a thousand kilograms to Leo, and they want to create these vehicles by 3D printing them entirely. So they're using additive manufacturing to print not only the engines, but the tanks and the aeroshell and everything, and then assembling it by hand on that last leg. So they want to drastically reduce the amount of labor that goes into a vehicle. It's really interesting. I don't know how it's going to work out yet. I have a lot of reservations about certain parts, but I like to see these companies taking a really unique tact, a unique strategy in the industry. Because there's a lot of people just building a small launch vehicle. There's not a lot of them doing it with a unique flair that means something. It's not just

unique to be unique, but actually they have a strategy behind it, and I like that. They've been making good progress in the last couple of years. They've got engines test firing at Stennis. They have a bunch of facilities down at NASA Stennis. And they have finally signed their first deal for a launch site. So they have signed a lease agreement with the U.S. Air Force to lease Launch Complex 16 out at Cape Canaveral Air Force Station. Eric Berger at Ars Technica reported that it was a five-year agreement where it is a multi-user facility, which means somebody else could technically come and use the launch pad. And then if Relativity meets certain milestones, if they start launching

regularly, then that would convert to a 20-year exclusive use of the pad. So for all intents and purposes, they've locked up this pad for 20 to 25 years. And that's a lot of good stability for a company that is making good progress and needs to start lining up launches sooner than later and lining up a launch site, start developing that launch site sooner than later. Now, being on the East Coast, Cape Canaveral, that gives you access to low inclination orbits, to medium inclination orbits, you know, think of anything from a GTO to the space station orbit. That's typically the range that you're going to get on the East Coast. And there's certain restrictions on each based on vehicle performance and flight paths and all that. But in general, that's the range that you've got from the

East Coast. So there has been comments from the leaders of Relativity that they do need a polar orbit launch site. So they need a launch site that can get them to sun-synchronous orbit, polar orbit, other things that are typically used for imaging satellites, for DoD missions, the kind of stuff that they're going to want to fly pretty frequently. So they've said that they're searching for that still. And this is where I've been thinking a lot about launch sites because there's still a handful left in Cape Canaveral, though more and more are going. So we've got Blue Origin developing a site there. We've got Relativity developing a site there. We've got SpaceX working in two there. Obviously, ULA is on two right now, soon to be one. So there's a lot there already. There's a couple

of more left to pick up. There's a couple of open spots out at Vandenberg still. So when they're talking about finding a polar spot, I'm trying to think about what they're going to scoop up to do that. And I'm sure that they're bummed out, and maybe they were even in this negotiation, to miss out on Vandenberg Space Launch Complex 2 West, which Firefly Aerospace is taking over. Now that Delta 2, which formerly flew out of 2 West, out of Vandenberg, that is no longer launching there. So Firefly is going to come in and take that over and convert it to a launch pad for themselves. Firefly is also rumored to be moving into a neighboring complex out at Cape Canaveral, Launch Complex 20. So you

can see both of these companies that have similar payloads to orbit. Firefly is slightly under relativity, but the same general range. I think Firefly can do about 600 kilograms to sun synchronous, 1,000 kilograms to a lower inclination orbit. So they're generally the same range. They're both angling for these launch sites on different coasts. And so I don't know if relativity was involved in the Vandenberg to West deal, or maybe they didn't want to deal with the Delta II heritage there at the pad. So I was thinking, and there is a pad that I would think is very interesting for relativity available out at Vandenberg, or at least available as far as I

know. Vandenberg is an Air Force base. There's a lot of other stuff going on up there. So there's a lot more restrictions. It's a lot harder to get access to. There's a lot less that we know about it because a lot of it is classified or at least privileged knowledge. So some of this conjecture could be wrong. But Space Launch Complex 3 West out at Vandenberg, that was last used in 2004, 2005 when SpaceX planned to use it to launch Falcon 1 from there. There was a Falcon 1 on the pad. They never actually launched because they hit massive delays with a Titan 4 that was out there launching a spy satellite. They weren't able to launch while that was on the pad, and that had a major delay, so they had a major delay.

They eventually packed up shop and went out to the Pacific. And that's the last time that that pad has had any activity. So similar size vehicle they could be looking to do a similar setup i would be very interested if uh relativity doesn't scoop up three west and uh maybe you know get them spot get themselves a spot of the very few that are left at vandenberg as i said there's not a ton out there that is non-operational right now. And there's probably more restrictions than I even know because of the Air Force's presence out there. And there's a lot of missile defense presence out there. So there's definitely a lot more restrictions than our

public. So I would think that Relativity wants to scoop that up pretty quickly. Because the other factor here is the U.S. really needs another site for polar orbiting satellites. We've got Vandenberg that gets most of the usage. There's Pacific Spaceport up in Alaska that is trying to be the new spot. And I hope to see some more activity up there. We've had a couple of launches from Astra out at Pacific Spaceport, Kodiak. And I would hope to see more activity there. I'm skeptical because I think some people think it's a little too remote to get to. And I've heard some stories about how they have to get vehicles there. And it's not the easiest to deal with. It's not like California, where you can fly it into LAX or whatever and drive it up the coast. So it's

really tough. We need another polar orbiting launch site here on, I think, I would say North America in general, because there's been a lot of talk about a Nova Scotia spaceport, which would be really good for that sort of thing. I think the US Department of Defense would really like it to be within the US borders. But when you look at the map, man, it gets pretty tough to find out where that would be. So we're hitting a little bit of a log jam here for polar orbiting satellites. And I kind of wanted to bring this up as a thing to watch as maybe more companies move into Vandenberg, more companies move into Pacific Spaceport, Alaska, and to see what other spaceports pop

up that can support polar launches. Cause I think that's going to be really important over the next couple of years. If we really want to see a continued growth of the commercial launch industry. So those are my trends to watch for early 2019 here. More layoffs and more polar launch sites. Keep it in mind, because I'll probably bring it up a couple of times this year, because those are two things that I'm definitely going to be watching here early in 2019. But for now, that is all I've got for you today. Thank you so much for listening. Thank you so much for your support at patreon.com slash Miko. And if you've got any thoughts on the show, head over to Twitter at WeHaveMiko and send me your thoughts there. But until next time, thank you so much, and I'll talk to you soon. Thank you.