SpaceX plans to lay off about 10 percent of workforce

By William Harwood

/ CBS News

SpaceX, the upstart rocket company that has shaken up the launch industry with low-cost reusable boosters and ambitious long-range plans to carry people to Mars and beyond, plans to reduce its workforce by about 10 percent, company sources said late Friday.

The revelation came just hours after the California rocket builder successfully launched 10 Iridium communications satellites into orbit atop a Falcon 9 rocket from Vandenberg Air Force Base, California, in the first of 18 or so SpaceX flights planned this year.

"To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company," the company said in a statement released late Friday. "Either of these developments, even when attempted separately, have bankrupted other organizations.

"This means we must part ways with some talented and hardworking members of our team. We are grateful for everything they have accomplished and their commitment to SpaceX's mission. This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary."

A company official said SpaceX remains "financially strong" and looking forward to a busy year in space, including the first flights of Crew Dragon ferry ships NASA will use to carry astronauts to and from the International Space Station.

The first unpiloted test flight of the Crew Dragon capsule is planned for next month with the first flight carrying astronauts tentatively targeted for mid-June.

In addition, two launches of the powerful three-core Falcon Heavy rocket are planned, along with deployment of the company's first Starlink satellites, the first of more than 7,000 planned as part of a global space-based broadband constellation.

SpaceX's Crew Dragon spacecraft will ferry astronauts to and from the International Space Station, helping end NASA's reliance on Russia's Soyuz spacecraft for transportation to low-Earth orbit. The first test flight of an unpiloted Crew Dragon, seen here during processing at the Kennedy Space Center, is planned for February. The first flight with astronauts aboard is expected in the June timeframe. SpaceX

The company also is pressing ahead with development of a new space launch system known as the Starship, a fully reusable launch system SpaceX officials say will be the most powerful in the world, capable of carrying humans to Mars and other deep space destinations.

But paying for those ambitious plans will be a challenge. The Wall Street Journal reported in mid-November that SpaceX, founded by charismatic internet entrepreneur Elon Musk, had raised $250 million from its first high-yield loan sale.

Some investors, the newspaper reported, "expressed misgivings about the company's record of burning through cash and its experience with high-profile accidents, which have previously led to dips in revenue."

"Other concerns include the company's large investment plans and its connection to Mr. Musk, the founder and chief executive of SpaceX, whose volatile behavior has led to turmoil at the electric-car maker Tesla Inc., where he also is chief executive."

NASA announced November 24 that it was implementing a major safety review of both SpaceX and Boeing, which is building its own space station ferry ship for the space agency. The Washington Post reported the review was ordered, in part, because of concerns raised in the wake of a podcast in which Musk apparently smoked marijuana.

The Journal, citing industry sources, said SpaceX takes in about $2.5 billion a year. Profit margins "are constrained in part by a payroll of some 7,000 employees, the cost of operating three launch pads (two in Florida and one in California) and expenditures for developing a fourth site," the newspaper said. The company's website says the workforce numbers "6,000+."

SpaceX has shaken up the global launch industry, undercutting the competition with Falcon 9 rockets starting at just $60 million, tens of millions less than other rockets in its class, and perfecting technology to recover the first stage boosters so they can be refurbished and flown again.

SpaceX has launched 67 Falcon 9 rockets since 2010 and one Falcon Heavy, experiencing one in-flight failure in June 2015 and one on-pad explosion a year later, both tied to problems with the helium system used to pressurize the rocket's second-stage liquid oxygen propellant tank.

Since the on-pad failure, SpaceX has successfully launched 40 rockets in a row, including Friday's flight, and recovered 33 first stage boosters, a feat no other rocket company has even attempted.

The Pentagon has approved the Falcon 9 for launching high-priority national security payloads and NASA relies on the company to deliver supplies to the International Space Station aboard Dragon cargo ships.

SpaceX holds contracts valued at $3.04 billion for 20 space station resupply flights through next year, according to the Government Accountability Office. The company holds another NASA contract for an unspecified amount for at least six additional flights through 2024.

SpaceX also holds a $2.6 billion NASA contract to build and launch the Crew Dragon capsule.

First published on January 12, 2019

© 2019 CBS Interactive Inc. All Rights Reserved.

William Harwood

Bill Harwood has been covering the U.S. space program full-time since 1984, first as Cape Canaveral bureau chief for United Press International and now as a consultant for CBS News. He covered 129 space shuttle missions, every interplanetary flight since Voyager 2's flyby of Neptune and scores of commercial and military launches. Based at the Kennedy Space Center in Florida, Harwood is a devoted amateur astronomer and co-author of "Comm Check: The Final Flight of Shuttle Columbia."

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