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Companies Skeptical of Commercial Space Market

Hugh Pickens writes "The NY Times reports that Boeing and Lockheed Martin will happily sell rockets to carry astronauts into space, but are leery about taking a leading role in President Obama's vision for a revamped NASA that relies on commercial companies to provide taxi transportation to the ISS. 'I don't think there is a business case for us,' says Lockheed Martin's John Karas about space taxis. Both Boeing and Lockheed were stung during the last burst of optimism for the commercial space business about a decade ago. They invested several billion dollars — Lockheed to develop its Atlas V, Boeing for the Delta IV — in the hopes that the huge market for commercial satellites would supplement their traditional business of launching American military spy satellites. The market did not materialize, and what business there was went to European and Russian rockets that were cheaper. The hoped-for commercial market for space taxis hinges on one small company, Bigelow Aerospace, which is developing inflatable space habitats that it hopes to market as research facilities to companies and foreign nations looking to establish a space program."

16 of 192 comments (clear)

  1. riiiight by jollyreaper · · Score: 4, Insightful

    Wait a second. They're saying there's no market and then they're saying cheaper competitors are snapping up all the business? Fellas, I think the invisible hand of the market is flipping you off.

    --
    Kwisatz Haderach
    Sell the spice to CHOAM
    This Mahdi took Shaddam's Throne
    1. Re:riiiight by Knara · · Score: 5, Interesting

      Is sort of what I got from it, too.

      I suspect that "there isn't a business case" really means "we liked it better when we had a guaranteed customer who would pay us whatever we and our one main competitor decided was the going rate for a launch vehicle. Please don't make us actually innovate and compete."

    2. Re:riiiight by sillybilly · · Score: 4, Interesting

      There really isn't a free market business case for it. People go to space simply to make living under unlivable conditions a status quo. If you can live in the vacuum of free space only on sunshine, fully recycling all the excrements into reusable things, you can almost make it no matter what. Living in space is a safety thing for life from Earth against a global catastrophy, such as an asteroid hit, anoter world war, nuclear holocaust, etc. You never know. There is really no free market for safety and security, unless the unthinkable happens, and then comes the should have, would have, but didn't. Maybe next time. If there is always a next time. Next time I'm not gonna keep all my eggs in the same basket. But going to space is not gonna solve a whole lot of issues, especially security issues, such as developing AI that is smarter than us, and hunts us. Space is no hiding place from stronger intelligence, should it be carnivore. But it does help some things.

      For instance, as a side benefit, in space recycling is mandatory. On Earth we may never put the resources to fully recycle, because there is no free market business case for it. It's always cheaper to litter your environment full of trash and forget about it than have to take care of it right now. Being in space would force us to immediately come up with full recycling techs, and improve them to the point where recycling almost make business sense down on Earth. Who's gonna put the resources into it down here?

      The only way space can make business sense is how Formula 1 makes business sense - as a show. But space is boring. It has to be boring to be professional. Formula 1 is boring to a lot of people. But it does get quite a bit of audience, to the point where it's profitable. Unfortunately the cost of a space show dwarfs the cost of Formula 1 in comparison. It's just simply too expensive to make business sense. Like the military, if it had to be free market supported, how much would you personally donate each month from your salary to support our troops? Or what would you pay for? The labor day air show?

    3. Re:riiiight by sunspot42 · · Score: 4, Interesting

      Soyuz - which is the current Soviet manned space booster - hasn't had a fatal accident now in decades. It's old but very reliable. My guess is the big US aerospace firms can't really compete with it, at least not without sinking many billions into development costs and potentially having their own string of catastrophic failures to learn from (the way the Soviets did). They're probably also worried about demand for manned boosters going forward, and possible competition from the Russians, Europeans and - eventually - Chinese. Even if the US aerospace firms were successful in developing a manned booster, it might be difficult for them to ever recoup their development costs due to competition alone. They may feel there are better ways to spend their money, probably on defense-related programs where the margins are much higher and the competition less intense.

      I know this is very anti-postmodern, but just because you don't see or don't know about something, doesn't mean it's not real.

    4. Re:riiiight by blankinthefill · · Score: 4, Insightful

      Great story, and a perfect example of how established business has a very hard time expanding. They grow to fill their niche, and moving outside that niche is a huge risk. Most of these companies are publicly owned, and taking a risk that may fail, or not pay off for many years, could lose them their jobs very easily. Because of this, established companies almost never take real risks. It's left up to the small, crazy passionate garage shops to start the revolution. To be frank, I feel like this is good, since it leads to real innovation, that the big companies would be too scared to take on (although the argument could be made that most big companies would never start such a project in the first place, making it a non-issue). There ARE big companies that manage to innovate and spread into other fields... but they are few and far between. Hell, probably the greatest innovator of the century, Xerox, never actually spread beyond their core business, despite the potential for huge profits, because they felt it was too big a risk. What a lot of these companies and shareholders don't really understand is that the adage 'you have to spend money to make money' is 100% true. Sometimes you'll fail, but if you're smart about how you go about things, the payoff for those initial investments is incalculable.

  2. want NASA to foot the bill by confused+one · · Score: 4, Informative

    For those who don't RTFA: ULA said the cost to upgrade the basic Atlas V to meet manned spaceflight would be $400M. They also said that if you want to build a heavy lift Atlas or Delta to manned spaceflight spec it would cost between $1B and $2B. And they want NASA to pay all the cost, up front.

    1. Re:want NASA to foot the bill by rsgeek · · Score: 4, Insightful

      This makes sense, though, from a business perspective. NASA isn't exactly a "reliable" customer, so if they want a new capability and won't guarantee future use of it, why shouldn't NASA be the one to pay for it?

      Tell you what... Go to a car dealer, tell them you want a custom model built to your exact specifications from scratch and that you won't pay a dime until it's delivered. Tell me how far you get with that...

  3. What, the giant government contractor... by Omnifarious · · Score: 4, Insightful

    What, the giant government contractor doesn't want to compete? What a surprise. I guess without making things overly expensive, budget overruns and miles of red tape they just can't get enough money from the public trough.

    I see this as a complete vindication of this plan. IMHO, Lockheed Martin and companies like them are some of the worst crooks our government (and by extension, all of us) does business with. There's no crook like the one that does it legally.

  4. 10 years + $20B and someone else gets elected by RichMan · · Score: 4, Insightful

    Cash up front is the only way to get corporations to commit to this. The government is too likely to pull a "that costs to much" about turn and leave the company holding the debt.
    --
    I don't see private companies betting big on long term government contracts. The commitment is just to large and the sleazy government turnarounds just to likely.

    Imagine being a company and investing $20B and 10 years of real effort into something expecting a big payout of years of ferrying astronauts into space. Then someone else gets elected and NASA changes it plans. Kiss your $20B good bye.

    See Northrop F20/F5G. It even had a politically correct name.
    ---
    Much of the F-20's development was carried out as part of a U.S. Department of Defense (DoD) project called "FX", which intended to sell less-advanced fighter designs to U.S. allies to limit the possibility of front-line U.S. technology falling into Soviet hands. FX developed out of a general re-working of U.S. military export policy started under the Carter administration in 1977. Although Northrop had high hopes for the F-20 in the international market, changes in policy following Ronald Reagan's election left the F-20 competing for sales with front line fighters like the F-16. The development program was eventually abandoned in 1986 after three prototypes had been built and a fourth partially completed.[1]
    --
    (congressional hearing!!)
    Thomas V. Jones, Northrop's CEO, stated that there was little point in having companies develop aircraft on their own if they were utterly reliant on the government to sell them. He suggested that the entire FX concept be dropped, and Northrop be allowed to sell the F-20 on the market like any other vendor.[41]
    ---

  5. Re:Government is Clueless about Business by h4rr4r · · Score: 4, Insightful

    This has nothing to do with that. It is just Lockheed belly-aching that they do not want to give up their sweet cost plus deals. The solution to this is to buy this service from Spac-X or another competitor.

  6. Re:Government is Clueless about Business by ZonkerWilliam · · Score: 4, Informative

    Working with the Feds I can honestly agree, the mentality is vastly different. From perspectives of a federal agency, they submit a request for more funding if they need it, usually they get it (meaning, usually, a tax hike). What kills me is the way the whole funding is setup, if you don't spend all your funding you have to send it back, and next year you get reduced funding. So... all the agencies are motivated to spend all the cash on unneeded equipment at the end of the fiscal year just so they can get the same amount of money next fiscal year. So this tells us that basically Government is structured to waste money.

  7. Re:Government is Clueless about Business by Runaway1956 · · Score: 4, Informative

    From experience in the Navy, I can verify the fiscal thing. Each quarter, we would "purchase" things out of our own storerooms, so that the books balanced within a couple of dollars. Across the board, we did this. The galley (or kitchen, for you landlubbers), office supplies, paint, you name it. The money had to be spent, or lost. At the end of the fiscal year, same thing. Spend right down to the very last dollar, never turn money in, or the next year your budget would shrink.

    Damn shame that things work that way. It's an incentive to waste.

    --
    "Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
  8. What happened to SpaceX by jfruhlinger · · Score: 4, Interesting

    I read that article this morning and was baffled to hear SpaceX mentioned nowhere in it, considering they have a Progress/ATV-type unmanned cargo vessel on the launchpad at Cape Canaveral and plans to build a man-rated capsule in the next 2-3 years. Have they imploded recently or something?

  9. Re:Government is Clueless about Business by timeOday · · Score: 4, Insightful

    Just curious, why does the Tea Party movement catch so much flak?

    They're modern hippies... purely an opposition party with no realistic plan of their own, hoping to fix everything simply by tearing down solutions that have been developed (with good reason) over hundreds of years. It's a style of wishful thinking where flawed solutions to problems (such as social programs) are conveniently seen as the source of the problems themselves, giving the false impression of easy solutions.

    The end of the Tea Party is when/if they actually get somebody elected and have to start making hard, divisive decisions.

  10. Re:Government is Clueless about Business by Chris+Burke · · Score: 4, Insightful

    Ever watch old kung-fu movies? I find it fascinating the way mortal enemies still have a genuine respect for one another. Each sees that his opponent is skillful and formidable and honors this.

    I find it really, really hard to respect the movement when I see town hall meetings stuffed full of elderly people on Medicare screaming about how they'd rather die than have the government provide their healthcare. When the representatives who are actually on their side of the issue end up having to try to correct the audience's misbegotten notions, and fail. Does that count as a good reason not to like them, that their arguments are so bad that even their allies that have a clue end up basically arguing against them?

    I'm not saying it's right. Certainly they deserve basic human dignity and I don't wish any ill on anyone. But respect is just hard for me to come by, I'm sorry. The kung-fu fighters respect each other because they see true skill. Deep and enduring respect for a mule's hard-headedness just doesn't fit that mold to me.

    Some armed conflicts in real life have been this way; I believe WWI was the last. There used to be the notion that if you lose your honor by engaging in those low-road practices, then the conflict has cost you quite a bit more than even the casualties sustained.

    Yeah, that's because they discovered that razor wire, artillery, and machine guns were more effective at stopping the enemy than disrespect. Assuming of course you don't think it's disrespectful to bomb the enemy's trenches with mustard gas. The only time "honor" like you're describing was important in warfare was when a Lord's honor was literally more important than the lives of the conscripts they sacrificed, but then again so was the Lord's trousers.

    Oh and on a more comparable level, the propaganda from back then was ridiculously insulting to the enemy. This idea of mutual respect is one I think mostly exists in nostalgia-land.

    --

    The enemies of Democracy are
  11. mod DOWN! by Anubis350 · · Score: 4, Informative

    Honestly, insightful?

    From a quick google search on NASA inventions:

    Ten NASA inventions you use every day

    Top 15 NASA inventions

    Polimide Foam

    NASA Inventions benefiting our daily lives

    Highlights from those links include kidney dialysis, CAT scans, various types of insulation, efficient water purification tech, cordless tools, modern designs of microchips, satellite tech (you know, it deleives a great deal of your communications....), scratch resistant lenses... And there's a *lot* more, a great deal of modern tech comes from NASA is one way or another.

    Even if you have a problem with exploration and a search for knowledge and understanding of the universe, you have to admit the space program and its SCIENCE have yielded *massive* results on earth in technology. I'm also pretty sure there were luddites like you when the first ships were being built, the first submarines, the first plans, hell, the first time someone said "I'm going to wander 50 miles that way and see what's there".

    --
    "goodbye and hello, as always" ~Prince Corwin, from Zelazny's Amber series