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Lockheed, SpaceX Trade Barbs

Lockheed Martin and Boeing have been getting all government launch contracts for the past six years. That is, until SpaceX demonstrated they could reach the International Space Station successfully this year. Asked about the new competition brought by SpaceX, Lockheed CEO Robert Stevens made light of the younger company's success. "I’m hugely pleased with 66 in a row from [the Boeing-Lockheed alliance], and I don’t know the record of SpaceX yet," he said. "Two in a row?" When he was asked about the skyrocketing price of launching his sky rockets, he said, "You can thrift on cost. You can take cost out of a rocket. But I will guarantee you, in my experience, when you start pulling a lot of costs out of a rocket, your quality and your probability of success in delivering a payload to orbit diminishes." SpaceX CEO Elon Musk was blunt about the source of the price difference between the companies: "The fundamental reason SpaceX’s rockets are lower cost and more powerful is that our technology is significantly more advanced than that of the Lockheed-Boeing rockets, which were designed last century." The Delta IV and Atlas V rockets of Lockheed-Boeing average about $464 million per launch, while SpaceX's Falcon 9 launches for $54 million. Its upcoming Falcon Heavy will go up for $80-125 million.

16 of 215 comments (clear)

  1. Progress! by Anonymous Coward · · Score: 5, Insightful

    First they ignore you, then they laugh at you, then they fight you, then you win.
    - some baldie

    1. Re:Progress! by taiwanjohn · · Score: 5, Insightful

      SpaceX is blowing the competition away. Even the Chinese have said they can't match SpaceX's prices. ULA will continue building Deltas and Atlases for a while yet, but once their current launch manifests are cleared, they'll have a tough time selling any more. Their only hope of survival is if SpaceX can't ramp up production fast enough to devour the entire market. In the meantime, other "NewSpace" vendors are getting into the game, making life even tougher for the "legacy" crowd. I just wonder how long it will take before SLS gets canceled.

      --
      XML is like violence. If it doesn't solve your problem, you're not using enough of it. --AC
    2. Re:Progress! by vlm · · Score: 4, Insightful

      Their only hope of survival is ...

      ... market segmentation between commercial and dotmil.

      In ye olden days: "Hmm we've got experience building cost is no object ICBMs, and there's a budding, although small and price sensitive commercial market... lets hit it while we can". Worked OK until real commercial competitors arrived.

      They can go back to the glory days of ICBM building with the proper congressional bribes. Maybe ICBM launched drone strikes or whatever. They'll never sink as long as .mil is around.

      If you demand a bad slashdot car analogy, if no one is building commuter cars, the guys who make Abrams tanks can make fat stacks of cash until Toyota arrives and kicks them out of the market... that doesn't mean the market for tanks is permanently gone or being given to Toyota. Just means the tank company is going back to building tanks, instead of econoboxes or tropical fish aquaria or monitor mounting arms or WTF they temporarily diversified into.

      Now if spacex is all a scam to bootstrap into the lucrative ICBM market, then, at that time, we'll have the epic business battle of the century.

      If you want another really bad analogy, I'm not sure whos on which side but its like trying to pick a fight between a 4 star restaurant and a fast food hovel. Technically you can stuff your piehole at either facility, but in practice its unlikely either will succeed in putting the other out of business.

      --
      "Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
    3. Re:Progress! by benjfowler · · Score: 5, Interesting

      SpaceX would need to have solids, which they've quite deliberately eschewed. As it is, they're thoroughly optimized for space launch, not storable rockets that can be launched at zero notice.

    4. Re:Progress! by smpoole7 · · Score: 4, Interesting

      > SpaceX would need to have solids, which they've quite deliberately eschewed.

      ULA's Common Booster Core (CBC) is liquid-fueled only. Solids are indeed more storable for the long term, but if you need to vary the thrust for different orbital profiles and payloads, liquid is the only way to go.

      I don't know that SpaceX is even interested in the ICBM market. Elon Musk is a space head who just wants to see people in the stars, and his company is a way to achieve his boyhood dream while making it pay for itself.

      What I want to know is when someone is going to take on the jetliner market. Maybe a SpaceX-like company could come along and eat into that market a swell. Then Airbus will join Boeing and the others in complaining and sweating. :)

      --
      Cogito, igitur comedam pizza.
    5. Re:Progress! by Smallpond · · Score: 4, Informative

      According to a federal report, you are paying $839 and adding 125 pounds for a much safer car than you had 25 years ago, so yes. People are willing to pay more for safety.

      I don't think ULA prices being 10X have anything to do with more safety, I think its mostly more overhead and lack of competition.

  2. Oldspace got fat and lazy by benjfowler · · Score: 5, Interesting

    Musk, is essentially running a massive experiment to see what costs can be squeezed out of building and operating launch systems. Much of it has to do with using off the shelf technology (as opposed to the proverbial gold-plated screws...), and flattening his supply chain.

    Obviously, it's working, as the old guard are getting butthurt that they're uncompetitive after growing fat and lazy off government space and defence contracts.

    Gotta love free markets when they work well.

    1. Re:Oldspace got fat and lazy by mcgrew · · Score: 5, Insightful

      Also, Lockheed is a very big, very old company with layers of bereaucracy. The bigger the organization, the more bureaucracy is needed, and the more expensive their wares become. Spaxe-X is still young and lean.

    2. Re:Oldspace got fat and lazy by smpoole7 · · Score: 4, Insightful

      > bureaucracy

      This, this and this again.

      I guess the day will come (I suspect that it'll be long after Musk has assumed room temp) when SpaceX is a giant, ossified fossil that can't adapt to changing markets. It seems to be inevitable.

      My brother is the business guru in our family, and one of his favorite stories involves pizza chains. There's a TON of profit in pizza. Ergo, big chains like Pizza Hut were able to build these fancy restaurants with beautiful decor ... and then along came discounters like Little Caesars to eat away at their market share.

      Smaller, leaner retailers like Dollar General are giving Wal Mart a run for the money nowadays, too.

      Call the Economic Circle of Life. You're born, you go through a rapid growth phase, then you become hidebound and eventually just fade away.

      --
      Cogito, igitur comedam pizza.
    3. Re:Oldspace got fat and lazy by dj245 · · Score: 4, Insightful

      Also, Lockheed is a very big, very old company with layers of bereaucracy. The bigger the organization, the more bureaucracy is needed, and the more expensive their wares become. Spaxe-X is still young and lean.

      Not only that, but their engineering processes are terrible. I had the misfortune of working with them on the replacement for the Alvin submarine. Instead of looking for things which could be purchased off the shelf, they seemed to go out of their way to design completely new parts and write completely new software when an ideally-suited commercial package would have been more functional than the programming garbage they produced. Maybe this is coming from higher up to inflate costs and chargeback to the customer. I certainly found it ridiculous though.

      A couple years ago I had to obtain a TWIC card. When I went to the office to have my biometrics done, all the equipment was branded "Lockheed". And none of it worked right, turning what should have been a 5 minute trip into a 1 hour ordeal. There was about 10 different devices on the clerk's desk, when 3 should have sufficed (scanner, fingerprint reader, camera). There are dozens of companies which make secure badging and identifying products. Lockheed's pile of garbage probably cost 100x as much and isn't as good.

      --
      Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
    4. Re:Oldspace got fat and lazy by aaarrrgggh · · Score: 4, Insightful

      The difference between many military grade (and grades within the us armed services) and consumer grade is the testing and validation done to make sure it works the first time. A composites supplier told me that if they produced 100 products, two would test to Air Force specs, 10 to Navy specs, 30 to Army specs, and the rest (save 2-3 units found to be defective) would be suitable for other customers. (Branches and exact numbers may be off, but orders of magnitude are right.)

      If you need to make the 100 to get two that are up to spec, you are going to have higher costs. Hopefully not 50x cost, but in a well managed system it is at least 3x. The problem comes when everybody makes their specification higher than what they actually need, or when only the people with the highest spec are buying.

      SpaceX's opportunity is in offering the value customer a better product designed and tested to meet their needs.

  3. Re:Government goes with lowest cost by cheesybagel · · Score: 5, Funny

    Nah, the government goes with the lowest bidder. Cost is something that is totally irrelevant.

  4. some truth by Tom · · Score: 5, Insightful

    There's some truth to it. SpaceX is built like an Internet startup - failure is always an option. The "old technology" is from an age when every launch was a national news event and failure was no option.

    Read this:
    http://www.fastcompany.com/28121/they-write-right-stuff

    and then realize that while everything NASA seems to be luxury spending, their software development manages to have at least two orders of magnitude fewer bugs than any commercial software company.

    If your life depends on it - would you rather fly a NASA Space Shuttle or a Microsoft Rocket ?

    SpaceX deserves a lot of credit, no doubt. Among other things, they have revitalized the "space exploration is cool" meme. And with it the willingness to take risks.

    But how about we talk about costs when they've had their first two or three explosions and resulting fallout in costs, publicity, etc.?
    I'd be mightily surprised if the learning wouldn't go two-way. Old tech learns from SpaceX how to cut costs while SpaceX learns from old tech which costs you shouldn't save on.

    --
    Assorted stuff I do sometimes: Lemuria.org
  5. Re:Better / Faster / Cheaper: Pick Two by aaarrrgggh · · Score: 4, Informative

    That failure was based on NASAs protocol to not relight the engine, and it was a secondary payload priced on that possibility. More like designed-in risk.

  6. Better Engineering by tjstork · · Score: 4, Insightful

    Musk once alluded to a better manufacturing process for actually building rockets. So, instead of saying that he's taking shortcuts and what not and doesn't have layers of bureacracy, what if he just has a cheaper way to build rockets that are better?

    --
    This is my sig.
  7. Re:Better / Faster / Cheaper: Pick Two by C0R1D4N · · Score: 4, Insightful

    I do not see anything wrong with having a higher failure rate on unmanned missions if the cost is enough thet you need to fail four times before the cost matches the rocket with a lower fail rate.

    We can have separate standards for manned vs unmanned.