Report: SpaceX to Lay Off 600 Workers

SpaceX will lay off 600 employees, about 10% of its 6,000 workers, according to a Los Angeles Times report.

The company responded to Times questions with a statement: “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. 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.”

Hawthorne-based SpaceX is offering a minimum of eight weeks’ pay and other benefits, including assistance with career coaching, resume help and job searches, the report said, citing an email sent Friday to employees by SpaceX President Gwynne Shotwell.

Shotwell told CNBC in May that the company is profitable and has had “many years” of profitability. SpaceX recently raised about $273 million of a $500 million equity round of funding, according to a filing with the Securities and Exchange Commission.

SpaceX had it’s busiest year on record in 2018, executing 21 satellite launches. That was up from 18 the year before.

 

[Cosmacelf]

This isn't surprising given that the global launch market is going through a pause right now. Essentially, the addressable market is currently shrinking, so the company must shrink with it. In addition, I am guessing that resusable boosters requires less staff. Unfortunate, but not terribly surprising.

 

[YoungStranger]

The Guardian (UK) continues its anti Musk campaign (for some reason I do not know) with remarkably slanted articles. All they had to do was write like the TMC article or note circumstances like Cosmacelf above... I would still have clicked on the headline, so it can’t be click bait.

Elon Musk's rocket company SpaceX cuts one tenth of workforce

It purports to be. Left of centre global news provider. Even when the news is positive they manage to put a negative spin in headline e.g Elon Musk's SpaceX launches military rocket after four attempts...It didn’t take 4attempts. It took one attempt after a series of delays...

Back to theme... Elon’s Mars attempts are obviously personal not commercial, whilst the commercial launch series is obviously successful technically and they have some leeway to raise prices... I suppose they are competing generally against State providers who have other motivations and can run with subsidies

 

[ecarfan]

This isn't surprising given that the global launch market is going through a pause right now. Essentially, the addressable market is currently shrinking, so the company must shrink with it. In addition, I am guessing that resusable boosters requires less staff. Unfortunate, but not terribly surprising.

Yes, I agree. Gywnne has pointed out many times over the past year that the commercial sat launch market size will be down in 2019. And the competition has grown, especially for small sat launches. In addition, SpaceX has likely built up an inventory of F9 Block 5 boosters and doesn’t need to build any new ones for the foreseeable future. So SpaceX doesn’t need as many employees.

The future of the company still looks bright, but it is going to be a challenge to fund Super Heavy/Starship development and production and Starlink. Hence, the staff cuts.

 

[e-FTW]

Good thread by Eric Berger on this: Eric Berger on Twitter
In the end, this goes to something I’ve wondered about before: without government funding, SpaceX has to get other funding (seemingly achieved in part privately) to make Starship and Super Heavy a reality, amongst other things...
But it also has to be efficient. This is sad for the folks moving on, but I have tot think that a stint at SpaceX makes that resume pop big time.

 

[ABCTG]

The Guardian (UK) continues its anti Musk campaign (for some reason I do not know) with remarkably slanted articles. All they had to do was write like the TMC article or note circumstances like Cosmacelf above... I would still have clicked on the headline, so it can’t be click bait.

Elon Musk's rocket company SpaceX cuts one tenth of workforce

It purports to be. Left of centre global news provider. Even when the news is positive they manage to put a negative spin in headline e.g Elon Musk's SpaceX launches military rocket after four attempts...It didn’t take 4attempts. It took one attempt after a series of delays...

Back to theme... Elon’s Mars attempts are obviously personal not commercial, whilst the commercial launch series is obviously successful technically and they have some leeway to raise prices... I suppose they are competing generally against State providers who have other motivations and can run with subsidies

I took The Guardian out of my news feed. The ICE advertisers continue to be their master.

 

[Uncle Paul]

One of the down falls of NASA is that it became bloated and a money pit. Elon does not want SpaceX to suffer the same fate.

Gotta be lean and agile to advance the technology.

Many of these specialized talent laid off employees will be snapped up by other aerospace companies.

 

[ecarfan]

Good thread by Eric Berger on this: Eric Berger on Twitter

Eric’s key points, quote:
“3. These cuts were not unexpected. SpaceX had grown rapidly, needing to engineer Falcon 9 various iterations, Dragon, Dragon 2, Falcon Heavy, Starlink, BFR, and more. Now they are done with development of a lot of those projects.
4. SpaceX no longer needs to build 100s of Merlin engines or 10s of Falcon 9 cores a year. Same with Dragons. So it needs fewer people in production. When you hear about low-cost rockets, and reuse, that means fewer people are needed.”

 

[bxr140]

Interesting times, these.

As we've been talking about for some time now, the fact that spaceX offers a low-cost solution to orbit isn't actually a primary driver toward significantly more people wanting to get on orbit, and certainly not in the short term. Even a "cheap" geocomm is going to be hundreds of millions of capex+opex over their lifetime, and while reducing that by tens of millions of dollars (SpaceX vs anyone else) is certainly not chump change, its also not a game changer. Put another way, the demand for space access certainly hasn't increased by anywhere near the same factor as the theoretical supply. So...its understandable that SpaceX needs to scale back.

Certainly the future of space--specifically, big constellations--are enabled by the low cost rides, but they are all finding it hard to align appropriate funding to their promises of a better tomorrow. Its not unreasonable to include SpaceX in that group now, either.

I understand that it is a factor, but don't fully buy the argument that development is trailing off and that production demand is lower. Its certainly an element to, but not the sole reason for the reduction. There's PLENTY of development and production that needs to ramp up on Starlink, and it would make a lot of sense to shift the skilled and trained workforce onto that project rather than onboarding brand new people.

Also probable is that SpaceX is finally feeling the financial pinch that everyone else in the space industry is feeling. I realize I've made somewhat flippant remarks in the past about Elon not giving a *sugar* about money/profit; here's the practical manifestation of that approach.

Finally, since nothing is ever binary, I suspect another element to this reduction is simple housecleaning. Not everyone is awesome at being a SpaceX employee, and despite SpaceX's impressive attrition rate not all of the low hanging fruit falls off the tree on its own. (It must be noted that there are some very awesome people that leave SpaceX on their own--genius that he is, Elon is still a pretty ruthless tyrant, and that doesn't mesh well with a lot of objective/left brained Alpha humans)

 

[ecarfan]

There's PLENTY of development and production that needs to ramp up on Starlink, and it would make a lot of sense to shift the skilled and trained workforce onto that project rather than onboarding brand new people.

The people who were building F9 boosters and Merlins are not necessarily people whose skills can be applied to developing Starlink, I would think.

 

[bxr140]

The people who were building F9 boosters and Merlins are not necessarily people whose skills can be applied to developing Starlink, I would think.

For sure its not a 100% direct transfer, but there's quite a bit more overlap and commonality when it comes to design and production of space hardware than there are differences...especially at the worker bee level where you need a smart engineer and capable technician to slog through execution. And the worker bee level (versus the senior/principal engineer level) is where the marjority of these reductions are taking place.

 

[ecarfan]

For sure its not a 100% direct transfer, but there's quite a bit more overlap and commonality when it comes to design and production of space hardware than there are differences...especially at the worker bee level where you need a smart engineer and capable technician to slog through execution. And the worker bee level (versus the senior/principal engineer level) is where the marjority of these reductions are taking place.

Fair enough. Though I would note that Elon has stated he wants to make Starlink sat production highly automated using mass assembly line techniques which will minimize humans and maximize robots, to drive down cost.

Now, we know that he wanted to do the same thing for Model 3 production, and that didn’t work out as planned. However, for Starlink to succeed it will require well over 10,000 sats in orbit, so if production can’t be highly automated the company is going to be in trouble.

 

[Grendal]

It will probably be another year or two before SpaceX starts to crank up production of Starship and Super Heavy. You wouldn't want to have all those production personnel sitting around for a couple years. This is one of the negatives of the Silicon Valley aspect of Elon's companies. Employees are more like contractors than long term employees. It goes hand in hand with the push for innovation and keeping costs down. It can a negative for SpaceX too. If you have someone great, but let them go, it's unlikely you'll get them back when you need them again in the future.

 

[ChrML]

Makes sense. They probably did the math for 2019 and the foreseeable future. It's not like they have the money to pay 600 workers without that amount of revenue. They need people on Starlink and Starship, but these projects don't generate revenue in a long time.

If they out of nowhere get a big contract, they will probably need to hire again.

 

[Grendal]

A couple posts that delved deep into Starlink moved to that thread.