SPACE

It’s Not All Bad News When It Comes to the Health of the U.S. Space Industrial Base

4/1/2011
By Stew Magnuson
EL SEGUNDO, Calif. — Craig Cooning, vice president and general manager of Boeing space and intelligence systems, showed off the factory where some of the nation’s most secretive spy satellites are built.

The facility, which began its life as a car factory, then an aircraft plant for legendary aviation pioneer Howard Hughes, now produces satellites for a variety of customers.

Its enormous equipment is designed to replicate the harsh space environment. Giant shake tables and sonic blasters ensure spacecraft can survive the rigors of being launched. A massive thermal vacuum chamber subjects them to temperatures ranging from plus or minus 125 degrees Celsius.

The facility employs about 5,500 workers.

Traveling northeast about 100 miles, at the Mojave Air and Space Port, Roderick and Randa Milliron are developing a multistage rocket called the Neptune that they believe will take micro-satellites that weigh about 1.65 pounds into orbit. They are working in a “temporary” building constructed by the Marine Corps’ aviation branch during World War II. Their company, Interorbital Systems, has five full-time employees, plus a roster of other experts they call in when needed.

“It’s really like an old style rocket team rather than a top heavy contractor,” said Roderick Milliron, co-founder and chief engineer, and a former aerospace worker at a major defense company.

The two companies couldn’t be more different other than the fact that they are both part of the nation’s space industrial base.

The health and welfare of the companies that produce spacecraft, payloads, rockets and ground stations for everyone from NASA to intelligence agencies has been the source of much hand-wringing during the past few years. The general consensus is that the space industrial base is in a state of decline.

There are many causes for alarm, several reports have noted. Baby boomer generation engineers who pioneered the field during the 1960s space race and subsequent Cold War are retiring, and few technical experts are in the wings to replace them. Strict trade controls on commercial satellites imposed in the late 1990s resulted in business being lost to foreign companies. NASA can no longer be counted on to keep legions of engineers, middle managers and technicians employed. The space shuttle is retiring, which will result in hundreds of layoffs, and pundits complain that the agency has no direction.

Yet Cooning said the Boeing facility in 2010 had a banner year. Commercial, civilian, and spy satellites have kept the factory humming. But he worries about what comes next.

“On one hand, I can say, ‘yeah, we look okay.’ But on the other hand, I’m concerned about what we can do in the future.”

With contracts for GPS, NASA, commercial communication satellites — and a few other classified programs he can’t talk about — there are no problems keeping the production workers occupied. That’s not the case for the highly specialized engineers tasked with creating the next-generation of spacecraft.

“If you look at the size of the business, I have people involved in the developmental business right now, but I don’t have a lot of developmental business walking through the door,” Cooning said.

He once employed 40 engineers who specialized in designing digital satellites. He’s now down to five.

Addressing the perceived woes of the industry was one of three strategic objectives spelled out in the recently released Defense Department National Security Space Strategy.

The goal of the department will be to “energize the space industrial base that supports U.S. national security,” the document read.

“Enhancing these benefits requires improving the foundational activities of our national security space enterprise — including our systems, our acquisitional process, our industrial base, our technology innovation, and our space professionals,” the unclassified version of the document said.

“A resilient, flexible, and healthy space industrial base must underpin all of our space activities,” the report added.

About a month after the strategy was released, the Aerospace Industries Association produced a white paper, “Building and Maintaining Value in the National Security Space Industrial Base,” that highlighted sectors that are at risk. Among them were: protected communications, liquid propulsion, solid rocket motors and missile warning systems.

How the Defense Department will energize the industry in times of fiscal constraint is the question. For the time being, defense space programs look relatively safe. The 2012 budget proposal left most programs intact. NASA has not fared so well.

“I certainly believe that there are segments in the industrial base that are threatened at the moment,” said Elliot Holokauahi Pulham, chief executive officer of the Space Foundation in Colorado Springs, Colo.

The Obama administration cancelled the Constellation moon exploration program last year, along with its spacecraft and rocket booster development programs.

“There are a number of negative forces at play because of the uncertainty surrounding NASA’ s future,” Pulham said. But the potential upside is the rise of commercial companies bringing on new launch vehicles.

NASA has made two attempts to develop a spacecraft that can replace the shuttle, but both ended in failure. The current plan is to start over and in the meantime let commercial companies such as Space Exploration Technologies Inc., of Hawthorne, Calif. — better known as SpaceX — resupply the international space station.

Peggy Slye, chief operating officer of Futron Corp., a Bethesda, Md.-based consultancy that specializes in space issues, said one of the key crises the industry faces is that it’s no longer attracting waves of young people into the profession as it did when there were bigger programs. The perception that NASA is in a state of decline sends the message to those considering entering the field to look elsewhere.

“A number of the most senior leaders in the industry are getting ready to retire, and that’s going to create a knowledge gap,” she said. There will also be an intense contraction of workers in the civil space after the shuttle retires, she added.

Meanwhile, the Air Force, which builds most military satellites, and the National Reconnaissance Office — responsible for spy satellites — have also had their share of program difficulties. Both have earned reputations for cost overruns and delays during the past decade.
Military space’s watershed moment was the cancellation of the Transformation Satellite program in 2009. But the multi-billion dollar communications satellite project seems to have forced the Air Force to rethink how it acquires spacecraft.

Air Force Brig. Gen. Jay Santee, principal director of the office of the undersecretary of defense for policy, said the Air Force is undergoing a change in the way it procures and deploys satellites.

It is looking toward smaller spacecraft that can be produced more quickly as well as hosted payloads, which allows an Air Force sensor or communication package to be placed aboard another satellite.

This piggybacking on other missions will lead to huge cost savings for the military, especially when the payload is being placed aboard a commercial communications satellite. In that case, the telecom company is paying for the launch and has acquired an orbital slot in advance. In some cases, the company may integrate secured channels at its own expense and lease out capacity to the Defense Department.

“We look at the industrial base and ask, ‘How can I have a steady stream of work for satellite engineers?’” Santee said at an American Institute of Aeronautics and Astronautics conference in Washington, D.C.

Yet, “we’re in the national security business, there has to be usefulness” in what the department procures.

“We see in this ultimately that it can lead to a steadier state of demand on the industrial base,” he said of the trend to move away from large-scale programs.

Pulham said the space industry has always suffered from peaks and valleys. He’s optimistic that the Air Force’s new way of doing business — along with its emphasis on block buys — will eliminate “the old paradigm of single-point acquisition of horribly expensive” spacecraft.
The Air Force having to change the way it does business is the “silver lining” in the budget crunch, Pulham added.

Joseph Rouge, special assistant to the deputy undersecretary of the Air Force for space programs, on the sidelines of the conference echoed Santee and told National Defense that industry will simply have to follow suit with the new way of doing business.

This is far better than waiting every 10 years for a large program to come along and having the contractors fight it out, only to let the losers have nothing to do for a decade, he said.

Cooning said Boeing sees opportunities integrating hosted payloads onto commercial aircraft. It is a complex undertaking, and it will occupy the time of some of the underemployed developmental engineers. But the amount of work to do this is not in the order of building an all-new satellite, he added.

Meanwhile, commercial communication satellite operators aren’t currently interested in innovation. They are happy to stand pat with their current technology, he said.

As for classified NRO spacecraft, which constitutes the bulk of Boeing’s business, “I can tell you there are not a lot of new starts out there that are visible to us,” Cooning said.

A few miles away from the Boeing facility in El Segundo, Bill Hart, vice president of space systems at Raytheon, doesn’t see a downturn in business.

The company’s main space-focused business emphasizes the sensors and other instruments that are integrated onto spacecraft.

Business is good, and there is no decrease in demand for the sensors, imagers and other payloads the company manufactures, Hart said.

As far as bringing in the next generation of aerospace workers, the space and airborne division, which employs about 8,000 workers — 3,000 of them involved in space-related products — hires about 300 recent graduates each year, tapping into Southern California’s technical schools.

Boeing’s Cooning, on the other hand, has not been hiring out of universities, but he hopes now that business is better, he can begin to do so. They would not be in great numbers, he said. He may bring on about 30 new employees next year.

Cooning also hopes proposed changes to the International Traffic in Arms Regulations, that have put commercial communications satellites in the highly restricted munitions list and hampered their export overseas, will come to fruition this year. That would boost revenue for commercial satellites at Boeing an estimated 15 to 30 percent, he said.

“It would help sustain the base. It could result in more hires,” he said.

A September 2010 Aerospace Industries Association report, “Tipping Point: Maintaining the Health of the Space Industrial Base,” said “scientists and engineers represent the core of our nation’s space industrial base, but we are not producing the work force currently needed to keep America on the cutting edge of technology development.”

Space system procurement has always been hampered by low production rates, small quantities and long lead times, the report noted.

While contractors such as Boeing, Northrop Grumman and Lockheed Martin build major satellites, the launch side of the space industry is attracting entrepreneurs, many whom have made fortunes outside the aerospace and defense world.

A few miles to the east of El Segundo in Hawthorne, one of the forerunners of the so-called “new space movement,” SpaceX, founded by billionaire Elon Musk, is building rockets and is pursuing a privately funded program to provide an unmanned cargo ship to the international space station, and manned flights into outer space.

A co-founder of PayPal, he had recently sold his share of the business and was looking for the next opportunity when he announced his ambition to enter the space industry in 2002. Two years later, the company had a rocket ready to launch.

Since then, the company’s work force has roughly doubled every year and stands at about 1,250 employees, spokeswoman Kirstin Brost said. The company has been profitable since 2007 and has a NASA contract for 12 launches to the space station. SpaceX currently has more than 30 launches scheduled through 2017.

The wealth of Howard Hughes, who helped build the aerospace industry in Southern California, came from oil. But he was obsessed with the budding aviation industry, and invested his family fortune into advanced aircraft.

Today in the space launch business, a handful of wealthy entrepreneurs like Musk are intrigued by the prospects of space travel.

David Masten, who made his fortune in the information technology boom of the 1990s, is building a suborbital spacecraft at the Mojave Space Port (see story page 38). Las Vegas real estate magnate Robert T. Bigelow’s company Bigelow Aerospace is working to not only launch vehicles, but build small space stations. He recently traveled to the space coast of Florida and announced his intentions to launch from Cape Canaveral, giving hope to soon to be out-of-work space shuttle workers. Amazon.com founder Jeff Bezos has a side business, Blue Origin, which is also pursuing a launch vehicle.

Despite the NASA woes, many other sectors of the industry are doing well, including ancillary space-enabled products such as GPS and earth imaging, Slye said. That, coupled with the Air Force’s new plans, gives her reasons to be optimistic.

In addition, the space tourism market, after decades of development, is poised to finally get under way, she said.

“A lot of these companies have good business plans,” she added. There are some issues to be worked out as far as liability and insurance, and how to qualify tourists to go to space. Providing that there is not another major economic crisis, some of these companies may be ready to launch within two to three years, she said.

Billionaire Richard Branson broke ground on a plant at the Mojave Air and Space Port to build spaceships for his Virgin Galactic space tourism business in November. The company is taking bookings for the $200,000 tickets. It has had 410 takers so far, the company’s website said.

And then there are those who don’t have a fortune to spend on pet space projects such as the husband and wife team of Randa and Roderick Milliron at Interorbital Systems. They have big dreams nonetheless. They want to launch rockets from a space port in the Pacific island nation of Tonga, and build a space tourism industry there where they send paying customers into orbit.

Roderick’s story is typical of the generation who were inspired by the space race of the 1960s. He was enthralled by model rockets and telescopes, and then went into engineering. He had no problem finding a job out of college in the industry’s heyday. General Dynamics paid him good money to sit around and do busy work.

Interorbital is building on the work of a defunct German company Otrag, which built a rocket designed for simplicity and low cost in the 1980s, but was eventually pressured to abandon the work because of fears that the rockets could be used as missiles.

The Millirons founded the company in 1996. They have survived on private investors since then, and never received any contracts for the government to support their research and development. They’ve sold 21 of their $8,000 apiece personal satellite kits to go aboard the first launch scheduled for June.

The Otrag-style rocket is “something people have been working for several decades and we believe the long-awaited vehicle will be arriving very shortly,” Roderick Milliron said.

Today, Interorbital has two college graduate interns, whom Roderick describes as enthusiastic about space. They have been looking for full-times jobs for a year, but so far have come up empty.            

Topics: Space

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