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Northrop Grumman to own Scaled Composites 108

Posted by Zonk
from the going-up-in-the-world dept.
Dolphinzilla writes "According to Space.com, Northrop Grumman Corporation agreed on July 5 to increase its stake in Burt Rutan's Scaled Composites (designers of Space Ship One, Proteus) from 40 percent to 100 percent. They have purchased the company outright, marking a new future for the space pioneering firm. 'Scaled Composites currently is working with Sir Richard Branson's Virgin Galactic venture on a vehicle designated for now as SpaceShipTwo, which would carry two pilots and six paying passengers into suborbital space for a few minutes of weightlessness. The company also is building a new carrier aircraft, dubbed WhiteKnight2, that will carry SpaceShipTwo to an altitude of 15 kilometers before releasing it to soar to suborbital space. The two companies last year formed a joint venture called the Spaceship Company to build the new vehicles.'"
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Northrop Grumman to own Scaled Composites

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  • guess this means Bert Rutan has succeeded beyond his wildest dreams, and The Establishment has come around to his way of thinking.

    this also has the faint smell of "NASA can't cut it any more, their memoes all blow up."
    • Re: (Score:3, Funny)

      by nacturation (646836)

      this also has the faint smell of "NASA can't cut it any more, their memoes all blow up."
      Memoes? Is that like Dan Quayle's "potatoe"?
       
      • Actually the potatoe was considered correct in the 19th century. Phonetically speaking the e following the o gives the o the long-o sound. PS
    • Re: (Score:2, Insightful)

      by J'raxis (248192)

      Considering that Northrop Grumman is a government defense contractor, their buyout could be to put a competitor, one that doesn't work for the government, out of business.

      • by jcr (53032) <jcr@NoSPaM.mac.com> on Saturday July 21, 2007 @06:57PM (#19941589) Journal
        That scenario is a silly fantasy, perpetuated by people who have no idea how to run a business. If you buy a competitor just to make it go away, you realize no benefit from the purchase. Grumman bought Scaled because they want Scaled's capabilities in their toolkit. Scaled was not in the business of building fighter jets for the Navy, or bidding against Grumman on massive defense contracts. Calling them a competitor at all is a bit of a stretch.

        -jcr

        • by kcbrown (7426) <slashdot@sysexperts.com> on Saturday July 21, 2007 @08:25PM (#19942107)

          That scenario is a silly fantasy, perpetuated by people who have no idea how to run a business. If you buy a competitor just to make it go away, you realize no benefit from the purchase.

          If you buy a competitor just to make it go away, then you remove some of the downward price pressure in the market and therefore make yourself more competitive in that market than you would be otherwise. The closer to a monopoly situation you can get, the more control you have over the market prices. And that is a very real benefit, because it means more profits for you.

          Whether the move ends up being worth it or not depends on how much you paid to remove the competitor versus how much money you can make as a result of the increased prices (or lack of decreased prices) you can charge afterwards. If a competitor looks to be on the verge of becoming very successful (and thus wielding a lot more market clout), then it's obviously better to buy them out earlier (before they get really successful) than afterwards because it's cheaper and it heads off the changes to market expectations that a successful, scrappy player can bring.

          No, I'm afraid the possibility that Grumman bought out Scaled Composites for this reason is very real. Scaled Composites is probably close to the point where they look like they can make a very real change to the expectations of the market, and that would put the traditional players like Grumman in a very bad position.

          Think of it as the equivalent of IBM buying Apple right before Apple made the mass-produced personal computer a reality. Doing so probably would have given IBM another few years, at least, of dominance of the computer market with their mainframes, but it would have taken a lot of insight and foresight on the part of IBM to know to make that move. That said, it was a lot cheaper to become a successful small computer manufacturer back then (Apple got started in a garage, and started shipping product while still in the garage phase) than it is to become a successful aerospace company today, so the buyout strategy would be more expensive for the big players in the case of computers because there would be more targets they'd have to buy out.

          • Re: (Score:3, Insightful)

            by Pseudonym (62607)

            Scaled Composites is probably close to the point where they look like they can make a very real change to the expectations of the market [...]

            The simpler explanation (thank you Occam) is that Scaled Composites has created a completely new market out of thin air, and Northrop wants a bigger piece of the action.

            • Re: (Score:3, Insightful)

              by jacks0n (112153)
              E.F. Northrup wrote a science fiction book about a private venture going to the moon- complete with a serious technical appendix- back in 1936, entitled "Zero to Eighty" under the amusing pseudonym "Akkad Pseudoman". It is a bizarre fake autobiographical novel, and well worth reading, if you can find it.

              Maybe it is offtopic and irrelevant, but in a thread about his company looking to get into the private space industry, responding to a user with the name "pseudonym"; well I couldn't resist.
          • by Anonymous Coward on Saturday July 21, 2007 @08:43PM (#19942215)
            Scaled doesn't and has never manufactured Air/Space (mostly Air) Crafts on a mass scale.
            They would build prototypes based on requests that they would receive.

            Grumman is buying a design firm which they themselves have used in the past.
          • Re: (Score:2, Insightful)

            by PopeJP3 (714468)
            Except for the fact that Northrop had no space business to speak of until they bought TRW a couple of years ago exactly for that reason. And that was for satellites. The others are right. It is a new market and Northrop wants a big piece of it. This is made more obvious by the fact that they had a 40 percent stake in the company originally.
          • by jcr (53032)
            I'm afraid the possibility that Grumman bought out Scaled Composites for this reason is very real.

            Perhaps you should seek professional help to deal with your unfounded fears.

            -jcr

        • Re: (Score:2, Interesting)

          by Sperbels (1008585)
          Give me a break. Scaled Composites wasn't a competitor. They've just been squashed by the military industrial complex. I expect we'll see very little from them now.
        • by darkwhite (139802)

          If you buy a competitor just to make it go away, you realize no benefit from the purchase.

          What?

          You can realize a huge benefit from buying out a competitor, especially in an industry which bids on government contracts, by decreasing competitive pressure and allowing you to raise bid prices. Please explain your idea, because to me you just sound stupid.

          As for this deal, Northrop had already owned half of Scaled, and they were doing extensive UAV work. Had they stopped their cooperation, Scaled could very much be in the business of bidding against Northrop on massive UAV contracts, and undercuttin

        • Re: (Score:3, Interesting)

          by J'raxis (248192)

          They're not a competitor to Northrop Grumman directly; they're a competitor to the government monopoly on space travel, however small. They're showing that an alternative to such is viable. And as I was saying, Northrop Grumman and the other big defense contractors might as well be considered an arm of the government, except perhaps on paper.

          As for benefit? Uncle Sam says something like, "Buy out Scaled Composites, and we'll make sure such-and-such tax break goes through, and we'll buy an extra dozen hel

          • Re: (Score:3, Interesting)

            by Kadin2048 (468275) *
            Huh? I know conspiracy theories are popular here on Slashdot, but this is getting out of hand.

            Here's a scenario that doesn't require the application of a tinfoil hat: NG took a look at NASA, and the aging Shuttle fleet, and realized that in the very near future, the U.S. space program is going to be out a launch vehicle. And because of certain other priorities that have gotten pushed to the forefront recently, NASA seems like they're pretty much out of the reusable-launch-vehicle business for the time being
  • by Zebra_X (13249) on Saturday July 21, 2007 @06:00PM (#19941205)
    While this is probably great for Scaled from a cash perspective - it is truly saddening for the space industry. Scaled has been for nearly the last decade pushing into areas where private firms have not been able to go in the past. They innovated and created a workable solution for "mass" sub orbital flights. Ultimately the next steps are going to be push to LEO - and beyond. I fear however that the innovation and creative problem solving that has defined Scaled to date is no longer going to continue. Despite the company's best wishes - they will no longer have the ability to take the risks and make the decisions necessary to continue innovating.

    We will most likley see Scaled develop into a robust provider for Sub Orbital flights but I doubt that they will attempt to push further.
    • by TobiasS (967473)
      On the other hand it is a huge validation for the remaining private firms and money will keep pouring (probably even more than before this acquisition) into the sector.
    • by cyclone96 (129449) on Saturday July 21, 2007 @06:40PM (#19941467)
      I fear however that the innovation and creative problem solving that has defined Scaled to date is no longer going to continue.

      I'm not sure it's quite as bad as you fear, it's possible that Northrup-Grumman will continue in that tradition.

      The challenge with these very small, innovative space companies is that their model (which is a small group of really smart guys working very hard without a lot of support overhead) can only scale up so far. At some point the products they are creating get complex enough where you hit critical mass and start needing groups to specialize in things like analysis, integration, customer support, systems integration, etc.

      This is what large aerospace companies are good at. You might call this a bloated support structure, but it's the only way that the industry has found to develop really big, complex, and profitable aircraft and spacecraft (which is what a passenger ship to LEO would be). They haven't yet found a way to build a high complexity, profitable product like a Boeing 777 airliner or a Boeing 702 satellite with a small shop.

      Orbital Sciences, for example, has evolved from a small company with a few neat ideas back in the 80's (in particular, the air launched Pegasus) into a major player in the aerospace world, and it is structured like Boeing, Northrup, and LockMart today.

      I consider this a positive evolution of the great ideas Scaled Composites has demonstrated into something that can be built and be a commercial success.
    • Scaled has been for nearly the last decade pushing into areas where private firms have not been able to go in the past.
      Perhaps that is part of why they were bought out by the military. Maybe private firms are not welcome in the space industry. I'm not making accusations, but examining likely possiblities. If 50 years from now a private firm wanted to start it's own space station or extraterrestrial colony whose jurisdiction would it fall under? The whole worlds population is under one government or anoth
      • by jcr (53032)
        Perhaps that is part of why they were bought out by the military

        They weren't bought out by the military. They were bought by a larger private company. If you want to own Scaled Composites yourself, then raise a mid-sized private equity fund and buy them out. They're only worth about $27 billion, which is about what Apple gained in market capitalization over the last couple of months.

        -jcr

        • Northrop Grumman isn't technically a branch of the military, but they will do exactly as they are told by the high ranking brass or the right senator. When 97% of your business comes from one customer, and that customer is the US Military, you are a part of the US Military. I grew up close to the Newport News Shipyard, owned by Northrop Grumman. There were mostly civilians working there, but they worked closely with Navy personnelle, and it was the Navy that gave the orders. Why were Navy officers calling t
    • by jcr (53032)
      it is truly saddening for the space industry

      Nonsense. Scaled now gets access to the resources of a far larger company, which increases the scope of the projects they can attempt.

      -jcr

    • Well, Scaled specialized in suborbital, and suborbital is a bit of a dead end without any clear relationship to orbital flight. Suborbital is all about launching as straight up as possible, and achieving maximum altitude with minimum expenditure of energy. You don't particularly care how fast you're going, so long as you reach your altitude.

      But getting to orbit is defined by achieving orbital velocity, not any particular altitude. (You can achieve orbital velocity at ground level if you want to, if you h
    • Re: (Score:2, Insightful)

      by onion_joe (625886)
      I tend to agree with several other posters in that this is potentially not nearly as bad as feared. We are not talking Microsoft here :-)

      Perhaps the best example I can cite is the Lockheed (now Lockheed-Martin) Skunkworks http://en.wikipedia.org/wiki/Skunkworks [wikipedia.org]. In short, Skunkworks was essentially as company within a company, with its own budget and most importantly, corporate mentality.

      If The Management at NG do not recognize the value of this type of organizational structure within their advanced r

    • Spacedev is still out there. They first came to my attention a few months ago when they agreed to house Bussard's electrostatic fusion experimental rig. No idea if they still have it, but it's an interesting little space company in the same general niche that SC is/was
    • by wikinerd (809585)

      it is truly saddening for the space industry

      I think Northrop Grumman, albeit a large company, still has the creativity to innovate and seek interesting solutions to engineering problems. I also think that the flying wing concept has not received the attention it deserves. I find the marriage between Scaled and Northrop an interesting development which may be good or bad, but we don't know that yet. We have to wait to see how Northrop is going to utilise Scaled within its family of engineers, and how much contact there is going to be between Nort

      • by Moofie (22272)
        What attention does a concept "deserve"?

        The flying wing concept is indeed interesting, but it's not without major challenges (particularly in the realm of flight control). Now, it's a well-understood problem to design control laws for "unorthodox" aircraft, and the flying wing design is indeed a good fit for some missions.

        But a concept "deserves" only the attention that it garners due to its performance. It's not just a matter of being pretty. Sure, a well-designed aircraft is usually aesthetically plea
  • by b0s0z0ku (752509) on Saturday July 21, 2007 @06:02PM (#19941219)
    I suspect that Scaled will become less innovative under the management of a large, established company, unfortunately. Them with the money calls the shots :(


    Best of luck to Rutan with establishing another aero company if he wants to...


    -b.

    • by iminplaya (723125)
      There goes innovation...

      Here comes a great movie [youtube.com]
    • Ya, because Northrop/Grumman *NEVER* innovated anything - only the FCS for the Apache gunship, AEGIS missile defense system, experimental 747-ABL laser missile defense system, or the B-2 Spirit nuclear bomber. Or what about the Nimitz class carriers?

      And that's just the 2 listed on Wikipedia's article on "northrop grumman" - the other 3 are only a few that caught my eye on the first page (A) of _how_many_ products they make or are researching?

      IMHO, Rutan entrusted his company to the right people - and
    • ... I don't know his motives, exactly, but I'm sure his age factors into it.
  • Great, but... (Score:4, Insightful)

    by qazsedcft (911254) on Saturday July 21, 2007 @06:06PM (#19941241)
    I applaud attempts to create a tourism of space, but so far there is nothing especially interesting in the presented solutions. They are just building smaller and cheaper rockets. These "space ships" don't even achieve stable orbits. They're basically only throwing a large object high enough that it needs a few minutes to fall back. So besides the nice view and the temporary weightlessness (which can be achieved by an airplane), there's nothing special about it.

    What I would like to see is some truly innovative solutions. Things that bring us closer to a conquest of space. Contests such as the X Prize should focus on that instead of giving money away for stuff that's been done 50 years ago.
    • by FleaPlus (6935)
      I applaud attempts to create a tourism of space, but so far there is nothing especially interesting in the presented solutions. They are just building smaller and cheaper rockets. These "space ships" don't even achieve stable orbits.

      http://en.wikipedia.org/wiki/SpaceX#Future_develop ment [wikipedia.org]

      http://en.wikipedia.org/wiki/Bigelow_Aerospace [wikipedia.org]

      What I would like to see is some truly innovative solutions.

      Innovation isn't necessarily the issue. The science of rocketry is now fairly well-understood, but up until companies
  • love the names (Score:1, Offtopic)

    by xSauronx (608805)
    the lack of creativity is astounding.
  • The Slashdot story needs translation. Probably something like this, in my opinion:

    "Northrop Grumman Corporation top managers decided they were bored with their regular business. They decided to buy a business they can talk about at parties. Of course, they have nothing creative to contribute. They are contributing only money. So, they will degrade Burt Rutan's Scaled Composites with their company politics, their need to be seen as important, and their general disinterest in doing the real work."
  • Given that he is a bit of a free-thinker and visionary, it will be interesting to see whether he can succeed in the world of a large defense contractor who is more concerned with profit over innovation. Once the bean-counters arrive, Scaled Composites is going to be a much different place.

    In any case, keep at it, Burt.

    • by Zibblsnrt (125875)
      If he's not "promoted" to Global Visionary and shuffled into a basement office somewhere in the next year or three, I'll be astonished.
  • Seems like a consolidation also in the manufacturing business. Not a good thing. In the last few years, the focus definitely has not been on anti trust issues:
    • Graphic software: Adobe, is now practically a monopoly. Prizes have become insane since.
    • Media consolidation: Murdoch owns 175 newspapers. Big media are now allowed to become even bigger. Wall street journal is next.
    • Chips: down to 2: Intel and AMD. If AMD would drop the towel, there would be a monopoly. Prizes are still reason
    • Re: (Score:2, Funny)

      by deimtee (762122)
      prizes

      You keep using that word. I do not think it means what you think it means.
      • by calethix (537786)
        shoot. and here I thought Adobe was going to give out little cheap plastic toys with Photoshop to encourage all the pirates to buy a legitimate copy.

        On a side note, I used to use Painter a lot several years ago and was surprised to see it's still around.
  • Rutan has done a lot of work for Northrop before, he built scaled RCS models of the B2 bomber, for example.

    Given that is *highly* classified work there must have been close ties, and high levels of trust involved between both parties for some time. This could be good news, to open up space proper the bigger aerospace companies need to get in on the act - just hope they don't stifle Rutan's creativity in the process.

  • That's a shame. (Score:2, Informative)

    by Anonymous Coward
    I work for one of the other mega-aerospace companies, and it's a wonder that anything we build ever flies after it's been through the cogs of the bureaucracy (to say nothing of the added blanket of the government customer). It's a shame that an outfit as innovative and down to earth (if you'll forgive the analogy) as Scaled Composites will inevitably be larded down with all the little empires and big nonsense of aero-bureaucracy.
    • I agree to a large extent, except that Grumman Northrop already owned 40%, and of all remaining big military contractors, N/G has always been the most creative in design. Maybe with Rutan "owned" by them, we'll finally get some decent new designs for military, commercial, and maybe even G/A aircraft. Who knows?
    • by dbrutus (71639)
      The big guys keep buying up the small companies in just about every field and very smart people keep making small companies worth buying. Scaled Composites didn't win by much and the big guys don't have enough money to buy out all the small companies. At a certain point, somebody's going to figure out how to stay independent and consistently win against the entrenched incumbents and they simply won't sell, taking the bigger payments that staying independent will provide.

      That's neither here nor there, we sti
  • Possibilities like, Space Ship 3 is stealthy and doesn't carry passengers... I think my NOC stock just went up.

    Cheers,
    Dave
  • Scaled composites (Score:3, Insightful)

    by waterdude (1131293) on Saturday July 21, 2007 @08:20PM (#19942047)
    Having worked at Scaled Composites in Montrose, CO I must say that the writing is probably on the wall for the Mojave Company. You probably haven't heard of a Montrose branch. That's because after having trouble with our bottom line being in cahoots with Burt Rutan we found a large company to buy us out and when our bottom line failed to improve we were bought out by another larger company. When the bottom line failed to satisfy the larger company we closed our doors and a fine r&d company with a lot of talented engineers and fabricators ceased to exist. Burt Rutan and many other people including some of our engineers are cutting edge innovators and people like them are the reason our country is so great but they are finding it harder and harder to develop new technologies and to be inventive because the big money companies that now own almost everything squeeze them out of their budgets. I think the solution is for the small companies to resist selling out to large corporations and continue their cutting edge work while taking on enough boring jobs to keep their bills and workforce paid. Too often today, companies are formed with the idea that if they show promise and profitability, they can sell out for a profit. I hope that Burt Rutan can continue to do what he does best and I'm fairly confident that, given his drive, talent, and inteligence he'll do whatever he needs to go on innovating and exploring new things.
  • They might as well have been purchased by the US Government. I guess we'll never see private space flight.
  • You hear a lot about Lockheed Martin's "Skunk Works", but Northrop Grumman keeps a lower profile in the "Crazy Ideas That Just Might Work" department. Perhaps they're looking to change that.
    • by mikelieman (35628)
      Quick question:

      What was the last REALLY GOOD product Northrop Grumman came up with?

      • by Moofie (22272)
        The YF-23? B-2 Spirit? F-14 Tomcat? Innumerable rugged, powerful combat aircraft back to at least 1937? The LEM?

        Is this a trick question?
  • Alright! (Score:1, Funny)

    by Anonymous Coward
    YAY! My Employer bought them!

    Now to get a transfer!!!
  • proof of concepts (Score:1, Informative)

    by Anonymous Coward
    Rutan is a great "proof of concept" guy, but given personal experiences with some of his products, he really does need to hand off development of finished systems to someone else. Not to say northrop is the answer, just that doing your drawings on the back of a cocktail napkin only gets you so far.. even 80% of the way, but that last 20% has to have a lot more rigor.
    • by Moofie (22272)
      Do you have even a vague idea of how many aircraft Rutan has built, not just designed? There's not a more prolific aircraft designer on Earth.
  • by fahrbot-bot (874524) on Saturday July 21, 2007 @10:48PM (#19942829)
    Didn't Lockheed win the contract to build the Space Shuttle replacement vehicle? If so, this could be Northrop's bid to compete by pursuing the commercial sector...
  • Kind of a bummer (Score:2, Informative)

    by rastoboy29 (807168)
    I know Mr. Rutan deserves whatever he gets, but still it's a bummer to me. I had kindof liked the idea of young whippersnapper companies being the ones to crack open mass market space travel.

    Still, it was probably inevitable, and I certainly still wish them all the best luck possible.

  • Selling out.... (Score:3, Insightful)

    by borgheron (172546) on Sunday July 22, 2007 @12:23AM (#19943237) Homepage Journal
    So, basically, what you're saying is that a new, fresh company sold out to and older behemoth. Does this mean the end of new, fresh ideas from Burt Rutan?

    GJC
    • Rutan is well along in years. He was born in 43, that makes him ... 64? Retirement, baby.
      • by borgheron (172546)
        64 is young. ;) I just guess I hate the idea of Scaled Composites now belonging to one of the largest, most evil, expensive, good-ole-boy, overcharging, never invented anything really new companies.

        It's like seeing Bill Gates pay an open source project to get the rights to the code. Depressing.

        GJC
  • Everyone who is worried that NG will have some sweeping new influence at Scaled needs to read more carefully.

    Northrop Grumman Corporation agreed on July 5 to increase its stake ... from 40 percent to 100 percent
    They already owned 40%, which in any company would give them a loud voice at Board of Directors meetings.
  • Anyone else thinking Scaled Composites is now fuxx0red?
  • Scaled Composites has been a wholly-owned entity of larger companies in the past: it was Beechcraft around the time Scaled was working on the Starship prototype, and Wyman-Gordon soon thereafter. The prototype output from the shop has been pretty consistent throughout the history of the company, so I highly doubt there'll be much change there. Both NG and Scaled have supposedly said as much in their announcements of the deal.

    Northrop Grumman has been heavily involved in the Proteus program for several yea

  • .... Unless your definiton of 'cheap spaceflight' is limited to suborbital flight.

    One of the few companies likely to have the knowledge and balls to make cheap space flight possible is now owned by a company that has a real bottom-line incentive to keep spaceflight from getting too cheap.

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