Northrop Grumman to own Scaled Composites

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.'"

This is unfortunate

[Zebra_X]

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.

There goes innovation...

[b0s0z0ku]

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.

Great, but...

[qazsedcft]

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.

Re:surprise, space is a business.

[J'raxis]

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.

Translation: The beginning of the end for Scaled C

[Futurepower(R)]

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."

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Comment removed based on user account deletion

Re:This is unfortunate

[onion_joe]

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 research division, well, let both Burt Rutan and NG collapse.

I hardly think Rutan was in this venture to make money. And now he's got the resources to make everyday space travel a reality.

Hats off to you, good sir.

Scaled composites

[waterdude]

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.

Re:surprise, space is a business.

[kcbrown]

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:surprise, space is a business.

[Pseudonym]

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:surprise, space is a business.

[Anonymous Coward]

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:surprise, space is a business.

[PopeJP3]

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.

Re:Translation: The beginning of the end for Scale

[swordgeek]

Ah yes, because nothing improves news more than pointless conjecture and outright fiction.

Selling out....

[borgheron]

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

Re:surprise, space is a business.

[jacks0n]

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.