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Companies Skeptical of Commercial Space Market 192

Posted by Soulskill
from the come-on-it's-not-rocket-sci-oh-wait dept.
Hugh Pickens writes "The NY Times reports that Boeing and Lockheed Martin will happily sell rockets to carry astronauts into space, but are leery about taking a leading role in President Obama's vision for a revamped NASA that relies on commercial companies to provide taxi transportation to the ISS. 'I don't think there is a business case for us,' says Lockheed Martin's John Karas about space taxis. Both Boeing and Lockheed were stung during the last burst of optimism for the commercial space business about a decade ago. They invested several billion dollars — Lockheed to develop its Atlas V, Boeing for the Delta IV — in the hopes that the huge market for commercial satellites would supplement their traditional business of launching American military spy satellites. The market did not materialize, and what business there was went to European and Russian rockets that were cheaper. The hoped-for commercial market for space taxis hinges on one small company, Bigelow Aerospace, which is developing inflatable space habitats that it hopes to market as research facilities to companies and foreign nations looking to establish a space program."
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Companies Skeptical of Commercial Space Market

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  • riiiight (Score:5, Insightful)

    by jollyreaper (513215) on Monday April 12, 2010 @04:02PM (#31822548)

    Wait a second. They're saying there's no market and then they're saying cheaper competitors are snapping up all the business? Fellas, I think the invisible hand of the market is flipping you off.

  • by Anonymous Coward on Monday April 12, 2010 @04:05PM (#31822576)

    The government is clueless about business, just as they always have been.

    Working for a non-profit and organizing 4000 people who aren't paid isn't much of a background to understand how commercial, for-profit, companies must work to make shareholders happy.

  • What, the giant government contractor doesn't want to compete? What a surprise. I guess without making things overly expensive, budget overruns and miles of red tape they just can't get enough money from the public trough.

    I see this as a complete vindication of this plan. IMHO, Lockheed Martin and companies like them are some of the worst crooks our government (and by extension, all of us) does business with. There's no crook like the one that does it legally.

  • by RichMan (8097) on Monday April 12, 2010 @04:20PM (#31822782)

    Cash up front is the only way to get corporations to commit to this. The government is too likely to pull a "that costs to much" about turn and leave the company holding the debt.
    --
    I don't see private companies betting big on long term government contracts. The commitment is just to large and the sleazy government turnarounds just to likely.

    Imagine being a company and investing $20B and 10 years of real effort into something expecting a big payout of years of ferrying astronauts into space. Then someone else gets elected and NASA changes it plans. Kiss your $20B good bye.

    See Northrop F20/F5G. It even had a politically correct name.
    ---
    Much of the F-20's development was carried out as part of a U.S. Department of Defense (DoD) project called "FX", which intended to sell less-advanced fighter designs to U.S. allies to limit the possibility of front-line U.S. technology falling into Soviet hands. FX developed out of a general re-working of U.S. military export policy started under the Carter administration in 1977. Although Northrop had high hopes for the F-20 in the international market, changes in policy following Ronald Reagan's election left the F-20 competing for sales with front line fighters like the F-16. The development program was eventually abandoned in 1986 after three prototypes had been built and a fourth partially completed.[1]
    --
    (congressional hearing!!)
    Thomas V. Jones, Northrop's CEO, stated that there was little point in having companies develop aircraft on their own if they were utterly reliant on the government to sell them. He suggested that the entire FX concept be dropped, and Northrop be allowed to sell the F-20 on the market like any other vendor.[41]
    ---

  • by rsgeek (1788532) on Monday April 12, 2010 @04:23PM (#31822824)

    This makes sense, though, from a business perspective. NASA isn't exactly a "reliable" customer, so if they want a new capability and won't guarantee future use of it, why shouldn't NASA be the one to pay for it?

    Tell you what... Go to a car dealer, tell them you want a custom model built to your exact specifications from scratch and that you won't pay a dime until it's delivered. Tell me how far you get with that...

  • by h4rr4r (612664) on Monday April 12, 2010 @04:24PM (#31822834)

    This has nothing to do with that. It is just Lockheed belly-aching that they do not want to give up their sweet cost plus deals. The solution to this is to buy this service from Spac-X or another competitor.

  • Re:How to tell (Score:3, Insightful)

    by georgewilliamherbert (211790) on Monday April 12, 2010 @04:26PM (#31822858)

    To some extent this is true - SpaceX has spent about 2x what they thought they would to a given point in their development program, though they're still liquid and moving forwards at good pace. A number of startups have spent tens of millions of dollars and not flown.

    However - Two startup companies and an independent team combined spent 1/10 of the cost of the DOD / NASA DC-X / DC-XA program to fly in the X-Prize Lunar Lander cup competition, which was a comparable technical challenge and vehicle performance specification. And DC-X was widely hailed for having come in at 1/5 of the price that competitors (Of McDonnell Douglas, who actually built and flew it for DOD) said it would cost.

    There were teams at large companies that were asked to quote an equivalent vehicle to Burt Rutan / Scaled Composites' SpaceShip One, and came up with numbers 8-15 times larger than it took Burt to build and fly and win the main X-prize.

    Perhaps the large companies don't know how easy it can be. Evidence is that some startups are succeeding reliably, and by comparison extremely cheaply, albeit slowly. There's a lesson there, too.

  • by Wyatt Earp (1029) on Monday April 12, 2010 @04:32PM (#31822916)

    DirectTV seems to make money in space.

  • by Nyeerrmm (940927) on Monday April 12, 2010 @04:49PM (#31823136)

    Since the proposed FY2011 NASA budget has about $6B allocated for helping fund the development of these new vehicles.... it sounds like they're going to get exactly what they're asking for. I'm not sure I see what the problem is.

    They just have to compete for the money like everyone else (their experience should help there,) and they'll need to be more careful with their budget, since the whole idea is to eliminate the cost-plus contracts that allows them to lowball their estimate and ask for more money later.

  • by TooMuchToDo (882796) on Monday April 12, 2010 @04:49PM (#31823150)

    Then the government might as well do it all in house so that no profit has to be made and given to shareholders. No point in wasting tax money to make some investor rich.

    Have you ever seen how the government works "in house" on projects? I've seen the DOE flush tens of millions down the drain that a private company would've spent *much* more efficiently. No, the government is best to let a commercial venture handle things, just not cost plus.

  • by ThreeE (786934) on Monday April 12, 2010 @04:54PM (#31823214)

    Your original post seemed to indicate that the government has a zero cost of capital -- which is what profit pays for in private businesses. This is simply not true. The US Governments either has to print money, borrow it, or confiscate it from citizens. If they print it, the cost is paid via by devaluing our dollars. If they borrow it, we eventually pay interest. If they confiscate it, we pay for it directly. This is no different than paying the contractor profit. Profit is not evil.

    Your second post changes the subject. Now you suggest a different type of contracting approach -- from cost plus to fixed fee. True, this is a different incentive, but the contractor is still making a profit. Good contractors will charge more for a fixed fee vs. cost plus contract due to the higher risk -- all other factors being equal.

    The bottom line is that the government is a terribly inefficient way to do anything. They simply have no motivation to provide value -- it is always someone else's money.

  • Mars (Score:2, Insightful)

    by charliemopps11 (1606697) on Monday April 12, 2010 @05:00PM (#31823282)
    How much is Mars worth? Because that's what we're giving up. We are literally a couple of decades away from being able to put people on Mars. By giving up now, which is exactly what we are doing, we are basically giving the entire planet to whichever government decides it's worth the investment. And we all know that governments going to be China. Yea, there's a space treaty... but we all know whomever gets their first gets to decide the rules ahead of time for everyone else. Space exploration isn't profitable yet, and isn't going to be for a long time. That doesn't mean we shouldn't do it.
  • Re:How to tell (Score:4, Insightful)

    by causality (777677) on Monday April 12, 2010 @05:06PM (#31823362)

    To some extent this is true - SpaceX has spent about 2x what they thought they would to a given point in their development program, though they're still liquid and moving forwards at good pace. A number of startups have spent tens of millions of dollars and not flown.

    You'd think that after having this consistently happen over and over and over again, maybe they'd revise the way they perform cost estimates? Y'know, so as not to be surprised by these things. It's like making the same mistake time after time and never learning. When an individual repeatedly does this, don't they call it a learning disability?

  • by lennier (44736) on Monday April 12, 2010 @05:15PM (#31823504) Homepage

    As far as I can see there are a very few actual uses for space:

    1. Satellite communications
    2. Military
    3. Tourism
    4. SCIENCE! (let's count the number of planets around stars that we will never be able to get to because of relativity! like angels and pinheads except we can fit curves to it)

    and of those four, military and SCIENCE! are basically big money pits which achieve nothing but international prestige (and ICBMs actively endanger all life on earth), tourism is a brief entertainment for the idle rich, and satellite data communications is the only thing which actually contributes to the health and wellbeing of Earth. So yay one out of four, I guess.

    Haven't we basically 'done the space thing' by now? Moonbases didn't work out, we're practically speaking not going to colonise Mars let alone Jupiter because of the radiation problems, so... ... why DO we need manned lifters? There's nothing out there to send people to, and even if we send people to nowhere there still won't be anything for them to send back.

    What's the big point of the Space Future, again? If we had warp drive or canals on Mars it would be different, but in our universe....?

  • Re:riiiight (Score:2, Insightful)

    by OeLeWaPpErKe (412765) on Monday April 12, 2010 @05:19PM (#31823560) Homepage

    Reliable ? You cannot seriously be referring to the Soviet space program [wikipedia.org].

    Well, it was reliable in that they hardly ever failed to have huge accidents. Nor did they ever fail to deny this with propaganda. It helps if your launch site does not have any reporter within a 1000 km radius if you want to coverup fuckups.

    I know this is very anti-postmodern but just because you don't see or don't know about something, doesn't mean it's not real. You'd think the fact that rain makes you wet at night would stop this sort of nonsense, but these are academics we're talking about.

  • Re:riiiight (Score:3, Insightful)

    by cheesybagel (670288) on Monday April 12, 2010 @05:38PM (#31823844)
    It's reliable now after a painstaking debugging process of many decades. Practice makes perfect you know.
  • by timeOday (582209) on Monday April 12, 2010 @05:41PM (#31823874)

    Just curious, why does the Tea Party movement catch so much flak?

    They're modern hippies... purely an opposition party with no realistic plan of their own, hoping to fix everything simply by tearing down solutions that have been developed (with good reason) over hundreds of years. It's a style of wishful thinking where flawed solutions to problems (such as social programs) are conveniently seen as the source of the problems themselves, giving the false impression of easy solutions.

    The end of the Tea Party is when/if they actually get somebody elected and have to start making hard, divisive decisions.

  • by Chris Burke (6130) on Monday April 12, 2010 @06:02PM (#31824148) Homepage

    Ever watch old kung-fu movies? I find it fascinating the way mortal enemies still have a genuine respect for one another. Each sees that his opponent is skillful and formidable and honors this.

    I find it really, really hard to respect the movement when I see town hall meetings stuffed full of elderly people on Medicare screaming about how they'd rather die than have the government provide their healthcare. When the representatives who are actually on their side of the issue end up having to try to correct the audience's misbegotten notions, and fail. Does that count as a good reason not to like them, that their arguments are so bad that even their allies that have a clue end up basically arguing against them?

    I'm not saying it's right. Certainly they deserve basic human dignity and I don't wish any ill on anyone. But respect is just hard for me to come by, I'm sorry. The kung-fu fighters respect each other because they see true skill. Deep and enduring respect for a mule's hard-headedness just doesn't fit that mold to me.

    Some armed conflicts in real life have been this way; I believe WWI was the last. There used to be the notion that if you lose your honor by engaging in those low-road practices, then the conflict has cost you quite a bit more than even the casualties sustained.

    Yeah, that's because they discovered that razor wire, artillery, and machine guns were more effective at stopping the enemy than disrespect. Assuming of course you don't think it's disrespectful to bomb the enemy's trenches with mustard gas. The only time "honor" like you're describing was important in warfare was when a Lord's honor was literally more important than the lives of the conscripts they sacrificed, but then again so was the Lord's trousers.

    Oh and on a more comparable level, the propaganda from back then was ridiculously insulting [wordpress.com] to the enemy. This idea of mutual respect is one I think mostly exists in nostalgia-land.

  • by Chris Burke (6130) on Monday April 12, 2010 @06:13PM (#31824306) Homepage

    Since the proposed FY2011 NASA budget has about $6B allocated for helping fund the development of these new vehicles.... it sounds like they're going to get exactly what they're asking for. I'm not sure I see what the problem is.

    I believe it may be tied to a new way of going about procurement that I heard NASA was planning, though I'm not sure if that's actually part of the new budget but if it was it would explain their concern. Basically, NASA would be only paying for results, like you provide a working rocket capable of lifting X lbs, they give you a contract for $BIGNUM. As opposed to now where they provide you with $PRETTYBIGNUM for claiming to be able to deliver the most for the least, only then five years later they say that wasn't enough and they now need $HUGENUM to finish it, and gee you wouldn't want to have wasted $PRETTYBIGNUM and have nothing to show for it, would you?

    I'm sure there's still up-front money to be handed out for the R&D and such, but the point is, it's a complete up-ending of all the defense contractors' business models.

  • Re:It's the size (Score:3, Insightful)

    by CRCulver (715279) <crculver@christopherculver.com> on Monday April 12, 2010 @06:25PM (#31824474) Homepage

    The larger governments get, the more inefficient and corrupt they get. It just happens.

    The European Union has a population larger than the United States and yet it manages just fine. Not all members have the same welfare state as the Nordic countries, but all do have more social programs than the US.

    They are against so called health care reform because they recognize it for what it is, a bailout for dinosaur insurance companies

    Tea Party opposition to health care reform began long before the bill took its final form as a mandate for Americans to purchase health insurance from private companies. Indeed, much Tea Party debate sounds as if they still believe a public option was part of the deal.

    As for the US supposedly unable to afford a welfare state, the institution of the welfare state actually boosted the economies of a number of countries. A more educated, more content and healthier citizenry is simply more productive.

  • by QJimbo (779370) on Monday April 12, 2010 @06:49PM (#31824840)

    Welfare states can go pearshaped. Look at the UK. Due to a large proportion of the population living on welfare, taxes have skyrocketed, working ambition has been destroyed for a lot of people, and an underclass has been created. Extend the softtouchedness to immigration and you add in overstretched inadequate public services.

    I can understand americans being fearful of a welfare state having witnessed how ugly they can become if done incorrectly.

  • Re:riiiight (Score:5, Insightful)

    by blankinthefill (665181) <blachanc@gmail.STRAWcom minus berry> on Monday April 12, 2010 @07:19PM (#31825170) Journal
    Great story, and a perfect example of how established business has a very hard time expanding. They grow to fill their niche, and moving outside that niche is a huge risk. Most of these companies are publicly owned, and taking a risk that may fail, or not pay off for many years, could lose them their jobs very easily. Because of this, established companies almost never take real risks. It's left up to the small, crazy passionate garage shops to start the revolution. To be frank, I feel like this is good, since it leads to real innovation, that the big companies would be too scared to take on (although the argument could be made that most big companies would never start such a project in the first place, making it a non-issue). There ARE big companies that manage to innovate and spread into other fields... but they are few and far between. Hell, probably the greatest innovator of the century, Xerox, never actually spread beyond their core business, despite the potential for huge profits, because they felt it was too big a risk. What a lot of these companies and shareholders don't really understand is that the adage 'you have to spend money to make money' is 100% true. Sometimes you'll fail, but if you're smart about how you go about things, the payoff for those initial investments is incalculable.
  • by demachina (71715) on Monday April 12, 2010 @08:59PM (#31826088)

    "As far as I can see ..."

    Well you apparently can't see well.

    There is also:

    - Power generation, solar beamed to earth via microwave
    - Power generation using He-3 for fusion mined from the moon though this is pretty speculative
    - Asteroid mining when the earth eventually runs out of minable mineral deposits which is eventually will unless we become a lot better at recycling.
    - Zero G manufacturing [panix.com] (protein crystals is the best proved though there are other possibilities)
    - Satellites are used for a lot more than communication including GPS, weather forecasting, climate monitoring, ozone layer monitoring, earth resource monitoring and location.
    - Colonization especially if we manage to crash the earth one way or another, If we dont contain population growth this is a near certainty,

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