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Companies Skeptical of Commercial Space Market 192

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 @05:02PM (#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.

    • Re:riiiight (Score:5, Interesting)

      by Knara ( 9377 ) on Monday April 12, 2010 @05:09PM (#31822632)

      Is sort of what I got from it, too.

      I suspect that "there isn't a business case" really means "we liked it better when we had a guaranteed customer who would pay us whatever we and our one main competitor decided was the going rate for a launch vehicle. Please don't make us actually innovate and compete."

      • Re:riiiight (Score:5, Interesting)

        by sillybilly ( 668960 ) on Monday April 12, 2010 @06:41PM (#31823890)
        There really isn't a free market business case for it. People go to space simply to make living under unlivable conditions a status quo. If you can live in the vacuum of free space only on sunshine, fully recycling all the excrements into reusable things, you can almost make it no matter what. Living in space is a safety thing for life from Earth against a global catastrophy, such as an asteroid hit, anoter world war, nuclear holocaust, etc. You never know. There is really no free market for safety and security, unless the unthinkable happens, and then comes the should have, would have, but didn't. Maybe next time. If there is always a next time. Next time I'm not gonna keep all my eggs in the same basket. But going to space is not gonna solve a whole lot of issues, especially security issues, such as developing AI that is smarter than us, and hunts us. Space is no hiding place from stronger intelligence, should it be carnivore. But it does help some things.

        For instance, as a side benefit, in space recycling is mandatory. On Earth we may never put the resources to fully recycle, because there is no free market business case for it. It's always cheaper to litter your environment full of trash and forget about it than have to take care of it right now. Being in space would force us to immediately come up with full recycling techs, and improve them to the point where recycling almost make business sense down on Earth. Who's gonna put the resources into it down here?

        The only way space can make business sense is how Formula 1 makes business sense - as a show. But space is boring. It has to be boring to be professional. Formula 1 is boring to a lot of people. But it does get quite a bit of audience, to the point where it's profitable. Unfortunately the cost of a space show dwarfs the cost of Formula 1 in comparison. It's just simply too expensive to make business sense. Like the military, if it had to be free market supported, how much would you personally donate each month from your salary to support our troops? Or what would you pay for? The labor day air show?
        • Re:riiiight (Score:4, Informative)

          by Dr. Spork ( 142693 ) on Tuesday April 13, 2010 @02:03AM (#31827914)
          I don't think you understood this right. Obama is opening the position of taxi service to the ISS to the open market, but by this he doesn't mean the private sector. He means that the national government would pay for this service with tax money. They're declaring unambiguously that there will be a demand, and inviting private companies to satisfy it at market rates. But those two companies have much more lucrative things to work on, like SDI - where they get billions for making powerpoint presentations.
    • Re: (Score:3, Informative)

      by icsEater ( 1093717 )
      They're saying there is no market for investing in new expensive launch vehicles with all the quadruple redundancies and fail-safes imposed by the government. There's already a crop of old but reliable Soviet technology that does the same.
      • Re: (Score:3, Interesting)

        by cheesybagel ( 670288 )
        The only figures I saw there regarding expenses were $400 million and $1 billion. If you know the space R&D business you would know those costs are tiny. Just developing a new rocket engine, under incumbent methods, can easily cost more than that. The contract for the J-2X engine for Ares-I X alone was $1.2 billion.
      • Re: (Score:2, Insightful)

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

        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 s

        • Re: (Score:3, Insightful)

          by cheesybagel ( 670288 )
          It's reliable now after a painstaking debugging process of many decades. Practice makes perfect you know.
        • Re:riiiight (Score:5, Interesting)

          by sunspot42 ( 455706 ) on Monday April 12, 2010 @06:46PM (#31823962)

          Soyuz - which is the current Soviet manned space booster - hasn't had a fatal accident now in decades. It's old but very reliable. My guess is the big US aerospace firms can't really compete with it, at least not without sinking many billions into development costs and potentially having their own string of catastrophic failures to learn from (the way the Soviets did). They're probably also worried about demand for manned boosters going forward, and possible competition from the Russians, Europeans and - eventually - Chinese. Even if the US aerospace firms were successful in developing a manned booster, it might be difficult for them to ever recoup their development costs due to competition alone. They may feel there are better ways to spend their money, probably on defense-related programs where the margins are much higher and the competition less intense.

          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.

      • Yes, because European governments are well known for their light touch hands off safety regulations.
    • by LWATCDR ( 28044 )

      The military asked Boeing and Lockheed to develop a new launch vehicle to replace the shuttle and TitanIV.
      The told them that they could recover some of the cost by launching civilian sats. At the time there where export limitations on what you could launch from Russia.
      Those restrictions have bee lifted and now they must compete with Russia and the ESA.
      The debate as to who is more subsidized between Launch Alliance, Russia, and the ESA is one I sure don't want to get into but right now the US companies are n

      • Re: (Score:3, Informative)

        by cheesybagel ( 670288 )
        Actually they (and a lot of new corporations at the time) thought they were doing to launch dozens, nay hundreds, of commercial LEO constellation satellites at the time. Like, you know, Iridium. Well Iridium went bankrupt when their satellite phones couldn't compete with terrestrial cellphone networks. As for the GEO satellite market, intercontinental satellite phone calls mostly go through fiber optic submarine cables now. The remainder markets are niches in the middle of nowhere. Where there isn't a lot o
    • by vlm ( 69642 )

      So, when an American aerospace company realizes they can't compete with imports, they refuse to enter that market segment.

      When an American automotive company realizes they can't compete with imports, they double down, then get bailed out by the govt.

      I'm confused why the different reactions. Just random chance that it falls out this way?

      • by h4rr4r ( 612664 )

        GM should have been allowed to die.
        The money would have been put to better use doing any number of things including funding new automakers or not spending it at all. Their ex-employees seem to be capable at building Hondas so clearly management was the issue.

    • Re: (Score:3, Interesting)

      by REJ Messser ( 909724 )
      Before I left Boeing, a young enthusiast engineer and I had a meeting with the two senior Boeing engineers regarding what would become of the McDonnell Douglas DC-X prototype and data. In general they had disdain for what had been accomplished. They considered it a circus sideshow in technology terms. (There was also disdain for a technical "know nothing" Vice President having let two sci-fi writers talk him into finding funding and flying such a thing. Never mind that one of those writers was an accomplish
      • Re:riiiight (Score:5, Insightful)

        by blankinthefill ( 665181 ) <blachanc@gmail.cDALIom minus painter> on Monday April 12, 2010 @08:19PM (#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 confused one ( 671304 ) on Monday April 12, 2010 @05:10PM (#31822642)
    For those who don't RTFA: ULA said the cost to upgrade the basic Atlas V to meet manned spaceflight would be $400M. They also said that if you want to build a heavy lift Atlas or Delta to manned spaceflight spec it would cost between $1B and $2B. And they want NASA to pay all the cost, up front.
    • WTF. We were blasting people into space on the Atlas 50 years ago. I know the Atlas V is a different vehicle, but hell, the Atlas was a modified ICBM. How much does it cost to redesign the payload platform on the DIVH or Atlas V?

      • Re: (Score:3, Interesting)

        by cheesybagel ( 670288 )
        Very little. Basically its a software change, to modify the rocket trajectory, and launch pad modifications so astronauts can actually enter the capsule on top of the rocket. Of course this may change if NASA insists on putting a lot of red tape around it.
    • by rsgeek ( 1788532 ) on Monday April 12, 2010 @05:23PM (#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 )

        Except when the guy in the next state is already doing it cheap, why not buy from him?

        Why not save the taxpayers dollars and buy from the Russians or ESA?

    • by PolygamousRanchKid ( 1290638 ) on Monday April 12, 2010 @05:23PM (#31822826)

      They also said that if you want to build a heavy lift Atlas or Delta to manned spaceflight spec it would cost between $1B and $2B. And they want NASA to pay all the cost, up front.

      So they actually *know* that it will cost more like $10B, and will be able to squeeze the rest out of NASA as "cost overruns" on the initial contract bid.

      Who's calling Tony Soprano a gangster?

      "How much dat cost?"

      "How much ya got?"

      This is one of the "fine arts" or "black magic" of bidding on government tenders . . . finding out how much they really have to spend. Not just what they claim in public testimony.

      Both Boeing and Lockheed Martin understand and know how to make money in this business.

      They are not sure yet how they will make money in the commercial market. But if they figure it out, they will be back in it . . . real soon!

    • by Nyeerrmm ( 940927 ) on Monday April 12, 2010 @05:49PM (#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.

      • Re: (Score:3, Insightful)

        by Chris Burke ( 6130 )

        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

  • 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.

  • fish tanks (Score:3, Funny)

    by ruin20 ( 1242396 ) on Monday April 12, 2010 @05:19PM (#31822762)
    Bigelow Aerospace is likely out there to put the mile high club to shame. the owner cleans fish tanks as a second job.
  • by RichMan ( 8097 ) on Monday April 12, 2010 @05:20PM (#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 h4rr4r ( 612664 )

      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.

      • Re: (Score:3, Insightful)

        by TooMuchToDo ( 882796 )

        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 h4rr4r ( 612664 )

          Medicare has very low overheads, with the right folks other government offices could do as well.

          I honestly would prefer a private business doing this, but with cost plus contracts the government might as well do it in house.

          • What is everyone's beef with cost plus? You have to pay the costs, of course, because you can't seriously expect a company to work for you at a loss, and you have to give them a plus so that they will work on your project instead of something else. It's common sense. Am I missing something? What's the alternative? Do you pay for services you receive some other way?
            • by h4rr4r ( 612664 ) on Monday April 12, 2010 @06:35PM (#31823788)

              The alternative is the producer puts in a quote and is stuck with it. If they fail to produce for that, then you get your money back.

              I do not pay the costs of USPs truck breaking down when they deliver a package to me. They lose money on that delivery and make it up on the aggregate.

              If you make a bid and it is too little, too fucking bad. Cost plus allows these companies to bid far lower than they know it will cost to produce these things and then jack the price up later.

              • I'm sure that these companies would be happy to put in a firm bid. The problem is that doesn't make sense for this kind of project. For one thing, the project goals are not firm, and they will change during the course of the project. Another problem is the companies will take engineering uncertainties into account when they put in their bid to shield themselves from risk. That means the government will end up paying more.

                Keep in mind the government is also stuck with a firm contract, that means they wil

                • by h4rr4r ( 612664 )

                  Then it sounds like job #1 needs to be growing a market with more competitors. Clearly there is a lack of competition to drive cost down.

                  I agree project goals should be firm, and that costs will go up somewhat. This prevents one company from lowballing to get contracts then using the cost plus arrangement to raise the final price. This way they can cheat other competitors.

            • The problem is that it provides little incentive for the service to become cheaper over time. If you paid a fixed price, then there is a strong incentive for the costs to drop because that increases the profit. If the profit is 1% in a fixed price contract then reducing the costs by 1% more than doubles the profit, so is a huge win for the company. In a costs plus arrangement, the profit remains the same irrespective of the costs, so there's no incentive to work on improving the efficiency.
          • by Rakishi ( 759894 )

            Yes medicare...The program that outsource everything except the very top functions to private companies. Private hospitals, private billing, private fraud investigation, private doctors, private pharmaceutical companies and basically private everything of any real consequence. You know, exactly what NASA is doing? So what was your point again?

    • by afidel ( 530433 )
      You can do it with contracts that pay for milestones and have big backout penalties. That's the way Constellation was done and one of the reasons it's going to cost a couple Billion to get nothing. It's probably closer to a fair system than either cash upfront or pay when it's finished.
    • by vlm ( 69642 )

      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

      It wasn't necessarily less advanced, it was just slightly lower performance and not quite as export controlled.

      It turns out to cost almost as much money to develop and manufacture a new 90% cutting edge fighter as a 100% cutting edge fighter.

      Once folks were allowed to select from either, at about the same cost, the F-5 went bye bye.

      The whole situation was just a reaction to the Iranian Shah's airforce, which had some pretty nice (for the time) aircraft.

      • by h4rr4r ( 612664 )

        Why did they not just make an F-16-Light.
        Give it crappier engines, make the mounting non-compatible, different computers, etc. Seems like that would have been way cheaper.

        • There are several F-16 models. Some countries buy the cheaper ones, others the more expensive versions. Also F-16 was by General Dynamics, I think it was the F-18 (well YF-17 actually) that was Northrop.
    • Actaully, I think the best way to get companies to commit is not cash up front, but pre-buying the first X flights.. as in, were going to pay you $100 Million per launch. Here is money up front for our first 10 launches: $1Billion. our first flight starts in 4 years, and then every 6 months afterwards. Every missed flight, you owe us back the money, or a credit on the next launch (can only add a credit once, and you have to pay us interest on that credit)

    • 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. 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.

      Um, no. Typically contracts of this nature are 'pay as you go' and the government is responsibl

  • by Psiren ( 6145 ) on Monday April 12, 2010 @05:24PM (#31822842)

    A big thank you to America (and yes, Russia too) for getting us started on this whole space thingamajig. I think Europe and Asia can take over now. So long, and thanks for all the fish!

  • "what business there was went to European and Russian rockets that were cheaper"
    They might need some business classes......
  • I double-dog-dare you to go make a buck in space
    • Re: (Score:2, Insightful)

      by Wyatt Earp ( 1029 )

      DirectTV seems to make money in space.

      • Yup, there's some market for satellites, but satellite TV seems to be slowly giving way to cable and Internet (often the same physical network). Satellite phones? The number you need is huge because the orbit needs to be very low to keep latency manageable. The same problem exists with any bidirectional system. It's generally cheaper to use terrestrial signals or aerosats. Mapping? Not a huge market, and one largely covered by ex-Soviet spy satellites. Navigation? Not much call for commercial naviga

  • Has anyone asked Burt Rutan [] how much he would charge to put a Pay Load on the Moon?
  • Mars (Score:2, Insightful)

    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 profitab
  • by lennier ( 44736 ) on Monday April 12, 2010 @06:15PM (#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: (Score:2, Interesting)

      by anarche ( 1525323 )

      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....?

      Um. To ensure the continued survival of the human race by ensuring we have a fallback for when Mother Earth become unsuitable for life/eaten by the sun/hit be a meteorite/Mormon

      Of course, if you aren't interested in the future of the human race, I'd love to understand the basis of your morality, while I murder your children.

    • mod DOWN! (Score:5, Informative)

      by Anubis350 ( 772791 ) on Monday April 12, 2010 @09:17PM (#31825692)
      Honestly, insightful?

      From a quick google search on NASA inventions:

      Ten NASA inventions you use every day []

      Top 15 NASA inventions []

      Polimide Foam []

      NASA Inventions benefiting our daily lives []

      Highlights from those links include kidney dialysis, CAT scans, various types of insulation, efficient water purification tech, cordless tools, modern designs of microchips, satellite tech (you know, it deleives a great deal of your communications....), scratch resistant lenses... And there's a *lot* more, a great deal of modern tech comes from NASA is one way or another.

      Even if you have a problem with exploration and a search for knowledge and understanding of the universe, you have to admit the space program and its SCIENCE have yielded *massive* results on earth in technology. I'm also pretty sure there were luddites like you when the first ships were being built, the first submarines, the first plans, hell, the first time someone said "I'm going to wander 50 miles that way and see what's there".
    • by demachina ( 71715 ) on Monday April 12, 2010 @09:59PM (#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 [] (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,

  • by jfruhlinger ( 470035 ) on Monday April 12, 2010 @06:16PM (#31823534) Homepage

    I read that article this morning and was baffled to hear SpaceX mentioned nowhere in it, considering they have a Progress/ATV-type unmanned cargo vessel on the launchpad at Cape Canaveral and plans to build a man-rated capsule in the next 2-3 years. Have they imploded recently or something?

    • Re: (Score:3, Informative)

      by cheesybagel ( 670288 )
      There is like one sentence about SpaceX near the end of the article. AFAIK things are rolling. Their website is pretty up to date. The article is mostly sour grapes.

I was playing poker the other night... with Tarot cards. I got a full house and 4 people died. -- Steven Wright