When the Vulcan rocket lifts off for the first time next week, many billionaires will surely be watching. Built in a joint venture with Boeing Co. and Lockheed Martin Corp., the new vehicle is poised to take on Elon Musk’s SpaceX satellites, space shuttles and payloads for companies like the Pentagon, NASA and even Amazon.com Inc.
Vulcan also helped make a bid to take over the fuel from the company that built it, United Launch Alliance. That includes a multibillion-dollar offer from Blue Origin LLC, an ambitious space venture run by billionaire Jeff Bezos, according to people familiar with the matter.
This is a significant moment for ULA, once a major supplier of launch vehicles to the U.S. government, whose popularity has waned in recent years. As SpaceX currently leads the commercial market and partners with governments with its reusable Falcon 9 rocket, ULA must adapt so as not to be left behind.
“SpaceX likes to say they have a monopoly” on the launch market, ULA CEO Tory Bruno said in an October interview. “They do not.”
The Vulcan, scheduled to debut Monday morning after nearly a decade of development, enters a market hungry for more performance. The rocket is intended to be a cheaper American alternative to ULA’s older Atlas and Delta vehicles, enabling the launch of high-end government satellites.
If Vulcan proves it can fly — and then fly repeatedly — the vehicle will be the company’s best hope to compete with Musk’s startup giant. ULA, which also aims to expand the commercial side of its business, has signed contracts worth billions for around 70 Vulcan missions.
“It’s important to demonstrate success as quickly as possible,” said Cristina Chaplain, an independent space analyst and former director of the Government Accountability Office, which oversees space and defense programs. “They really want to stay in the game.”
“The Hatfields and the McCoys”
ULA was created by Boeing and Lockheed in 2006. The pioneering company had “a virtual monopoly on U.S. government rocket launches in those early years,” said George Sowers, the company’s former chief scientist. These contracts were sweetened with additional money to ensure that the Department of Defense maintained access to space at a time when there were few viable launch vehicle suppliers.
But its ownership structure – with two publicly traded companies competing for defense contracts – has also hampered its strategy. Sowers, now a professor at the Colorado School of Mines, likened it to “being owned by the Hatfields and the McCoys.”
“Trying to get them to agree to anything at the board level is almost impossible,” he said.
According to Bruno, unlike new entrants that have raised capital from public and private markets to pursue ambitious new technologies, ULA has not received cash injections from investors. This forced the CEO to reduce the company’s operations and staff.
“Every year we make a profit,” Bruno said. “Always like that.”
ULA will now face an increasingly tight flight schedule with fewer launch operations personnel in the coming years following recent layoffs, a person familiar with the matter said. The person said ULA’s employee count is around 2,300 compared to more than 10,000 employees at SpaceX and Blue Origin.
ULA laid off about 75 people last summer, about 40% of launch operations personnel at Vandenberg Space Base in California and about 12% at Cape Canaveral in Florida, said the people, who spoke to condition of anonymity because the matter is private.
“We work in a highly competitive industry and as a company we continually evolve to meet emerging mission requirements,” Ron Fortson, director and CEO of ULA Launch Operations, told employees in an Aug. 13 email announcing Bloomberg’s layoffs. “Due to strategic business relationships, we found it necessary to reduce our workforce.”
A ULA spokesperson did not respond to a request for comment by the time of publication.
A spinoff or sale could give ULA access to more capital and free it from constraints that limit growth. According to people familiar with the matter who asked to remain anonymous, the company that conducted the formal sales process recently announced a tender.
The timing, which coincides with Vulcan’s debut, gives bidders a glimpse into ULA’s future. In addition to Blue Origin, potential buyers include private equity giant Cerberus and aerospace manufacturer Textron Inc., the Wall Street Journal reported last month.
Volcanic roots
The Vulcan program began in 2015, when ULA decided to abandon its decade-old Atlas V rocket, which used Russian-made engines. At this point, dependence on Russia is becoming increasingly untenable for Western companies, especially American contractors like ULA tasked with launching spy satellites.
In the case of Vulcan, the company chose an engine produced by Blue Origin, which was a more acceptable choice for lawmakers. However, changing suppliers and implementing new designs presents challenges. ULA initially hoped to launch Vulcan in early 2019, but Blue Origin didn’t ship hardware until late 2022. Then, last March, ULA suffered another setback when part of Vulcan exploded during the tests.
When Vulcan finally lifts off from Cape Canaveral, he will ride on a robotic lander headed to the Moon.
The stakes are high for ULA, which plans seven Vulcan launches in 2024 and then doubling the frequency in the first half of 2025. It’s an ambitious program, especially because the development of new rockets is so slow.
ULA is expected to support about two dozen national security launches over the next two to three years, and Bruno said a functioning Vulcan will allow it to compete for NASA contracts again. The rocket is also being prepared for the 38 launches commissioned by Amazon to send the Kuiper Internet satellite into orbit.
Competitive costs
By building commercial operations to complement government operations, ULA seeks to position itself as a cost-effective alternative to other vendors. Although critics have criticized ULA’s lack of reusability and relatively higher launch price, Musk once called the company a “waste of taxpayer money.”
Bruno did not reveal how much ULA would cost, but said the Vulcano launch would be “very competitive with SpaceX.”
The Space Force contracts awarded to ULA and SpaceX in October provide an indication of what the administration wants. The award awards 11 launches to ULA with a total value of $1.3 billion, or approximately $118 million per launch. SpaceX’s contract for 10 launches is worth $1.23 billion, or $123 million per launch.
According to ULA, aside from price, Vulcan’s biggest advantage is that it is optimized for high-energy missions: flights that need to carry larger payloads directly into very high orbits.
“No one chose to design it; we have,” Bruno said, arguing that the Falcon 9 is better suited to low-Earth orbit flights. High-energy missions are “almost exclusively for governments,” he said.
This is a critical period for ULA, which has a new vehicle and little room for error before entering a busy schedule.
“This is a change in the entire launch operation,” said Kaplain, the space analyst. “Can they do that?”
2024-01-05 04:03:03
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