In recent days, SpaceX has had the aerospace world abuzz with a pair of sudden business shifts. First the company laid off a tenth of its workforce and then CEO Elon Musk announced the company’s intentions to scrap plans to put it development work in California in a Tweet.

Last week, SpaceX announced that it will lay off 10% of its nearly 6,000 workers in an effort to become leaner. “This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary,” the company said in a statement printed by the Associated Press.

“To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based internet, SpaceX must become a leaner company,” the Hawthorne-based company said in a statement printed by the Los Angeles Times. “Either of these developments, even when attempted separately, have bankrupted other organizations. This means we must part ways with some talented and hardworking members of our team.”

SpaceX intends to give those released from their jobs at least eight weeks pay and other benefits as well as help finding new jobs.

This announcement even as the company continues to report financial health. Recently valued at $30.5 billion, SpaceX is financially healthy and one of the most valuable private companies in the world. Last year, the company had 21 completed missions on its manifest, an increase from the 18 in 2017. Further, the company has already completed one this year (Flight 8 of Iridium).

At the same time, the company has aggressive plans that will take deep pockets to achieve. It hopes to, for example, send humans to Mars and has already prototyped steel-clad test rocket, which is called Starship. It has also planned another 10 billion project called Starlink that would leverage a constellation of satellites to deliver affordable broadband internet service to customers.

Yesterday, the Los Angeles Times reported that SpaceX had scrapped plans to develop the Starship in California. However, Elon Musk corrected the news outlet (via Twitter) saying that development would continue in Hawthorne, CA, but that the prototypes would be built at the launch site. The company will also test the prototype there in a brief test launch.

This points to an evolved and mature approach to supply chain and manufacturing management.

Too often, companies don’t consider the potentially hidden costs of building products. The “total landed cost” should be carefully calculated, said Gelston Howell, senior vice president at contract manufacturer Sanmina Corp. “Deciding where to build the product should consider the size of the product, where the primary market is and the cost of shipping it,” he added. SpaceX cited the weight of the rocket and the difficulty of transporting it as a key factor in its decision making around where to build it.

Originally, the plan was to build the spaceship at the Port of Los Angeles. The port has been working to attract high-tech companies and estimated that the SpaceX project had the potential to create 700 new jobs in the port. Though Port of L.A. officials are “disappointed that SpaceX will not be expanding their operations at the Port of Los Angeles, we are pleased that they will continue their recovery operations here,” spokesman Phillip Sanfield said in a statement to the Los Angeles Times.

In a tweet Wednesday morning, Los Angeles City Councilman Joe Buscaino said: “While I feel crushed about SpaceX pulling the Super Heavy out of the Port of L.A., I feel confident that other innovators will see the huge value they get in San Pedro.”

California continues as a compelling place for high-technology organizations since the state, although known for strict regulatory environment, also offers many benefits. “California is not the most preferred place to start with its labor laws and restrictions. At the same time, California offers one of the best labor pools in the world which compensates for any cons,” said Jens Gamperl, chief executive officer at Sourceability, an electronics distributor based in San Diego.

SpaceX, however, said that it still intends to do some work at the port saying that it would “continue recovery operations of our reusable Falcon rockets and Dragon spacecraft at the Port of Los Angeles.”

This leaner SpaceX is clearly positioning itself for further growth and continued aggressive development.

By: DocMemory
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