(Bloomberg) -- For over a decade, United Launch Alliance had an absolute monopoly. If the Pentagon wanted to send a spy satellite to space, the Boeing Co. and Lockheed Martin Corp. venture was its only choice.
Now, Elon Musk’s well-funded SpaceX has eaten into its business, capturing 40% of Pentagon contracts over the last few years. Jeff Bezos’ Blue Origin threatens to take more of the pie once it certifies its New Glenn rocket.
Over at ULA, budgets are running over and revenue is down as customer delays push back launches, according to a person familiar with the matter. Boeing and Lockheed would rather offload ULA to someone else.
A ULA spokesperson said the company is profitable for the year, but making less than its own goals.
The issues explain, in part, why ULA was running behind while gearing up for its latest Pentagon mission. The space company needed more workers to meet its July 30 launch date due to quality issues, the person said. So it flew in a temporary crew to Cape Canaveral, Florida, from 500 miles away.
Working around the clock, the team managed to make the fixes in time for the rocket’s 100th mission. It wasn’t the only time ULA has had to shuttle people from out-of-state to handle unexpected repairs: It did the same for work on its new rocket.
A crew from Decatur, Alabama traveled to Florida to fix “significant” out-of-sequence factory work that cropped up ahead of the Vulcan rocket’s debut, according to a company document seen by Bloomberg. The painstaking nature of the repairs would have been too big of a strain on the Florida launch operations engineers, the person said.
A ULA spokesperson said it’s not uncommon for the company to travel experienced personnel between sites. In the Vulcan instance, ULA sent a handful of experienced technicians to replace leaking actuators, the spokesperson added.
But with a record number of launches due next year, the space venture is losing key staff to competitors, including Blue Origin and SpaceX. This year alone, ULA has lost about 45 of its 105 Launch Operations engineers — the people who test, assemble and prepare every rocket and its cargo to fly — at its primary launch site in Florida, according to the person, who asked not to be identified discussing non-public information. The lack of experienced personnel has postponed work for future missions, the person said.
The staff departures are contributing to ULA’s struggles as it works to retain its position as the US military’s preferred rocket launcher. Already the government is frustrated with the pace of ULA’s progress and has levied financial penalties on the company for not meeting its deadlines. If ULA can’t come through, it could jeopardize the Pentagon’s national security interests.
Chief Executive Officer Tory Bruno admits there are challenges ahead. “There’s inherent incentives – pressure, if you will – to ramp up and perform,” he said. But he believes the company is prepared to meet them. “I don’t have concerns that we are understaffed to support the launch cadence,” Bruno said.
ULA declined to provide specifics on its workforce, but said the overall launch staff has roughly 600 people across its sites. ULA’s 2,700-strong workforce also includes 1,200 rocket scientists and 100 new staff hired to assist with launches, the company said.
Still, to meet its ambitious launch schedule — the company is aiming for a record 20 next year – ULA is stockpiling rockets and other components in specially built warehouses, Bruno said.
“I’ve got over 30 solid rocket motors stacked up literally like cordwood” in one Florida warehouse, Bruno said. “I’m pretty sure that might be the largest tonnage of TNT equivalent propellant that has ever been accumulated. So, you know, no matches in there.”
ULA needs to maintain a busy launch season to keep money coming into the business. Unlike its billionaire-backed rivals, ULA doesn’t get cash infusions from investors, Bruno has said.
Boeing’s appetite for investing in its space division is limited by fallout from the safety crisis in its core jet division, while Lockheed’s earnings from its stake in ULA have dropped in recent years.
Boeing and Lockheed, in a joint statement to Bloomberg, said they have demonstrated their commitment to meeting launch demands with investments that have enabled rocket development and new facilities. They also offer technical support and business expertise, they said.
ULA’s staff, particularly engineers, are lured away by higher pay or the ambitious space-conquering visions offered by Bezos and Musk, or Amazon.com Inc.’s satellite internet project, people familiar with the matter said.
Bruno declined to give specific figures on employee turnover, but said the company is seeing attrition at a single-digit percentage rate. “It’s significantly below industry average,” he said.
The SpaceX-ULA rivalry spilled over into Musk’s X social media platform last week, with Bruno taking a thinly veiled jab at a promotional photo of Musk’s new Raptor v3 engine. In a reply, Bruno suggested that SpaceX posted a “partially assembled” engine that helped it “exaggerate” its design.
SpaceX’s Chief Operating Officer, Gwynne Shotwell, punched back, posting a picture that appeared to show the Raptor engine shooting fire and exhaust on a test stand. “Works pretty good for a ‘partially assembled’ engine :),” Shotwell wrote.
Blue Origin and SpaceX each have dozens of job openings for engineers across different business units, while ULA has just 12 advertised, four of which are for Launch Operations engineering jobs.
“ULA has been constrained in a way that has hampered their ability to respond to the competitive challenges with SpaceX,” said George Sowers, ULA’s former chief scientist. “It’s a terrible ownership model.”
ULA has at least one thing going for it. It has touted a 100% record of mission success with its legacy rockets. SpaceX’s Falcon family has launched nearly 400 times, though it had a notable mission failure last month. Blue Origin has yet to stage a launch to orbit.
This year, ULA put astronauts into orbit for the first time and its 100th flight of the Atlas V was a “hot, straight and normal” send-off for an iconic American rocket, Bruno said.
Now, Bruno has to focus on getting its replacement, the Vulcan, certified for the Department of Defense. It’s targeting a September launch, according ULA. If the mission is successful, and the rocket is certified, ULA will be eligible for multibillion-dollar Pentagon “phase 3” contracts.
Bruno said he’s on track to build all the Atlas rockets ULA needs for 2025 launches before year end, with boosters already stacked up in a giant Florida facility.
“I have all the tools I need, I have all the facilities. I’m not concerned about having the rockets ready,” Bruno said. “All I need are my payloads to show up and I will fly them.”
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--With assistance from Julie Johnsson, Loren Grush and Matt Day.
(Updates with details on Vulcan certification in seventh and eighth paragraph.)
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