Competition with SpaceX forced ULA CEO out

A news story today in Defense News speculates that the competitive pressure from SpaceX is what forced ULA’s CEO to step down.

Changes at the CEO level are usually accompanied by a change in how business is done, said Byron Callan, an analyst with Capital Alpha Partners. “Generally, when you see abrupt leadership changes, there’s an abrupt change of strategic or tactical course needed,” Callan said. “You don’t make those changes unless you see something that needs fast corrective action.”

Caceres said he expects to see layoffs and a streamlining of ULA to find all possible cost savings. “My sense is you’re going to see at ULA a restructuring of some sort, because ultimately they’re going to have to find a way to be a lot more competitive on price,” he said.

This restructuring is entirely the result of the new competition from SpaceX, as repeatedly noted by the article.

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6 comments

  • Kelly Starks

    Actually ULA was reportedly already charging the under $200M a launch price the article said they couldn’t compete with.

    Big agree that the old CEO was complacent though. With the mil and congress just wanting the same old thing decade after decade its easy to fall into that, but its not healthy.

    With EELV replacement programs being discussed in the mil, and ULA ignoring Space for so long that they needed to PR catch up in Washington after this long a set of SpaceX attacks in press etc, and little real effort to prepare or rather look prepared for the RD-180 cut off. Hews not really looking in charge.

    One big plus to the CEO change though. It says ULA is directed to stay in the game, and not just run out the current orders and close the doors when the EELV contracts run out. Given ULA really doesn’t generate any significant cash for the parent companies – there was serious grumbling they would just bail out of the business. This suggests they are committed to it for a while.

    Which is a relief frankly.

    • Dick Eagleson

      Actually ULA was reportedly already charging the under $200M a launch price the article said they couldn’t compete with.

      No. The infamous block buy involves 36 cores for $11 billion. That’s a bit over $305.5 million per core. ULA says the block buy saves the government $4.4 billion. So their old average price per core was apparently just under $428 million apiece. They’ve got a long way to go to get down to even $200 million. I’m not optimistic they can do it.

      little real effort to prepare or rather look prepared for the RD-180 cut off. Hews not really looking in charge.

      Agreed. The phrase “deer in the headlights” comes to mind.

      Given ULA really doesn’t generate any significant cash for the parent companies

      My understanding is that ULA contributes about $300 million per year to both Boeing’s and LockMart’s bottom lines.

      • Kelly Starks

        >>Actually ULA was reportedly already charging the under $200M a launch price the article said they couldn’t
        >> compete with.

        > No. The infamous block buy involves 36 cores for $11 billion. That’s a bit over $305.5 million per core…

        Yet the reported price per launch was about $200. Presumably the Block by included other theng then the launches?

        >> little real effort to prepare or rather look prepared for the RD-180 cut off. Hews not really looking in charge.

        > Agreed. The phrase “deer in the headlights” comes to mind.

        To be fair ULA did make sure they had years of RD-180s in stock, and the Delta-IV is kept in production specifically as a back up to the Atlas-V in case something stopped them being usable. So ULA did have all the bases covered. But Hews didn’t present that to folks – resulting in the panic in Washington when folks thought there was a possibility of launch services suddenly not being available from them. Image is reality in DC.

        >> Given ULA really doesn’t generate any significant cash for the parent companies

        > My understanding is that ULA contributes about $300 million per year to both Boeing’s and LockMart’s bottom lines.

        Agreed. Trivial for companies of that size.

  • wodun

    “Caceres said he expects to see layoffs and a streamlining of ULA to find all possible cost savings. ”

    Perhaps there is some bloat in the workforce but I suspect that it not the factor driving the disparity in prices between ULA and their competitors.

    • Robert Clark

      Yes, it’s the Old Space approach of getting the most congressional districts involved in the development process. You are in fact REWARDED for needing a large number of employees, with the associated high costs, across the country.

      The next big thing ULA will have to deal with is reusability. It’s not that ULA can’t do reusability as SpaceX is doing. It’s just they did not WANT to do it because it would cut prices and, they feel, total revenues.
      This is not just a ULA problem it is endemic in the industry. They feel how can we make a significant profit when we cut our prices by a factor of 10 or 100? They key point is you will increase your number of launches when prices are cut by this extent and the increase in the number of sales will cause an increase in revenues.

      Bob Clark

      • Kelly Starks

        Skight dif. The gov customers wouldnd (or were ordered no to by congress) except reusables. They would cut costs and that would anger voters.

        ;/

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