SpaceX to trim workforce by 10%


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Capitalism in space: SpaceX announced yesterday that it plans to trim its workforce by 10% in an effort to reduce costs.

It might seem strange for the company to be doing this at this moment, when they are embarking on the construction of the very ambitious Super Heavy and Starship rockets. One would think they would need to expand (not shrink) their workforce to make that happen.

What I see is that they have recognized a need to reconfigure their workforce. This article today about their growing fleet of Falcon 9 first stage boosters, provides the clue.

SpaceX’s reusable Falcon fleet could feature as many as 12-15 boosters capable of something like 5-10 additional launches each by the second half of fourth quarter of 2019. At that point, SpaceX might have enough experience with Block 5 and enough flight-proven boosters to plausibly begin a revolutionary shift in how commercial launches are done. With far more boosters available than SpaceX has payloads to launch, multiple flight-ready Block 5 rockets will inevitably stack up at or around the company’s three launch pads and surrounding integration and refurbishment facilities.

In other words, they no longer need as many people employed building expendable first stages. Moreover, they might have found that many of the employees used to build new Falcon 9 first stages are not the kind they need to design and build the new rocket. This trimming allows them to cut some fat with the opportunity to add muscle later. It would not surprise me if their workforce once again starts to grow, but with new employees with new skills.

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12 comments

  • Edward

    From the article: “‘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 company statement said. ‘Either of these developments, even when attempted separately, have bankrupted other organizations.’

    It is clear that the 17-year-old company is proceeding carefully, because it realizes that it is betting the company on two new and expensive endeavors. They are beginning to borrow money in order to do them, and this commits them to years of payments whether or not the endeavors pay off.

    If it were a publicly traded company, then betting the company like this would be a tricky thing, as it would put shareholders at risk of losing their entire investment through bankruptcy. As it is, a failure due to these moves could dampen future companies from trying to “shoot for the Moon” like SpaceX is doing. One stretch goal is hard enough, but SpaceX has taken on two.

    I wish them luck, and if success means that they have to save a few tens of millions of dollars per year in salaries then that may be what they have to do.

  • Col Beausabre

    ” then betting the company”

    The most famous example of this was Boeing, which borrowed more than the company’s net worth to fund development of the model 367-80 airliner.

    You’ve never heard of the Dash 80? That’s because it was a ruse, to make it seem it was nothing but an advanced development of the Stratoliner/KC-97 line.

    You know it as the 707, the immortal transport that changed air travel forever and founded a dynasty

    The bet vaulted Boeing, whose Stratoliner was distant third place to the Douglas DC-7 and the Consolidated Model 1069 Constellation , into the world leader.

    Famously, as part of the Dash 80’s demonstration program, Bill Allen invited representatives of the Aircraft Industries Association (AIA) and International Air Transport Association (IATA) to the Seattle’s 1955 Seafair and Gold Cup Hydroplane Races held on Lake Washington on August 6, 1955. The Dash 80 was scheduled to perform a simple flyover, but Boeing test pilot Alvin “Tex” Johnston instead performed two barrel rolls to show off the jet airliner.[10]

    The next day, Allen summoned Johnston to his office and told him not to perform such a maneuver again, to which Johnston replied that he was simply “selling airplanes” and asserted that doing so was completely safe.[11][N 1]

    Boeing Chief Test Pilot John Cashman stated that just before he piloted the maiden flight of the Boeing 777 on June 12, 1994, his last instructions from then-Boeing President Phil Condit were “No rolls

    https://www.bing.com/videos/search?q=boeing+707+roll&qs=n&sp=-1&ghc=1&pq=boeing+707+roll&sc=5-15&sk=&cvid=BAD3B5AC07044806AF13A87C3BAA1CDF&ru=%2fsearch%3fq%3dboeing%2520707%2520roll%26qs%3dn%26form%3dQBRE%26sp%3d-1%26ghc%3d1%26pq%3dboeing%2520707%2520roll%26sc%3d5-15%26sk%3d%26cvid%3dBAD3B5AC07044806AF13A87C3BAA1CDF&view=detail&mmscn=vwrc&mid=D49B4FFE0335A9FB1CD9D49B4FFE0335A9FB1CD9&FORM=WRVORC

  • eddie willers

    Sounds to me that he is following Jack Welch’s example when Jack was head of GE.

    He would fire the bottom 10% of his managers, regardless of absolute performance.
    Cruel, but effective.

  • Edward

    eddie willers,
    I thought something similar. My understanding is that SpaceX routinely trims the lowest performers. This could help remove deadwood and inspire the others to perform well.

    However, the statement from the company stated “SpaceX must become a leaner company,” so I think that this time they are doing more than just removing the lesser performers.

    Col Beausabre,
    The 707 was an important product for Boeing, and changed the company, if not the world:
    https://behindtheblack.com/behind-the-black/points-of-information/the-707-turns-60/

  • Robby

    The Musk method is also referred to as decimation, which was well known to the Romans. One in ten was sacrificed to increase the overall morale and fighting power of the troops, because fear is a powerful force of motivation, at least according to the theory of merciless executors named Edward and Elon. Only the Romans were fairer, because it was drawn and also officers were affected.

  • wayne

    Col Beausabre–
    Good stuff.

    tangentially related-

    De Havilland Comet Jetliner Story
    WTTW Chicago, 1990
    https://youtu.be/Z9pmYrvz6YU
    28:43

  • Edward

    Robby,
    It probably does not increase overall morale, as it induces a fear that one may lose one’s job.

    I have worked under mildly similar circumstances in which if we did not get our product to perform well enough, the project would be cancelled and many of us would lose our jobs. The motivator stopped being pride in workmanship and became fear of the future, especially since a basic design problem created months or years earlier could be the thing — over which we had no control — that prevented good performance. Entire teams of workers could lose their jobs, because someone who was already on another project had messed up the design.

    I worked on a Canadian television broadcast satellite that had faulty parts that were made in Germany. People had already been hired in Canada and were being trained to install rooftop satellite dishes when we discovered the problem, late in the test phase, and told the Canadian customer how long it would take to repair. All those installers lost their jobs, because the company could not afford to keep them employed with no revenue. And those installers were not woking in fear under a “decimation” policy.

    Jobs can be lost for any number of reasons. As Robert notes, some or many of those SpaceX employees may merely be losing their jobs because the project they are currently working on (Falcon 9 Block 5) is coming to an end. I once lost a job for the same reason; my project came to an end and the company did not have a place for me to go to. A difference is that the word “layoff” was not used in my case, as there was no new work in sight (the company was downsizing in that city and selling property), but is used in the article, a word that implies that the worker could be called back when work picks up again.

  • Dick Eagleson

    Robby,

    Management is hardly a protected class at SpaceX. The recent wholesale slaughter at the Starlink operation in WA, for example, was almost entirely among the management cadre.

  • Robby

    Maybe that workforce reduction wave has something to do with the fact that Musk has changed fundamentally the design of the so called ITR/BTR/StarShip/Superheavy vehicle. He was just gearing up for a huge production of carbon fiber for this launch vehicle and then suddenly dropping the whole thing and switching to a stainless steel design and making now even his own alloy factory!

    I think that for a company that has benefited on such a large scale from governmental support and contracts as SpaceX, higher standards should apply, how they have to treat their employees. It is also difficult to tolerate that common employees have to pay for his management and design mistakes and his swaying back and forth. By the way, SpaceX offers at same time about 1000 open jobs.

  • wayne

    “10 percent of its roughly 6,000 workers” = 600 positions.
    I have no clue what the natural attrition-rate at SpaceX actually is, but it’s at least 5-10%, so these positions would vacate themselves over the next 12 months.
    –as for treating these employee’s as-if they work for the federal government? I’d put forth the proposition, that would be crazy.
    (tangential– I’m surprised SEIU hasn’t move to organized these people. But thank God Michigan is a right-to-work State now.)
    Only in the government, does one keep their job forever.

  • Robby: I don’t think you understand the concept of freedom, a circumstance common nowadays to too many Americans. No one is made to work for Musk. Musk is not required to hire anyone. They are working under this freedom concept, which allows for each person to make their own choices along the way. Musk’s employees eagerly take the jobs, knowing that Musk has the freedom to take those jobs away, at any time.

    You don’t want to work for Musk? Then don’t. At the same time, don’t try to impose your ideas on him.

  • Edward

    Robby,
    You wrote: “I think that for a company that has benefited on such a large scale from governmental support and contracts as SpaceX, higher standards should apply, how they have to treat their employees. It is also difficult to tolerate that common employees have to pay for his management and design mistakes and his swaying back and forth. By the way, SpaceX offers at same time about 1000 open jobs.

    Although there were also times when I was able to find other work at the same company, every time I lost a job, the company had hundreds or even thousands of job postings. It was just that I was not suited to most of those jobs. For some of those openings I had more experience than the hiring manager wanted (i.e. I would cost too much for his budget, and he didn’t need as much expertise as I had). This even happened at companies that had mostly government contracts and relied upon them even more than SpaceX does. Why is SpaceX supposed to be subject to higher standards than other government contractors, and why should government be telling companies how to run their businesses?

    It may be difficult to tolerate that common employees have to pay for management and design mistakes, but I gave two examples of design mistakes that adversely affected people, from less joy on the job to loss of jobs. It happens, and if the employees are kept on while the company cannot afford to pay them (a clear management mistake), then the whole company goes under, meaning that all the employees have to pay for that management mistake, and so do the investors of the company. And the employees of the companies that were relying upon the first company to provide the products that keep their companies going, and those companies’s investors, and so on and so forth.

    Life is not fair, even when you try to make it fair.

    Robert,
    I have chosen to not apply to SpaceX for a variety of reasons, none of which is that SpaceX has the same right as every other company that I have worked for: to take away my job at any time for any reason. Thank you for noting that I have the freedom to make that choice.

    wayne,
    Thank you for noting that only in government is the employee allowed to be an unnecessary burden on his employer (you and I and all the other poor taxpayers who earn less than that permanent employee, who also receives generous current and retirement benefits).

    I have an aunt in California who, when Governor Gray Davis screwed over his taxpayers a couple of decades ago, went back to government work in order to get more retirement benefits at taxpayer expense.

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