The Russians today announced a reorganization of their space industry.

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The Russians today announced a reorganization of their space industry.

An obvious attempt to deal with their increasing production and quality control problems, this proposal has both good and bad parts to it.

The good part is an immediate and significant raise in pay:

The government also ordered a 50-percent salary increase for all employees in the space industry, Popovkin said. Salaries currently average 37,500 rubles ($1,200) a month, he said.

The low salaries in their space industry have been cited as one reason the industry is suffering. Smart engineers, both young and old, can make much more money working elsewhere. This pay increase might help bring quality people back to the industry.

The bad part of this reorganization is how the Russian government is merging and centralizing the control of its many aerospace companies.

A structural reform of Russia’s space industry will see its numerous enterprises united into five or six large holdings, Federal Space Agency chief Vladimir Popovkin said on Monday. The reform should make the troubled industry more manageable, Popovkin said after a governmental meeting in Moscow.

As the article notes, after the fall of the Soviet Union and the loss of government funds the many former government aerospace agencies were forced to go private, producing “130-plus enterprises developing vastly different ownership structures and with many becoming de-facto independent of the [Russian space program],” This reform will nationalize these private companies.

While centralizing control might seem like a good way to improve management, in the end it will not work. It will instead destroy competition, which will in turn starve innovation and eliminate any incentive to lower costs. I can’t see how doing this will make Russian rockets more appealing to the commercial launch market.


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