In a webinar yesterday the CEO of ULA, Tory Bruno, argued that there is too much money being invested in new rocket companies and the money would be better spent developing in-space activities instead.
To be attractive to investors, these new space activities should be dual-use with both commercial and national security applications, Bruno said.
The launch market is becoming dangerously “overheated” for a couple of reasons. One is simply that there are too many launch companies chasing a “more or less fixed size” pool of customers, Bruno said. In the large rocket market, he said, prices are falling and the demand for satellite launches “has remained stubbornly inelastic.”
“It’s down to a third or even a fourth of the cost of what access to space was just a handful of years ago,” Bruno said. “Yet we have seen no increase in the overall size of the launch market nor have we seen a corresponding tripling or quadrupling of space activity.”
While Bruno is correct when he says that there are likely too many new launch companies, he is so wrong about his belief that the customer base “has remained stubbornly inelastic” that he is practically in the wrong galaxy. The lower costs he complains about are exactly why there is so much investment capital being poured into the new launch companies, because those investors see those lower costs attracting many new customers, something that is demonstrated by the growth of the launch rate in the past few years (something that I expect will explode in the next two years).
Many of these new companies will fail, for any number of reasons. No matter. A large number will succeed, and attract more than enough customers to make a profit.
What Bruno really is complaining about are the new lower launch costs. ULA can’t match them, and for this reason faces a crisis in that it might not be able to attract any customers at all in the coming years, even with the introduction of its new Vulcan rocket. And though Bruno has done a good job trying to make ULA competitive in this new market, he appears to have generally failed to change the company significantly. For example, why hasn’t ULA tried to market its Atlas 5 and Vulcan rockets for multi-payload smallsat launches, as SpaceX did with the recent launch of 143 smallsats on one Falcon 9? I can’t think of any reason why ULA’s rockets couldn’t do the same. Yet the company has done nothing to try to market itself to this smallsat industry. Instead, they have let Rocket Lab, Virgin Orbit, and now SpaceX grab it, along with at least four or five new smallsat rocket companies about to do their first launches.
Instead, Bruno advocated during this webinar that the federal government get involved, acting to encourage investors to leave the launch market and instead focus on building companies that only do things in space.
What a deal! The government helps to limit the number of new rocket companies, thus protecting ULA’s market share. ULA in turn can continue to charge its high prices, because the new in-space companies the government subsidized will have few launch options. In fact, the high launch prices that would result from a smaller launch market would likely force the federal government to also subsidize the launch costs for the new in-space companies so they can even afford to get to orbit.
All for the benefit of old big space companies like ULA, who for decades did nothing to innovate or lower the cost to launch.
I think what Bruno is really signaling to us here is that he is not hopeful for the future of his company in today’s present competitive free market, and is thus advocating government intervention to save his company.
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