Wednesday, February 25, 2015

ULA vs SpaceX: The empire strikes back

The book says that a large, established company can’t be as nimble as a small company. The big guy just can’t change direction fast enough to ward off the brash upstart. United Launch Alliance (ULA) is out to prove that some books should be left on the shelf to collect dust.

Lockheed Martin and The Boeing Company set up ULA as a joint venture in 2006. ULA’s Delta IV and Atlas V rockets have an enviable record of launching dozens of U.S. Air Force (USAF) payloads over the years.

Enter the aggressive startup. SpaceX of Hawthorne, CA, wants some of that lucrative USAF business. Elon Musk, CEO of SpaceX, saw his chance at the March 5, 2014, meeting of the U.S. Senate Appropriations Subcommittee on Defense. He launched his attack at what he saw as ULA’s big weakness: Cost.

As outlined in an article at, SpaceX and ULA go toe-to-toe over EELV contracts, Musk claimed that the USAF paid ULA more than $380 million per launch. SpaceX, he said, could do the same launches for under $90 million. He also pointed out that ULA’s Atlas V rocket uses a Russian RD-180 engine, a potential problem due to the current political tensions over Ukraine.

Now, back to the point about those slow-to-respond established mammoths of industry. Some big companies would have shrugged off the attack from the upstart and carried on as before.

That seemed to be the case with ULA. As mentioned in the NASASpaceFlight article, Michael Gass, ULA’s CEO at the time, said little more than ULA had a great track record and Musk’s numbers were categorically wrong.

ULA’s plans for change must have been in the works—rocket development has a long lead time—but for whatever reason, the board decided that Gass wasn’t the right guy to lead that change. He was replaced by Salvatore “Tory” Bruno, the president of Lockheed Martin Strategic and Missile Defense Systems, on August 12, 2014.

PR-speak often veils true meaning in the corporate world, but it’s easy to read between the lines in a statement Gass made that’s quoted in United Launch Alliance Taps a Lockheed Executive To Replace CEO Gass, an article at SpaceNews.
... Gass said he had planned to retire ‘in the near term’ but with ‘the changing industry landscape over the next several years, the Board of Directors and I have agreed that the immediate appointment of my successor to begin the leadership transition is in the best interest of the company.’
The new guy didn’t waste any time making it clear to SpaceX that they were in for a fight. In a Denver Business Journal article, ULA plans new rocket, restructuring to cut launch costs in half, Bruno addressed the cost factor directly.
We’re cutting [ launch cost] in half again, we’re getting in to the commercial [launch] marketplace. We will also adjust design our teams and our organization to be the most effective at delivering that.”
Bruno again outlined his plans in an article in Aviation Week, New Rocket, White Tails In ULA’s Long-Term Strategy.

Two projects are under way: a new upper stage to replace the existing RL-10 upper stage, and a new booster called the Next-Generation Launch System (NGLS).

The new booster/upper stage combination will replace both the Atlas V and the Delta IV rockets. A new methane/liquid oxygen (LOX) engine from Blue Origin, the company owned by tycoon Jeff Bezos, will provide the power.

Flight testing for the NGLS is scheduled for 2019.

ULA will also reduce the number of launch pads it maintains from 5 to 2. The one on the east coast will support the last launches of the Atlas V and Delta IV, as well as the NGLS.

Further evidence shows that ULA is thinking more like a competitive commercial company. They’re ordering hardware further in advance than they used to for white tail rockets (vehicles that haven’t been sold yet) for an expected increase in business. The old, conservative ULA was loath to order parts without a committed customer.

Where’s that increased business coming from? NASA commercial launches and non-governmental commercial launches of communications satellites. Bruno said in the Aviation Week article, “We intend to go aggressively now after NASA commercial activities—cargo and crew—as well as pursuing [the] commercial market place which is largely comsats in the GEO orbit.”

Bruno’s moves aren’t just behind the scenes. His public profile is noticeably higher than the previous CEO’s. An article at Adweek, Meet the Most Interesting Space CEO You’re Not Following on Twitter, covers Bruno’s entry into social media. He has a lot to say in his Twitter account, @torybruno, about his company, the industry, and his main competitor. He even jokes around with someone who created a fake Tory Bruno Twitter account.

Some big companies falter when they’re pushed by a new, innovative competitor. Some, like ULA, fight back. In the end, commercial space should benefit from the innovation that comes from the competition between these two nimble companies.