Who will compete with SpaceX? The last two and next two years.

[daveklingler]

    Its main design goal, from the beginning, was to bring the cost of space access down.

False. The Space Shuttles' primary goal was to satisfy the requirements of as many stakeholders as possible, starting with the need to distribute funds across as many congressional districts as possible in order to ensure congressional support. Reducing the cost of space access did nothing whatsoever to ensure congressional support, and there are innumerable design decisions one can point to which make it clear that congressional support was the overriding priority.

Source: talking with Max Faget over the years at various conferences. I'm quite sure he knew what he was talking about, since he, more than anyone else, designed the Space Shuttle: https://en.wikipedia.org/wiki/Maxime_Faget

You are correct.

The felgercarb about STS supposedly being designed to bring down the cost of access to space came from NASA.
NASA HQ made a whole lot of completely unrealistic promises about STS just to "sell" the vehicle to the politicians.
For example: NASA HQ stated that a single orbiter could fly at least 20 times each year while they d*mn well knew it was in fact impossible to fly each orbiter 20 times per year.

Ectually...based on the results Pratt was having, NASA may really have thought that each orbiter could fly 20 times per year.

Pratt & Whitney, hitherto a jet turbine company, at that time had spent ten years and a large amount of their own money (and NASA's) developing reusable high-pressure hydrolox engines nearly to airline operational engineering standards, on the premise that space travel was the Next Big Thing.  Had NASA gone with Pratt (Pratt won the committee evaluation but the NASA Deputy Admin, freshly from Rocketdyne, overruled his evaluation team and gave the SSME bid to Rocketdyne), it's arguable that at least the SSME would not have been a limiting factor.  Shuttle also would have flown a few years sooner, and been far less expensive to fly, and perhaps we would have gotten another piece or two of the Space Transportation System, like tugs or depots or a bigger station.  Or ongoing Shuttle development dollars going to other problem areas. (Source: Dick Mulready)

Not disagreeing with your overall premise, but the corrupted award process of the SSME really turned out to have a huge overall effect on the space program.  Rocketdyne had no experience with high-pressure, or reusability, or staged combustion, going into the SSME design process, and Pratt's engineers were asked back to quietly work on the engine's largest flaws from the mid-eighties until shortly before the last Shuttle flight.

[jongoff]

I spoke with two folks from Hawthorne, and their salaries were "California reasonable".

I don't know how recent my friend's data was, but he had enough data points (several dozen) that I'll weight that higher than two anecdotal data points. Note, its possible to be "California reasonable" while still being 80% of the average aerospace wage in the area.

SpaceX certainly doesn't have to pay a premium to lure people in, and you can't "blame" their success on lower wages.

If ULA can't compete, it's not because SpaceX starves its employees. It's because SpaceX gets much more done per employee and per dollar.

I think the effective labor rate does make a difference that's larger than what SpaceX proponents would like to admit, but smaller than what SpaceX skeptics would like to think. :-)

It's not everything, but having half the effective $/hr labor cost (about where I think SpaceX was vs ULA when Tory started), makes a non-trivial difference in an industry where labor is such a high fraction of the overall mission cost. I think SpaceX is doing several other things right that I wish ULA would either copy, or find their own way of doing. But dismissing the labor cost difference as inconsequential isn't empirically valid, IMO.

~Jon

[LouScheffer]

the facts are they get paid less and work more.  See HXMHMX

Let's assume this is true.  Then the question still exists, how do you compete?  There are lots of examples of strategies for companies trying to compete with others with lower labor costs:

(a) Lower your own labor costs.  Move to cheaper areas, de-unionize where possible, reduce benefits.
(b) Move production to a country with a good enough work force and lower costs.  India, China, Russia?
(c) Automate more, or re-design your product, to reduce labor costs.
(d) Supply products and services your competitors cannot or will not supply, making you less cost-sensitive.
(e) Acquire a charismatic leader or mission of your own, so people want to work for you.  Apollo did this, for example.
(f) Enforce a legal framework that forces others to pay the same wages.
(g) Assume your competitor's approach is unsustainable.  Wait, and they will be forced to pay industry standard wages to keep their workers, and their cost advantage will evaporate.

Thinking along these lines, India, China and Russia could compete using strategies (a) and (b),  BO needs to try (c), since it's apparently paying at least nominal salaries.   Also, lots of startups appear to be trying this by using additive manufacturing.  Hopefully Vulcan and Ariane 6 are being designed with this in mind.  (d) might work, but it's tricky.  The market might be too small, or alternatively might be big enough to attract a lower-cost competitor.  (e) is not easy to make as a deliberate change.  (f) will be tough in the current political environment. (g) will not give you an advantage, just reduce that of a competitor. 

So given this, who will compete with SpaceX?  I guess India and China will try (a) and (b).  Russia is doing this now, with a competitive price for Proton, but seems not to have the capital and/organization to make a serious attempt at a next generation vehicle.  BO will try (c), and has deep enough pockets to make a serious effort.  ULA and Ariane will try approach (d), combined with some (c).

[RedLineTrain]

I have a friend who used to work for another aerospace company doing competitive research (among other things), and when they interviewed ex-SpaceX employees, they'd try to find out how much they were paid. He said that they were coming in consistently around 80% of typical market salaries for the same position/experience. I'm not sure if that was direct salary, or counting salary+benefits, but that was the data he got from dozens of interviews over the years.

With SpaceX, the direct salary may be much different than salary+benefits, given that SpaceX issues restricted stock that has been greatly increasing in value over the past few years.

I have not seen a knowledgeable accounting of that on NSF.

[Lar]

I took a mild pay cut from what I could have gotten to go to an outfit that gave me nice options. Which paid off in a not too bad way.

So don't discount the power of options to attract talent.

[MechE31]

I have a friend who used to work for another aerospace company doing competitive research (among other things), and when they interviewed ex-SpaceX employees, they'd try to find out how much they were paid. He said that they were coming in consistently around 80% of typical market salaries for the same position/experience. I'm not sure if that was direct salary, or counting salary+benefits, but that was the data he got from dozens of interviews over the years.

With SpaceX, the direct salary may be much different than salary+benefits, given that SpaceX issues restricted stock that has been greatly increasing in value over the past few years.

I have not seen a knowledgeable accounting of that on NSF.

I posted about this on the last page, but the options (awards now for new hires) are extremely significant, especially for those hired somewhat early on.

A lot of people didn't or couldn't take advantage of them. Tax consequences are significant, especially for those who did cashless buybacks and converted their grants from ISO to NSO.

With awards, the path is much simpler and you really have to screw up to not take advantage of them.

[oldAtlas_Eguy]

With the standpoint of production labor costs ULA is in Decatur, AL and SpaceX is in Hawthorn, CA. Even if SpaceX is paying 80% of the rate for their local area and ULA is paying at 100% for theirs, the actual rates being paid out is the same and possibly even less for ULA. It is very expensive to operate in CA. So SpaceX paying under local labor market salaries is not a competitive edge vs a company in a much lower salary local labor market. Although Huntsville local market is a lot higher than most areas of the southeast it is still nowhere as high as southern California.

So this argument is a nearly pointless one in the comparison of labor salaries, specifically that of production. The more important item is the efficient use of the labor assets. If the labor force is overstaffed to handle surge conditions or the workload is not distributed correctly the efficient use of the labor will be poor. This is where a lot of the cost differential is as well as the vertical integration of the business. Without as many subcontracts the effort can be manged more efficiently with less people. Why? Because you do not need an extra engineer and marketing and procurement as well as receiving acceptance testing personnel all of which greatly increases the cost for the part. In most cases a cost savings occurs when a part is built in-house unless the part is from a supplier that build hundred, thousands, millions of the part for which you can not match the incredibly low price by building it in-house.

A good deal of studies have been done about the advantages/disadvantages of outsourcing to another country that has lower labor rates. But usually this is also associated with a general lower average education level of available labor but not always. In the case not as much costs savings occur as thought because more manpower is required to perform high tech takings at high reliability levels therefore cutting into the lower labor salery advantage.

So why does SpaceX F9 costs so much lower than an Atlas V. It is VI, efficient use of labor assets. Everyone is always busy. Except possibly at a pad and even there if the launch rate is high then even those are staying busy.

The excess labor force within ULA is being trimmed. Reorganizing workloads. Designing a new LV with an eye on costs of manufacture and operation as a major driver. ULA is adjusting to be more competitive. It will be instructive to see if they also do some limited VI in their manufacturing supply chain where they can gain significant cost savings for small capital costs.

[Jim]

Fyi, ULA still pays a pension. 

[spacenut]

Something you guys may not know.  Alabama has the most unionized workforce in the south.   Maybe not saying much, of course there are the steel workers in Birmingham, dock workers in Mobile, the Huntsville area.  However, there are car tire manufacturers that are unionized (BF Goodrich, Goodyear, and maybe Michelin), AT&T (Bell South), Alabama Power, Alabama Gas (now Spire), coal mining in NW Alabama, etc.  Don't know if ULA is unionized, but could be due to their parent companies.  Overall pay scale may be low due to low farm wages, retail sales, etc. 

[RedLineTrain]

I have a friend who used to work for another aerospace company doing competitive research (among other things), and when they interviewed ex-SpaceX employees, they'd try to find out how much they were paid. He said that they were coming in consistently around 80% of typical market salaries for the same position/experience. I'm not sure if that was direct salary, or counting salary+benefits, but that was the data he got from dozens of interviews over the years.

With SpaceX, the direct salary may be much different than salary+benefits, given that SpaceX issues restricted stock that has been greatly increasing in value over the past few years.

I have not seen a knowledgeable accounting of that on NSF.

I posted about this on the last page, but the options (awards now for new hires) are extremely significant, especially for those hired somewhat early on.

A lot of people didn't or couldn't take advantage of them. Tax consequences are significant, especially for those who did cashless buybacks and converted their grants from ISO to NSO.

With awards, the path is much simpler and you really have to screw up to not take advantage of them.

Thank you for this confirmatory information, MechE31.  Bookmarked for future reference.  This comes up often, as those in the more traditional aerospace industry are personally unfamiliar with this type of compensation and seem to minimize its size and impact.

[Coastal Ron]

Fyi, ULA still pays a pension.

Lots of apples and oranges figures being tossed around, so I'll add my pineapple perspective to the mix... 

When I first started in manufacturing the rule of thumb was that labor was 10% of the product cost, two decades later that had gone down to 1% of product cost.

So if salary and benefits are on the high side for ULA, and their touch labor is higher than SpaceX, that would add some percentage to the overall product costs in comparison. But I wouldn't think it would add up to double digit differences.

For expendable vehicles, I think product design and infrastructure overhead costs are more significant cost drivers than labor costs. But because we're comparing apples to oranges, we'll never know the exact drivers.

[AncientU]

Fyi, ULA still pays a pension.

ULA is laying off a significant portion of their workforce, too.
Not sure 'getting a pension' is what they talk about around the water cooler.

[jjyach]

Fyi, ULA still pays a pension.

ULA is laying off a significant portion of their workforce, too.
Not sure 'getting a pension' is what they talk about around the water cooler.

Pretty sure the pension for new hires at ULA went away a while ago, and I know they have required their employees to do unpaid overtime, and have been trying hard to trim their pension workforce.  This is the case here in Denver and we have hired quite a few ULA folks at my company/campus over the years.

[QuantumG]

Fyi, ULA still pays a pension.

Talk about archaic.

When it comes to pay/hours the real question is: who is happier? If you're doing what you love you don't need to be paid overtime. In my first managerial role I blew up at HR for screwing up the pays again: The last thing I want my team thinking about is money. SpaceX is full of happy true believers and baffled quickly leavers.

[Rabidpanda]

Fyi, ULA still pays a pension.

Lots of apples and oranges figures being tossed around, so I'll add my pineapple perspective to the mix... 

When I first started in manufacturing the rule of thumb was that labor was 10% of the product cost, two decades later that had gone down to 1% of product cost.

So if salary and benefits are on the high side for ULA, and their touch labor is higher than SpaceX, that would add some percentage to the overall product costs in comparison. But I wouldn't think it would add up to double digit differences.

For expendable vehicles, I think product design and infrastructure overhead costs are more significant cost drivers than labor costs. But because we're comparing apples to oranges, we'll never know the exact drivers.

Product design is labor - it's just engineering labor. I suspect SpaceX gets a much better labor/dollar ratio than ULA due to their much younger workforce and their culture of working long hours all the time. Young engineers will work their butts off (55+ hrs/week is typical) at entry-level salaries, with no retirement benefits (SpaceX does not offer 401k contributions), and low health insurance costs to the company. On the other hand, they do get generous stock benefits.

Additionally, I suspect that labor costs are a vast majority of SpaceX's total expenses due to how vertically integrated they are.

[AncientU]

Fyi, ULA still pays a pension.

Talk about archaic.

When it comes to pay/hours the real question is: who is happier? If you're doing what you love you don't need to be paid overtime. In my first managerial role I blew up at HR for screwing up the pays again: The last thing I want my team thinking about is money. SpaceX is full of happy true believers and baffled quickly leavers.

Wonder which company is drawing in the young, talented engineers and other technical staff needed for the future?  Which company is better for those young workers to have on their resume?

[Coastal Ron]

Additionally, I suspect that labor costs are a vast majority of SpaceX's total expenses due to how vertically integrated they are.

Although that is offset by not have to pay suppliers their profits on the product SpaceX is now building in-house. And since SpaceX can likely do more "Just In Time" manufacturing, they can lower their overall inventory costs too.

Lots of things to consider, but again it's apples vs oranges when we're talking about ULA vs SpaceX.

[QuantumG]

Which company is better for those young workers to have on their resume?

I presume the answer is SpaceX... and yeah, a lot of young people do a stint at SpaceX for their resume and leave shaking their head for a less demanding workload - often with the goal of having children. That's their choice.

[ChaoticFlounder]

Which company is better for those young workers to have on their resume?

I presume the answer is SpaceX... and yeah, a lot of young people do a stint at SpaceX for their resume and leave shaking their head for a less demanding workload - often with the goal of having children. That's their choice.

This is a problem I believe not many are taking seriously / not able to see, if the people that learned the lessons of CRS-7 and what was it JCSAT-16 leave, what happens to that knowledge when they go?

[QuantumG]

This is a problem I believe not many are taking seriously / not able to see, if the people that learned the lessons of CRS-7 and what was it JCSAT-16 leave, what happens to that knowledge when they go?

It's called documentation and training. Also known as modern engineering culture. No rockstars required.