Los Angeles Business Journal

Getting Off Ground

By James Rufus Koren Monday, May 27, 2013

That’s a fourfold increase in just a few years, but Shotwell said SpaceX has the expertise it needs to scale up production. Last year, the company hired Andrew Lambert, formerly of German carmaker BMW AG, as vice president of production.

“If you’re building cars, you’re building hundreds of thousands of units a year,” Shotwell said. “Building 40 rockets a year is not scary or daunting.”

SpaceX was founded in 2002 by L.A. billionaire Elon Musk, who ranks No. 3 on the Business Journal’s list of Wealthiest Angelenos. (See page 32.) It was just a year ago that the company made headlines around the world when it docked one of its Dragon capsules with the Space Station – a first for a privately built craft. The privately held company’s estimated value quickly jumped from around $1 billion to about $3 billion.

With that successful mission and now two more under its belt, SpaceX has moved past the point of proving a concept. It now has to make that concept work time and again by building and launching many more rockets.

But every rocket and every launch is an opportunity for a high-profile failure. As it increases production, the company will have to make sure it doesn’t sacrifice quality, said Teal’s Caceres.

“The more pressure you have to build more, the greater the chance you’re going to get careless, that you’re going to miss stuff,” he said. “The most mature teams from Boeing and Lockheed miss stuff. That, to me, is certainly a risk.”

Shotwell, though, said SpaceX has been preparing for an eventual production increase for five years and that making more rockets should lead to better rockets.

“We have been working toward and considering production in our vehicle designs and our factory since 2008,” she said. “And as a general rule, an actual production process improves quality. Having technicians work on the same part of the process over and over every day makes more reliable parts.”

Risks remain

Still, while the company’s failed launches in 2008 and earlier could be seen as the predictable outcome of building rockets from scratch, failures at this point could hamper SpaceX’s growth plans, especially its hope of winning big military launch contracts.

Large military satellites are launched by United Launch Alliance, a joint venture of Boeing Co. of Chicago and Lockheed Martin Corp. of Bethesda, Md. The Air Force last year awarded SpaceX two trial missions, but to compete for more launches, the company will have to continue its string of successes. Caceres said the military, much more so than commercial satellite customers, could be scared off by a failed launch.

“You have a lot more latitude to make a mistake with commercial launches. Satellites are insured,” he said. “But if you’re a government agency and you get the money for a big satellite and it explodes, you’re going to think twice before going to that launch vehicle again.”

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