Archive for the ‘Industrial Base’ Category

Groan.  Wasn’t the shuttle a reusable booster?  Didn’t EELV promise cost savings?

Here’s the link to the Aviation Week article…

When I read about savings of over 50%, I think about EELV and the cost savings it was asserted to create.  EELV was a massive ‘cost avoidance’ program, that is, by creating and using new families of launch vehicles, the USAF could get away from brutally expensive ‘heritage’ systems like the Titan IV.

Of course, the savings–the cost avoidance–never materialized.  Paper rockets are cheap and things cost more and more as they move further away from Powerpoint.

EELV’s cost problem was rooted in the bogus assumption there would be lots of EELV launches and ergo, plenty of cost sharing and a low per-unit expense. These were, of course, all wrong.  Its advocates didn’t see that foreign launch competitors, with advantageous labor rates, subsidization, and greatly reduced regulatory entanglements, would end up as the  way for commercial users to go.

Give the SpaceX and Microcosms of the world a chance to compete.  Reusable if it makes sense, expendable if it doesn’t.

Advertisements

In a profoundly optimistic and interesting set of prognostications, Spaceflight Now reports on the outlook for the space industry.  In short, most of it looks mighty fine.  Here are some of the highlights forecast for the world-wide space industry.

Regarding meteorological and terrestrial observation satellites:

  • Revenues at $1B in 2009 and could quadruple in a few years
  • About 260 new satellites launched in the next decade, about double the 128 launched between 1998 and 2008
  • Growth to $27.4B in the next decade versus $20.4 in the last decade
  • Profits derived from space-based capabilities increasing at 16% per year for the next decade
  • Thirty-four nations involved in satellite observation programs by 2018 versus eight in 1997

Regarding communications satellites:

  • Average revenue growth of about five percent in the next five years
  • More than 30 large new satcoms being produced with a value around $7.5B
  • Twenty new satellites launched in the last 18 months for terrestrial digital TV
  • 2800 new satellite TV channels appeared in 2008 bringing the total to 24000
  • Satellite data transmission grew 10 percent in 2008

Regarding launch:

  • 10-year forecast for launch vehicles at $48B–totals 636 launch vehicles
  • The split: U.S 161; Russia, Ukraine, and China 306; Europe 92; India, Japan, and Israel 73

The bad news:

  • U.S. Atlas 5 and Delta 4 launch vehicles largely priced out of the commercial market

What exactly is the “space race” anyway?

And are we really losing it or are others just catching up?

This is often called reverting to the mean.  Reverting to the mean can be caused by a number of factors.  ITAR is one of those factors, and the government’s intervention has distorted the market regarding the space industry and caused a cascade of unintended consequences.

There is no revelation here.

The issue rather is what to do about the problem. Issue identification we have skills at; problem resolution and implementation, not so much.

This thrash has been going on since 1998, plus or minus about two years.

Regarding the defense industry, AT&L’s Ash Carter provides a totally on-target money quote (emphasis added):

“At the end of the day we are totally dependent on that defense industry. The government doesn’t make our weapons, private industry makes our weapons.”

The goal of acquisition is for the government to get what it needs, when it needs it, and to pay a fair price for the product. Simultaneously, the government should want industry to make a fair profit.

If industry isn’t making a fair profit, they will tend to do other things, which will reduce competition, product selection, and ideas. It all seems pretty straightforward, doesn’t it?

Carter is paraphrased as saying he like as much competition as possible. I bet his real intent is to have as much competition as is useful. There is a point of diminishing, and even negative, returns.

The phrase ‘reverting to the mean’ is often used in the financial industry to address the nearly-inevitable likelihood that a fund or stock’s spectacular success over the long term (think ponzi-scheme king Bernie Madoff) is simply unsustainable. Reverting to the mean is viewed with such certainty it is sometimes linked two other high-probability events, death and taxes. But just what causes something to revert to the mean? Often it’s because of changed conditions like market competition, consumer preferences, or government intervention (which itself is capable of pulling a company’s returns back to earth or conversely, back from Chapter 11). Gaming is another great example of reverting to the mean: think about how many people had to lose money so that guy shilling for the gambling house on the radio could say “I won a hunnert fifty-six thousand dollars and you can be a winner too.”

For some time, U.S. space programs have been reverting towards the mean. Ok, while there really isn’t a real mean for space programs, the general idea is relative to the U.S., others are catching up, and relative to these others, the United States is not nearly as dominant as it has been. This seems to be especially true regarding the United States as a space launching nation. Need proof? Let’s see–China now has a serious commercial space program and a robust manned space flight effort as well. When they get their heavy lift Long March 5 on line in 2014, they’ll be capable of launching a wide variety of very heavy payloads including up to 55000 pounds to a low earth orbit, as well as to geosynchronous orbit and beyond. Russia? They possess the know-how behind the amazing RD-180 engines and some exceedingly mature space launch systems. Besides the space shuttle, the Russian Soyuz and Proton systems provide rides to the International Space Station. Arianespace? That French-led endeavor, along with its nine other European partners, are probably pretty happy with the Ariane 5’s 32 consecutive successful launches. How about some other space launching nations that few seldom think of like India, Japan, and Iran? So far, indigenous South and North Korean space programs have only been suborbital…so far.

Reverting to the mean for U.S. human space flight isn’t too bothersome–unless you’re NASA–as the value of manned space flight is basically a spectacular stunt, kind of like a grizzly bear dunking a basketball. First you say “Wow!” Then you say “Weird.” Next, it’s “Are you going to eat the rest of that hot dog?” Finally you say “Why is that bear dunking a basketball anyway?” From a military perspective however, a loss of U.S. space launch leadership is more problematic: space launch is that necessary first enabler for all other operations in the space domain, such as the traditional unmanned space missions of providing ISR, communications, weather, and GPS that not only enable the U.S. military but are also thoroughly intertwined with our economy.

Just as the United States has a national security requirement to be capable of performing military missions in the air, on the ground, and on and under the sea, we similarly have a need to be able to get to space and to operate our space systems. If we lose the ability to get to space, we put our capacity to operate in the space domain at serious risk. Because of the decision made to get military payloads off the space shuttle following the 1986 Challenger disaster and because we were then in the Cold War, a number of already developed space launch systems came quickly into great prominence.

The Atlas and Titan programs provided ICBM-based space launch vehicles and the Delta program, which started life as the Thor IRBM did the same. However, these recycled rockets, especially Titan in its heavy-lift configuration, were not particularly responsive nor were they cheap. As their fly-out approached, this afforded the military space community an opportunity to envision cheaper, better, and faster ways of getting to space, which became the Evolved Expendable Launch Vehicle program. But the assumptions associated with the EELV program–that an “explosion” of commercial space activities would provide the military the ability to reduce its own launch costs by sharing expenses with other space launch users–has never come close to fulfillment. The lack of a robust U.S. commercial space launch industry for the size payloads the military and intelligence communities commonly flies has in fact resulted in massive EELV cost overruns and even more consolidation within the U.S. space launch service industry.

Now, the high cost of getting to space (as well as the high cost of satellites and associated space systems) is dragging U.S. space programs back towards the mean. With the DoD space systems, this is the culmination of excessive rework, of a requirements process that has trends towards exquisite solutions, the planned use of not-ready technologies, funding instability, and too often, a lack of government and contractor proficiency. Other nations seem to lack many of the cost-busting challenges the U.S. suffers from including their reduced labor rates and less entangled bureaucracies.

Is there anything that can save us from reverting to the mean? In the long term–50 years or more–maybe not. However, if things are to improve in the next five years, it is almost certain to be caused by market-based competition from U.S. launch systems like SpaceX’s Falcon 9 or Orbital Sciences’ Taurus 2 launch vehicles, or OSC’s Peacekeeper ICBM-derived Minotaur 4 and 5 launch vehicles. These systems, using old-school rocketry like Falcon 9’s RP-1 (kerosene that’s been space-rated) and liquid oxygen burning engines and using similar proven concepts like recycling existing ICBM components a la the legacy Delta, Atlas, and Titan programs have an excellent chance to get our national space launch efforts back on a more affordable footing. While improvements in U.S. launch programs alone won’t preserve our space leadership, they are an essential and compelling starting point to do just that.

ITAR–the International Traffic in Arms Regulation–is the guidance intended to keep U.S. businesses from selling potential adversaries the proverbial ropes from which they would hang us. To say the least, ITAR is a business-unfriendly, rule intensive, and cumbersome process. Now it seems ITAR is up for a wire brushing.

Within the defense industry, ITAR has become an industry-wide pariah–something approaching “it whose name cannot be spoken.” The U.S. space industry–and in particular, space launch–have especially demonized ITAR, as huge chunks of market have been lost to foreign competitors. It probably doesn’t help that State runs ITAR.

Is it possible the U.S. space industry has confused correlation with causation? The answer can’t be known with certainty, but GM and Chrysler do come to mind.