It is being reported that SpaceX has plans to lay off approximately 10% of its workforce, in an attempt to manage costs. This news comes after the company has embarked on an ambitious plan to develop and test an interplanetary spacecraft while simultaneously performing frequent orbital launches. The goal of these layoffs is to become a leaner company, but will this actually have that intended affect? The company made the following statement:
To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company. Either of these developments, even when attempted separately, have bankrupted other organizations. This means we must part ways with some talented and hardworking members of our team. We are grateful for everything they have accomplished and their commitment to SpaceX’s mission. This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary.
SpaceX has employed at least 7,000 people in late 2017, which is the last headcount that we have. This would mean about 700 people will lose their jobs. 10% is a huge number, regardless of how you swing it, but when you put the actual numbers along side of this, those numbers are astounding. Layoffs of this magnitude typically ring alarm bells, because, like I said – these are large numbers. But the company has indicated that they are solvent and successful.
But why such a major reduction in the workforce, and why now? Just saying that they want to be lean isn’t much of an explanation. The company is relatively young, and some might argue small, so it seems impossible for them to be able to trim any fat at all. That said, mounting costs may have caught up with SpaceX’s ambitions. After all, they seem to have been making progress on many fronts, so it seems odd to have these kinds of layoffs now.
They have been building and actively improving its Falcon 9 and Falcon Heavy launch vehicles for years. The Falcon 9 is more or less in a final state, but the Falcon Heavy is far from it. SpaceX has been researching and prototyping an interplanetary spacecraft. In addition, they raised $450 million in 2017 and have another round of funding in negotiations right now. That second round of funding is anticipated to be just as much.
So where can (or will) they take the cuts? The most logical place to cut from would be the Falcon 9 development team. CEO Elon Musk has indicated that large scale research and development on that platform was ending and being reallocated to the Falcon Heavy and Falcon 9 projects. But what types of jobs would they cut? Presumably, SpaceX employs a lot of designers and engineers, and it makes you wonder who of these would be “easy” to let go?
Who they plan to lay off is all speculation at this time, but the layoffs themselves aren’t. It does beg the question as to whether or not there is something else behind this, or if SpaceX is telling the truth, and they need a leaner workforce in order to be able to get the work done? I anticipate that we will have more for you on this one in a few weeks.