Elon Musk’s SpaceX plans to reduce its workforce by 10%, or roughly 600 employees, even as the company seeks to ramp up ambitious projects to develop a super-powerful rocket and deploy thousands of advanced satellites.
The move, believed to be the most significant cutback since SpaceX gained international prominence about a decade ago, is the latest sign of major strategic and technical challenges roiling the closely held Southern California company.
Buoyed by a hefty backlog of commercial and government launches, the company in recent years racked up a string of historic space-transportation accomplishments even as Mr. Musk and his management team identified still-more-difficult and expensive goals: sending large spacecraft to Mars and launching more than 11,000 small satellites to provide global internet connections.
Each of those efforts promise to dwarf SpaceX’s current business, but Mr. Musk has never spelled out how he planned to pay for development, testing and manufacturing costs. His deep-space exploration endeavors currently don’t have any obvious commercial market.
In a statement, Space Exploration Technologies Corp., as the company is formally called, indicated payroll savings are now part of its financial realignment.
“To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet,” SpaceX said, it must become a leaner company. “Either of these developments, even when attempted separately, have bankrupted other organizations.”
The company also said action to reduce head count “is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary.”
The move, first reported by the Los Angeles Times, suggests at least a portion of the engineers and other employees who helped devise SpaceX’s reusable Falcon 9 rockets and Dragon capsules are now considered expendable. “We are grateful for everything they have accomplished and their commitment to SpaceX’s mission,” SpaceX said.
In the past, SpaceX officials have touted the company’s rapid growth in both payroll and facilities spread across the country. Its main production and engineering site is located in Hawthorne, Calif.
But with the company’s core satellite-launching business projected to decline this year and possibly in 2020—and investment in new technology slated to increase—SpaceX took the uncharacteristic step of acknowledging it confronts greater challenges than it previously indicated publicly.
Analysts have estimated it could take an investment of more than $50 billion to bring the Mars and broadband-via-satellite ventures to fruition.
For the shorter term, SpaceX has told analysts, investors and others that it expects cost savings from reusing boosters, noting that its launch business was profitable last year. The company plans to launch two of its Falcon Heavy rockets in 2019, currently the most powerful booster in the world.
But in recent months, Mr. Musk, who also is the chief designer and technical officer, has abruptly changed designs for a proposed deep-space exploration system. Mr. Musk previously played down expectations about how quickly his proposed satellite constellation would become operational.
SpaceX is on track to launch fewer than two dozen satellites overall this year—about half the total number internal company plans projected when they were drafted roughly three years ago. On Friday, a SpaceX spokeswoman declined to elaborate on the prepared statement.
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