United Launch Alliance Touts Benefits of Consolidation

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  Space News Business

United Launch Alliance Touts Benefits of Consolidation

By BEN IANNOTTA
Space News Correspondent
posted: 18 April 2007
03:08 pm ET


SUMMERLAND KEY, Fla. — Of the 900 Delta rocket managers and engineers at Boeing’s Huntington Beach, Calif., facility, 43 percent have agreed to move east to formerly hostile territory: the Lockheed Martin Waterton campus in Denver, where Atlas rockets are still built, though possibly not for much longer.

The relocation of the Delta management team, scheduled to begin in May, will mark the first step in a two-year overhaul of the Atlas and Delta rocket engineering and production processes by United Launch Alliance (ULA), the new joint venture finalized by Boeing and Lockheed Martin last December as they completed the merger of their government launch services business units.

The Waterton campus, the home of Lockheed Martin Space Systems, will soon include the hub of engineering and management for both the Atlas and Delta rockets. Eventually, the Atlas manufacturing activities now based at Waterton and in San Diego will be shifted to Boeing’s Decatur, Ala., plant, where Delta rockets are made. Some work also will be done at the Lockheed Martin facility in Harlingen, Texas, said Michael Gass, the chief executive officer of United Launch Alliance.

For the moment, Gass and his ULA management team are occupying offices at the Waterton campus, but within months they too will be relocated to leased offices in south Denver.

ULA hopes to turn profits by streamlining the redundant human and manufacturing resources of the two erstwhile rivals under one company. Those infrastructure investments were simply spread out over too few launches to make for a stable industry, Gass said.

Plans call for keeping the designs of the Atlas and Delta families largely unchanged so that U.S. military and spy satellite customers will know there is a backup in the event one of the rockets is grounded.

“We want to use one infrastructure but we want to have two systems,” Gass said.

By the late 1990s, the anticipated explosion in demand for commercial satellite launches had vanished, and the competition between Lockheed Martin and Boeing for government launches was heating up. In 2003, the Air Force discovered that Boeing had used thousands of pages of sensitive Lockheed Martin launch documents to win an edge in an earlier competition for Air Force launch contracts under the Air Force’s Evolved Expendable launch Vehicle program. The Air Force banned Boeing from competing for new launch contracts for nearly two years.

Now, engineers from the two companies are more than free to compare notes — they are required to do so.

“The fact that the Atlas and Delta engineers now share their lessons learned is delivering reliability and mission success for our customers,” Gass said.

ULA’s goal is an orderly, disciplined transition, he said. For example, members of the Delta team who decide not to move to Denver will be required to share their knowledge with their replacements in exchange for help in the search for jobs elsewhere at Boeing.

“You treat employees like professionals and you make sure you have the appropriate human resources support systems there for their final transition, and they will do everything necessary to help us continue to deliver mission success, and make their replacement employees successful. It’s got to be a disciplined process,” Gass said.

The transition of Delta management and engineering from Huntington Beach to Denver is just one of the planned moves. Ultimately, Atlas manufacturing staff at Waterton and San Diego will be offered jobs in Decatur.

Gass said he expects that relocation process to begin in nine months to one year. “The actual production is probably two years away from initiation,” he said.

ULA will retain a smaller manufacturing facility in Harlingen where the cylinders that connect stages of the Atlas rockets are built. “There’s some potential that some of the [similar] structures for Delta can move to Harlingen, but we’re still evaluating that,” Gass said.

ULA’s launch customers are braced for minor issues as the consolidation proceeds, but one customer said he viewed the merger as a generally favorable development.

“We sense a sincere desire within ULA to scope the organization with a laser-like focus on the customer, but we understand there will be growing pains in such a complicated undertaking,” said Mark Brender, a spokesman for GeoEye of Dulles, Va., a commercial remote sensing satellite company that plans to launch its GeoEye-1 satellite on a Delta 2 rocket later this year.

In addition to consolidating manufacturing plants and computerized information systems, ULA plans to trim costs by training mechanics and technicians to work on both rockets.

Gass stopped short, however, of promising dramatically reduced launch costs. He said launch prices depend largely on how many launch opportunities are out there.

“On an apples-to-apples basis, it’s going to save money,” he said noting in particular the synergies that will be achieved by the consolidation of management and operations and the elimination of considerable infrastructure. “Clearly, though, space launch is still a market that’s heavily dependent on the business base, and the overall launch demand. It’s a very rate-sensitive pricing activity,” Gass said.

For government customers, price might not be the top priority. Air Force officials talk most often about “assured access” to space, meaning the ability to launch satellites even after a launch failure or technical issue grounds one type of rocket.

“When a system goes down, it could be down for six months or a year. In that period of time, you can start reassigning certain missions or at least recover faster if you have an alternative system to support it,” Gass said.

The merger has been planned so there will be no compromises on assured access, and there will be some advantages.

Before the merger, launch customers at the Air Force, the National Reconnaissance Office or NASA might learn something from one company’s rocket team that could help the other, but they were barred from sharing it. “They couldn’t because of the competitive environment,” Gass said. Mow they can.