In recent developments within the aerospace sector, layoffs at leading space companies are not necessarily viewed negatively. Boeing’s defense and space division, known as BDS, is reportedly preparing for job cuts. This division, responsible for products ranging from rockets to missile defense systems and managing NASA’s Space Launch System (SLS) for the Artemis program, is concerned about possible cancellations of future SLS contracts under the new administration.
Job security concerns are not isolated to Boeing. A report from Bloomberg indicated that Blue Origin, a competitor challenging Boeing’s position in the rocketry industry, is similarly preparing to reduce its workforce.
According to Bloomberg, Blue Origin, founded by Jeff Bezos, intends to downsize as part of a strategy to cut costs and reallocate resources to increase rocket launch activities following years of research and development. The company plans layoffs potentially affecting several hundred to a thousand of its 14,000 employees, potentially exceeding the scale of Boeing’s layoffs.
Blue Origin’s New Glenn reusable rocket successfully reached orbit last month, which, contrary to expectations, is partially driving these layoffs. This pattern mirrors actions taken by Sierra Space in November 2023 when it restructured its workforce after completing its Dream Chaser spaceplane, laying off and replacing research staff with employees equipped with security clearances.
Bloomberg suggests that Blue Origin may adopt a similar approach, aiming to accelerate New Glenn flights and clear its substantial backlog of $10 billion in launch contracts. CEO Dave Limp informed employees that the primary objective for 2025 and beyond is to enhance manufacturing and launch operations, necessitating a reduction in “bureaucracy” and “management,” particularly within engineering, R&D, and project management functions.
This cost-cutting initiative aligns with remarks made by Bezos at the December 2024 DealBook Summit, where he acknowledged the company’s current unprofitability but expressed optimism in its long-term potential.
For investors, these strategic adjustments could signify substantial growth for Blue Origin. The company intends to convert its $10 billion backlog into revenue and profit, potentially transforming it into a premier business. However, whether Blue Origin will replicate Sierra Space’s strategy of expanding departments that manufacture and manage rocket launches remains to be seen.
Given Blue Origin’s $10 billion backlog and a projected $100 million cost per launch, the company may have plans for up to 100 future launches. Assuming this process follows a typical growth trajectory for space companies, starting with one launch in the current year and doubling annually, Blue Origin is poised to conduct a significant number of launches over the next five to six years.
Such developments at Blue Origin suggest heightened competitive pressure for existing heavy-lift rocket providers like Arianespace, SpaceX, United Launch Alliance, and Boeing. The extent of this impact will depend largely on Blue Origin’s strategic pricing in the market. Further details are anticipated as Blue Origin defines pricing for its new megarocket services.
