Corporate reinvention
may be key to Spacehab's survival
Space services provider faces an uncertain future with
post-Columbia cutbacks
by Kathy Hagood
Brevard Technical Journal
|
The loss of Columbia destroyed the company's multi-million dollar pressurized laboratory, the Research Double Module. The module, which flew in the Shuttle's cargo bay, was composed of two of Spacehab's four research and logistics units.
Because the Shuttle manifest is still being reviewed and Spacehab is negotiating a new logistic module and cargo carrier contract with Lockheed Martin, Spacehab's future is a question mark, said Martin McLellan, vice president for ground operations. McLellan is based at the company's Payload Processing Facility in Cape Canaveral.
Spacehab's Integrated Cargo Carrier, a pallet for payloads, is slated to fly to the International Space Station on STS-114. The mission, scheduled for launch no earlier than Sept. 12, 2004, will mark the Shuttle's return to flight.
But missions for the company's two logistics modules, which are cash cows for the company, haven't been nailed down. The Shuttle program could opt to use the Italian-built Multipurpose Logistics Modules instead, McLellan pointed out.
McLellan and other Spacehab leaders are working overtime to snag enough space and other business to keep the 20-year-old Webster, Texas-based company afloat. The company has even considered applying its high-tech payload packaging equipment to other industries.
"This is a challenging time for us. If we aren't able to generate enough business in the coming months, we may not survive," McLellan said.
During the company's first quarter, which ended September 30, it earned $18.9 million in gross revenues, down from $26.8 million during the first quarter last year. The company's net income was $700,000.
Spacehab earned about $100 million in gross income during its past fiscal year, which ended in June.
The company took a charge of $50.3 million for the quarter ending March 31, 2003, to account for its lost module. Spacehab is seeking compensation from NASA for the module, which had been specially upgraded and outfitted to support STS-107 and other potential research missions.
"NASA seemed very interested in possibility of future research missions aboard Columbia, so the loss was disappointing in many ways," McLellan said.
Spacehab, which employs 300 workers nationwide, has had to lay off a number of its workers this year. The company announced in October it was closing its headquarters in Washington D.C. in October and consolidating them with its Webster operations near Johnson Space Center.
The company currently is negotiating to sell its Cape Canaveral facility and lease back about 65 percent of the space.
"There's a good business case for it. We've lost half of our modules, so we don't need as much space now," McLellan said.
While only three Spacehab employees work at the Cape Canaveral facility, the overall Spacehab flight services division employs about 80 employees of The Boeing Co. at its Space Coast and Huntsville, Ala., operations.
At the peak of the module and carrier support program, about 130 Boeing employees worked on the Spacehab flight services contract. The business generated about half of the company's revenues. Remaining workers are focusing on maintaining the flight hardware and catching up on repairs that weren't considered critical.
Astrotech, a subsidiary of Spacehab, employs about 25 workers at its Titusville facility. It continues to process satellites for launch on expendable launch vehicles from both coasts. But Boeing recently terminated Spacehab's contract to provide commercial payload processing services for the Delta program because of a downturn in the commercial satellite market.
Several of Spacehab's other business sectors have faced recent disappointments as well. For example, Spacehab lost its bid to continue managing the Neutral Buoyancy Laboratory and Space Vehicle Mockup Facility, which are used to train astronauts at Johnson Space Center.
"We're trying not to let these upsets get us down, but we've definitely increased our focus on generating new business. It's a make-or-break situation," McLellan said.
The company has come through hard times before. Just two years after it was incorporated Spacehab survived the 1986 Challenger tragedy, redesigning the module it had intended for space tourism. By creatively using its expertise and resources, it's possible Spacehab will reinvent itself again, said veteran space industry watcher Craig Covault, a senior editor for Aviation Week and Space Technology.
"Spacehab could very well have the assets to make it through this difficulty, which is certainly no fault of their own. Things were looking good for the company before Columbia. They have certainly acquitted themselves well in the space program," Covault said.
Because the federal government is seeking greater privatization of the space program, Spacehab's role in the industry is valued.
"They did a great job in generating business themselves on Mir, the Shuttle and the International Space Station," Couvault said.
The company potentially could generate business with Russia's RSC Energia and with space agencies and companies in Japan and Europe.
About 80 percent of the company's 2003 revenues were produced from NASA contracts.
"We know they are struggling and we hope they are going to be able to hold on because they offer us options and that's important for the program," said Tip Talone, NASA's director of International Space Station and Shuttle processing.
Looking farther out, Spacehab potentially could support NASA's Orbital Space Plane by processing the vehicle at its Astrotech facility. But any OSP work is too far in the future to turn the company around now.
"If we go down the tubes, it will hurt the space program in the long run," McLellan said. "We are able to process outside of the gates of the space center and avoid a lot of the bureaucracy, which reduces costs."
While McLellan continues to worry about his company's future, he puts it in perspective relative to the loss of the lives of the STS-107 astronauts. Those astronauts spent much time with Spacehab and Boeing employees training for the extensive science mission.
"They were a great group, the most down-to-Earth crew we'd ever worked with. We'll never forget them," McLellan said.
For more information on Spacehab, visit www.spacehab.com
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