Free Market to Take Over Space Travel in Obama's NASA Overhaul
The administration's new free-market approach of designing and operating spacecraft could mean big business for a handful of U.S. companies in what will decidedly be a lucrative new market.
"NASA is getting out of the space shuttle business, and this change unleashes the private sector," said Dale Ketcham, director of the private think tank Spaceport Research and Technology Institute. "This creates new opportunities for companies to compete for this work. We can tap into our entrepreneurial innovation to fill this gap."
Who's who of aerospace firms champing to fill gap
The usual suspects head up the A-list of beneficiaries, such as a Lockheed Martin (LMT), Raytheon (RTN), Boeing (BA) and Northrop Grumman (NOC). But the next tier, which includes Orbital Sciences (ORB) and Space Exploration Technologies, also stand to cash in.
Mark Hamel, a senior vice president at Orbital Sciences, said this week at the National Space Symposium in Colorado Springs that a new, healthy market for the private sector will emerge from the space plan. The Virginia-based company is developing the Taurus II rocket and a cargo capsule.
Obama, as part of his tour at Florida's Cape Canaveral Air Force Station, visited privately held SpaceX's commercial launch facility. The company's founder, Internet tycoon Elon Musk, is a huge proponent of having NASA go the private-sector route. Musk, the 38-year-old founder of PayPal, was seen speaking with Obama prior to the president's speech.
Plan not without detractors
"For the first time since Apollo, our country will have a plan for space exploration that inspires and excites all who look to the stars. Even more important, it will work," Musk said in a statement.
The new space plan is not without its detractors. It calls for some existing programs to be refocused or shut down. Obama had initially slated the Constellation's Orion capsule program to cease, a move that would have cost an estimated 6,000 jobs.
Earlier this week, though, Obama relented and said the program will change its focus to providing an emergency capsule for the international space station.
Say goodbye to taxpayer-funded space shuttle
NASA budget is $100 billion over the next five years, an increase of $6 billion, and its primary focus will be robotic exploration, scouting missions, increased earth-based observations, and extending the life of the international space station.
Morningstar analyst Anil Daka said you can count on the "big boys" to fill the gap and keep landing the lucrative NASA contracts.
"There are a lot of moving parts, but you can bet that Lockheed and Boeing will figure out ways to make it work to their advantage," Daka said.
Private-sector companies have had a difficult time creating a profitable "space taxi" program since NASA, which held the monopoly, had an endless supply of taxpayer funding.
"I wouldn't want to say the plan is perfect, but the timing is right to make a change and shake up the agency," Spaceport's Ketcham said. "NASA has turned into another bureaucracy, and this will bring a little creative disruption from the private sector."