After yesterday's irritating, inconvenient winds and complications with the valves of the Delta IV Heavy rocket that had delayed the initial launch, today's launch as well as the initial test flight of NASA's Orion Spacecraft was successful and historic. The $370 million test flight collected crucial data on Orion's major systems - data necessary to reach the ultimate goal: maximize safety for humans that will soon (2021, potential first voyage) travel inside the capsule. Orion - a technological marvel - was designed and built for future human-based missions to distant destinations in our solar system, including Mars (by the mid 2030's) and a rendezvous with an asteroid (as early as 2021).
Orion Contract
What today is the United Launch Alliance (ULA), a 50-50 joint venture owned by Lockheed Martin (NYSE:LMT) and The Boeing Company (NYSE:BA), was awarded the Orion contract back in 2006 - a contract that was then valued at $8.15 billion. In 2010, after the Constellation program, of which Orion was part, was cancelled by the President due to political/budgetary issues, NASA proposed a new plan to develop a Multi-Purpose Crew Vehicle. Lockheed Martin, who is the prime contractor/builder of the Orion Multi-Purpose Crew Vehicle, is the leader of the Orion industry team that includes major subcontractors Aerojet Rocketdyne, United Technologies Aerospace Systems, and Honeywell as parts of an expansive nationwide supply chain network that brought the Orion program to where it is today and to places it will go in the future. Successful execution ("execution," in general) of future missions, on the other hand, depends on government's appropriation of funds. According to the Wall Street Journal, "NASA faces years of daunting technical and financial challenges. The overall systems could cost more than $20 billion through 2021."
Lockheed Martin
According to Lockheed's 2013 annual report, the company's Space Systems business segment, which not only includes Orion and earnings from ULA but also research and development, design, engineering, and production of satellites, strategic and defensive missile systems for national security, experienced net sales of $7.96 billion in the 2013 fiscal year, which is 18% of its total consolidated net sales of $45.4 billion, and operating profit of slightly more than $1 billion, thus making the operating margin of the Space Systems segment 13.1% (overall consolidated operating margin was slightly less than 10%). Northrop Grumman, which is one of Lockheed's main competitors, experienced sales on its Aerospace Systems (comparable to Lockheed's Space Systems) of slightly more than $10 billion and operating income of $1.2 billion. In the 2013 fiscal year, Northrop's Aerospace Systems' operating margin was 12.1% - a margin smaller than Lockheed's.
Government contracts account for 98% of the Space Systems segment, which includes NASA, National Oceanic and Atmospheric Association, and several branches of the military (Navy and Air Force). In the case of Northrop, U.S. government contracts account for 86%. The Orion program, on an annual basis, is only a medium contributor to Lockheed's sales for this business segment, and even smaller for the consolidated.
Trying to figure out what the point of this blog post is going to be, I thought I could discuss the importance of the Orion program for NASA and for Lockheed Martin.
In my opinion, the return on investment of the Orion program, regarding the gain of scientific and technological knowledge and insight as well as positive impact on the economy due to program spending (almost exclusively inside the United States) is much greater than its cost.
by Peter Steenhuis
Sources: |
Delta IV Heavy take off - on the morning of the 5th of December
Credit: Joe Raedle/Getty Images
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What today is the United Launch Alliance (ULA), a 50-50 joint venture owned by Lockheed Martin (NYSE:LMT) and The Boeing Company (NYSE:BA), was awarded the Orion contract back in 2006 - a contract that was then valued at $8.15 billion. In 2010, after the Constellation program, of which Orion was part, was cancelled by the President due to political/budgetary issues, NASA proposed a new plan to develop a Multi-Purpose Crew Vehicle. Lockheed Martin, who is the prime contractor/builder of the Orion Multi-Purpose Crew Vehicle, is the leader of the Orion industry team that includes major subcontractors Aerojet Rocketdyne, United Technologies Aerospace Systems, and Honeywell as parts of an expansive nationwide supply chain network that brought the Orion program to where it is today and to places it will go in the future. Successful execution ("execution," in general) of future missions, on the other hand, depends on government's appropriation of funds. According to the Wall Street Journal, "NASA faces years of daunting technical and financial challenges. The overall systems could cost more than $20 billion through 2021."
Lockheed Martin
According to Lockheed's 2013 annual report, the company's Space Systems business segment, which not only includes Orion and earnings from ULA but also research and development, design, engineering, and production of satellites, strategic and defensive missile systems for national security, experienced net sales of $7.96 billion in the 2013 fiscal year, which is 18% of its total consolidated net sales of $45.4 billion, and operating profit of slightly more than $1 billion, thus making the operating margin of the Space Systems segment 13.1% (overall consolidated operating margin was slightly less than 10%). Northrop Grumman, which is one of Lockheed's main competitors, experienced sales on its Aerospace Systems (comparable to Lockheed's Space Systems) of slightly more than $10 billion and operating income of $1.2 billion. In the 2013 fiscal year, Northrop's Aerospace Systems' operating margin was 12.1% - a margin smaller than Lockheed's.
Government contracts account for 98% of the Space Systems segment, which includes NASA, National Oceanic and Atmospheric Association, and several branches of the military (Navy and Air Force). In the case of Northrop, U.S. government contracts account for 86%. The Orion program, on an annual basis, is only a medium contributor to Lockheed's sales for this business segment, and even smaller for the consolidated.
Trying to figure out what the point of this blog post is going to be, I thought I could discuss the importance of the Orion program for NASA and for Lockheed Martin.
- For Lockheed in its entirety, Orion is only a fraction of its business - the company could live without the program, which, however, it would rather not do - something that I would not advise them to do. The point is, in Lockheed's operation, Orion is a great component to its programs portfolio, but not absolutely vital. Still, the Orion program sharpens the competitive edge against competitors, such as Northrop.
- Oppositely, NASA, with missions directly affecting humanity, depends on Orion as an program that explores new frontiers of science and technology. Missions, that essentially are for the greater good of the public, depend on government funding to continue the exploration of space, milestone after great milestone. Importance that is paramount.
In my opinion, the return on investment of the Orion program, regarding the gain of scientific and technological knowledge and insight as well as positive impact on the economy due to program spending (almost exclusively inside the United States) is much greater than its cost.
by Peter Steenhuis
http://www.lockheedmartin.com/content/dam/lockheed/data/corporate/documents/2013-Annual-Report.pdf
http://www.lockheedmartin.com/us.html
http://www.lockheedmartin.com/us/ssc/orion-eft1.html
http://www.businessweek.com/articles/2014-12-02/nasas-orion-test-flight-gets-us-closer-to-mars?hootPostID=945e0ef1c8405c785a2dbdd3b90ca373
http://www.space.com/27924-nasa-orion-spacecraft-historic-launch.html
http://www.space.com/27909-nasa-orion-capsule-mars-exploration.html
http://www.space.com/27918-nasa-orion-spacecraft-by-the-numbers.html
http://online.wsj.com/articles/orion-spacecraft-set-for-second-launch-attempt-1417771599
