- SpaceX, the rocket company owned by Elon Musk, will lay off about 10% of its employees, the Los Angeles Times reported on Friday, citing an unnamed source.
- SpaceX confirmed the layoffs, citing the “extraordinarily difficult challenges” of developing a new interplanetary spacecraft and launching a global satellite internet network.
- A document filed by SpaceX with the state of California suggests at least 577 people at the company’s headquarters will lose their jobs on March 12.
- The company has more than 6,000 employees and raised more than $US1 billion in 2018.
SpaceX, the rocket company owned by Elon Musk, will lay off about 10% of its employees, the Los Angeles Times reported on Friday, citing an unnamed source.
A representative at SpaceX later confirmed the workforce reduction, saying the staff cuts are company-wide and will leave more than 6,000 people employed at the aerospace startup, which is worth perhaps $US30 billion or more.
SpaceX declined to provide a number of people who lost their jobs and where those positions are located. However, a layoff notice filed to the state of California and obtained by Business Insider suggests that 577 positions – the bulk of the layoffs – are located at the company’s headquarters in Hawthorne, California.
These terminations are supposed to take effect on March 12, SpaceX said in the document.
A spokesperson at SpaceX provided the following statement to Business Insider:
“To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company. Either of these developments, even when attempted separately, have bankrupted other organisations. This means we must part ways with some talented and hardworking members of our team. We are grateful for everything they have accomplished and their commitment to SpaceX’s mission. This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary.”
The interplanetary rocket in question is the two-stage launch system called Big Falcon Rocket (BFR), more recently referred to by Musk as Starship (the top half and a spaceship) and Super Heavy (the bottom half and a rocket booster).
SpaceX has been working relentlessly in recent weeks to build and start testing a prototype of the new system. The ultimate goal is to launch crewed missions to Mars, perhaps as soon as 2024. Each flight may be capable of ferrying up to 100 people and 150 tons of cargo, according to Musk and his top engineers.
SpaceX’s global space-based internet project is called Starlink, and the plans call for launching 11,943 satellites into low-Earth orbit – many times more spacecraft than humanity has launched throughout history. The FCC approved the scheme on the condition that SpaceX complete its launches by December 2027. So far, the company has launched two prototypes into space.
The news about layoffs was sent to SpaceX employees in an email from company president and chief operating officer Gwynne Shotwell, the LA Times said.
The cuts – which might save SpaceX up to $US100 million per year, based on some back-of-the-envelope calculations – come less than a month after SpaceX announced plans to raise another $US500 million in investment funding. The company had previously raised $US507 million in April 2018.
That new funding is likely being used to further both Starlink and BFR (or Starship/Super Heavy).
SpaceX also hopes to use that system to send a Japanese billionaire and a crew of artists around the moon and create the world’s fastest transportation system.
Not the first round of layoffs for SpaceX
SpaceX is offering the affected employees eight weeks’ severance pay and other career resources, according to the LA Times. Such compensation packages are in line with provisions in California’s Worker Adjustment and Retraining Notification (or WARN) Act – a law that requires at least 60 days’ notice to workers if more than 50 are let go within a 30-day period.
SpaceX filed a WARN notice to California’s Employment Development Department via email on Friday.
“[W]e anticipate that approximately 577 employees at the Facility will be terminated from the Company, with terminations expected to begin effective March 12, 2019,” SpaceX states in the document. “Affected employees will be paid all wages and other benefits (if any) to which they are entitled through their date of termination.”
The document also includes a list of the 577 positions being terminated, which range from additive technicians and baristas to turbomachinery engineers and welders. About 24 of the positions are temporary and the rest are full-time.
SpaceX may have adjusted its layoff strategy after weathering litigation following a previous round of layoffs. In July 2014, the company made workforce cuts of a similar percentage, after which some former employees sued the company over language in the WARN Act.
“The WARN Act is very clear. You’re entitled to back pay and wages if you are not given notice,” Leonard Sansanowicz, an attorney who represented the former SpaceX workers, told the Daily Breeze in August 2014.
SpaceX fought the class-action lawsuit but ultimately lost, according to Los Angeles County court documents.
The layoff notice that SpaceX sent to its employees on January 11 provides about 61 days’ notice before termination – one day more than the WARN Act’s 60-day minimum.
This story has been updated. It was originally published at 8:01 p.m. EST on January 11, 2018.
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