Lockheed Martin Corp. (LMT, Financial) and Boeing Co. (BA, Financial) entered a joint venture in 2006 to form United Launch Alliance, which has announced it will let go 12 executives by December. This has been called as company’s reorganization to match with the “increasingly competitive business environment” and a step to make changes in its leadership team.
The Joint Venture
Headquartered in Colorado, United Launch Alliance was started as a joint venture between Lockheed Martin space systems and Boeing defense, space and security. While Lockheed Martin is a Maryland-based American global aerospace, defense, security and advanced Technology Company with worldwide presence, Boeing Co. is an American multinational corporation founded in 1916 that designs, manufactures and sells airplanes, rotorcraft, rockets and satellites. The newly formed company was made to provide spacecraft launch service to the government of the United States, which includes both the Department of Defense and NASA, along with few other related organizations. A major restructuring took place within the ULA in 2014 as the company announced its restructuring process and shuffling of workforce in an effort to decrease launch costs by 50%. At that time, competition from SpaceX was cited as a major reason because of which ULA took steps for restructuring.
Threats to ULA
Even the current reorganization of staff at ULA has been termed as being done to ensure continued growth and attract new customers despite the growth of SpaceX. After serving for long as the sole company responsible for the launch of US military and intelligence satellites into orbit, the monopoly might end soon with Air Force planning to certify Space Exploration Technologies to takeover some of the launches next month. The company is also under rigorous pressure from a new law that has put a limitation on using Russian RD-180 rocket engines which would be used to make Atlas 5 launch vehicles work post 2019. The Congress government passed this law after the Crimea region of Ukraine was annexed by Russia last year. Analysts are of the belief that the new law will cause severe damages to ULA if not rolled back as without those engines, the company will not be able to catch up with some of the important air force launches between 2019 and 2022.
Going forward
Toy Bruno, chief executive of ULA, replaced Michael Gass in August last year. The company also announced it will develop a new launch vehicle powered by a U.S.- built engine in partnership with entrepreneur Jeff Bezos. In an effort to boost growth, the company would also cut costs and add new customers to its portfolio. The company intends to reduce costs as well as the time period of the current launches. The management layoffs mark the beginning of the major reorganization in course.
