Elon Musk’s Space Exploration Technologies Corp. (SpaceX) expects to lay off 10% of its 6,000-employee workforce citing the urgent need to be a “leaner company.”
The cuts were mentioned in an email sent to employees by President Gwynne Shotwell, which was given to the Los Angeles Times. “This was a very difficult but necessary decision,” Shotwell wrote.
“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,” the Hawthorne-based company said in a statement. “Either of these developments, even when attempted separately, have bankrupted other organizations. 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,” the company continued. “This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary.”
The layoffs would affect approximately 600 employees, who would receive a minimum of two months’ pay and other benefits, while the company promised to assist with job searching.
The job cut announcement coincided with the first SpaceX mission of 2019 on Friday, as a Falcon 9 rocket launched ten satellites into low-Earth orbit. Even with SpaceX’s increased launching activity – 21 in 2018, up from 18 the prior year, the company still has to reduce its size.
SpaceX generates most of its revenue from commercial and government satellite launches.
Elon Musk’s company maintains it is financially sound, but the need to reduce staff indicates that financial stress could be brewing underneath.
In May 2018, Shotwell told CNBC that the company is profitable and has had “many years” of profitability.
Meanwhile, SpaceX reported in an SEC filing that it had raised more than $273 million in a planned $500 million round last week. The company is valued around $31 billion, according to Equidate, which tracks private-company valuations.
Musk also made headlines in June 2018 at his other company, Tesla, when it announced it was cutting 9% of its employees as part of an organizational restructuring aimed at reducing costs and boosting profits.
As for now, Musk’s house of cards SolarCity, SpaceX and Tesla remain standing, yet there are ominous signs that trouble could be brewing in the Musk empire.