The State of New Mexico and Sierra County believe SpinLaunch’s rocket-launching system using centrifugal force will be proven successful, evidenced by the county commission’s approval at its Jan. 19 meeting of the state’s $4 million economic development deal with the California-based start-up company.
The county’s contribution is administrative, not financial. The New Mexico Economic Development Department will provide public support out of state funding. The county’s participation falls under the state Local Economic Development Act, which requires local government endorsement of local economic development projects. The LEDA deal approved last week will reimburse SpinLaunch’s engineering, design and construction costs up to $4 million, including the construction of a test centrifuge at Spaceport America.
If SpinLaunch can perfect a centrifuge that hurls a rocket through the first 65 miles of atmosphere, it will eliminate the need to expend tons of rocket fuel, reducing satellite-launch costs from about $10 million to $500,000 and permit frequent launches, according to SpinLaunch founder Jonathan Yaney.
Yaney, who describes himself on his LinkedIn profile as a “is a 1,000+ hour pilot and serial entrepreneur with 15 years experience founding companies in Fortune 500 consulting, IT, construction, and aerospace industries,” laid out these potential competitive advantages in a Jan. 29, 2020, Wired Magazine article. Wired’s examination of the company’s history, experimental technology and business strategy that can be read in its entirety here.
At the county commission’s Jan. 19 meeting, Sierra County Manager Bruce Swingle claimed the county held a public hearing on the SpinLaunch deal at the previous month’s commission meeting. But no public hearing was noticed on the Dec. 15 agenda and, as a result, no public testimony was received. There was also no explanation for the unusual step of separating the public hearing from the county commission’s final decision on the participation agreement, which was on the Jan. 19 agenda.
County Commission Vice Chairperson Travis Day said the county has always supported the Spaceport and should continue to do so, because its commercial success means greater economic success for the county. County Commission Chairperson Jim Paxon’s comments echoed Day’s. There was no analysis or questioning of the economic development agreement itself.
At neither county commission meeting was it discussed or acknowledged that SpinLaunch’s use of the Spaceport will be mostly limited to testing and employee training. Even if the company’s kinetic launch technology ultimately works—a big “if,” according to aerospace engineers interviewed by Wired Magazine—commercial launches will not take place at the Spaceport but on the coast for safety reasons.
QUESTIONS ABOUT THE ECONOMIC BENEFITS OF SPINLAUNCH JOBS AND INFRASTRUCTURE
As with most of the state’s local economic development deals, SpinLaunch’s is predicated on job creation. In exchange for state reimbursement of the company’s costs to put in permanent infrastructure at the Spaceport, SpinLaunch must create about 100 jobs over 10 years.
The company is to have 53 people on the payroll by Dec. 31, 2021, and 75 by Dec. 31, 2022. Hiring goals diminish in subsequent years, with 100 to be hired by Dec. 31, 2029.
As no salary or benefit minimums are specified in the deal, there is nothing to prevent a revolving door of trainees paid from $10 to $20 an hour from fulfilling the hiring requirements. There is a restriction that new hires must have lived in the state at least one year.
SpinLaunch and NMEDD confirm the company is recruiting employees from state colleges. In a separate deal unrelated to the $4 million agreement signed by the county, NMEDD will subsidize the salaries of SpinLaunch employees who are provided training.
If the Spaceport site is primarily a training ground, with employees eventually headed to coastal jobs, where small satellite launch sites must be located, the trickle-down economic benefits of their short-term presence in Sierra County, such as home acquisitions and greater gross receipts tax revenues from the purchase of local goods and services, may be less than anticipated.
The LEDA agreement is predicated on SpinLaunch’s staying at the Spaceport for 10 years. If it departs before Dec. 31, 2025, the state can “claw back” all of the money reimbursed to the company, up to $4 million. In that case, SpinLaunch would essentially have been given an interest-free loan and the Spaceport would be left with a centrifuge with test capability, but limited commercial value.
There is little chance the company will build a centrifuge at the Spaceport large enough to launch rockets that can place commercial satellites in low-orbit space. Rockets that fall to earth after launch, shedding hardware by stages, are currently restricted to coastlines so that the debris falls into the ocean, where it does not pose a threat to civilian populations. Therefore, SpinLaunch can use the Spaceport only for testing, limiting the economic returns to the state and county and the long-term growth of the test site the state’s taxpayers have helped to develop.
WHY NMEDD THINKS SPINLAUNCH IS A GOOD BET
After consulting NMEDD’s economic analysts, Public Information Officer Bruce Krasnow conveyed the department’s response to the Sun’s questions about SpinLaunch’s ability to generate enough economic benefit to warrant public support.
Testing and development at the SpinLaunch site will go on for years, NMEDD asserted.
“Because of Spaceport America’s unique range capabilities, SpinLaunch anticipates continuing to utilize its suborbital test site for activities beyond the development of its first-generation launch system. Over the next 10 to 20 years, SpinLaunch will use its site to develop next-generation launch systems. The site will also be used to support several other continuous test and development activities unrelated to launch systems,” NMEDD stated.
“The technology also allows for other types of testing, including for hypersonic materials research,” NMEDD explained.
“The state investment and SpinLaunch’s decision to locate at the Spaceport in Sierra County has already brought significant positive attention to New Mexico as a place for satellite, aerospace and engineering innovation. The partnerships the company is establishing with New Mexico Tech and NMSU will yield benefits for graduates who want to work in this field and for enrolled students who want to pursue hands-on internship experiences.
“Spaceport America is now nurturing a cluster of high-tech innovative companies and this is a positive message for the state as we work to create higher paying jobs and diversify our economy.
“SpinLaunch has already invested over $38 million into its Spaceport America flight test site to date. The company’s current employment level represents 1.5 percent of the Sierra County’s total workforce,” NMEDD stated.
SPINLAUNCH’S INVESTMENTS AT SPACEPORT TO DATE
According to NMEDD, SpinLaunch has been paying about $10,000 a month since May 2019 for land leased on the outskirts of Spaceport America in the “Advanced Technology Area,” miles from Virgin Galactic’s main terminal and hanger. Its lease is partially subsidized through a separate deal with NMEDD, which provides “graduated incentive payments that depend on its pace of launch and development.”
NMEDD reports SpinLaunch has invested $38 million in the test site to date, without providing a breakdown. A partial accounting can be pieced together from multiple sources. According to a recent Los Alamos Daily Post article, SpinLaunch has built a 10,000 square-foot “Integration Facility/Mission Control” building. A photograph accompanying the article shows a prefabricated metal building.
Employee accommodations are even less expensive. Spaceport Interim Executive Director Scott McLaughlin said at the Dec. 15 county commission meeting that “30 to 40” employees were living and/or working on-site. Freight containers have been modified into living quarters, a game room and gym. Outside are a fire pit, hot tubs and archery range. Meals are provided by an on-site chef.
McLaughlin also reported at the December meeting that 59 more employees were soon to be hired. The list of employment opportunities on the SpinLaunch website, checked Jan. 19, advertised a single position at the Spaceport—a “sous chef.”
NMEDD offered the following explanation in response to the Sun’s questions about employee recruitment and housing: “While SpinLaunch does have accommodations for some staff on-site, SpinLaunch activities have resulted in approximately 30 members of its staff renting property off-site in Truth or Consequences and Las Cruces. The majority of New Mexico-based positions filled were not listed on the company website, or have since been taken down after being filled. For members of SpinLaunch that are located on-site during the week, in-town merchants and services are still regularly utilized.”
“As SpinLaunch shifts from construction to operation of its suborbital flight facility,” NMEDD elaborated, “it expects to hire more engineers, technicians, and other highly paid workers to support operational activities.”
Salaries are being partially reimbursed by the state in concurrent and separate deals between NMEDD and SpinLaunch. Under its “Job Training Incentive Program,” NMEDD will reimburse 75 percent of SpinLaunch’s employee salaries for up to the first six months, in exchange for SpinLaunch’s provision of employee training. Eligible salaries range from $10.63 to $15.13 an hour. NMEDD said it has made two such JTIP deals with SpinLaunch so far, but provided no other details.
THE COUNTY’S PROJECT PARTICIPATION AGREEMENT
The county’s duties in the “Project Participation Agreement” are to collect receipts documenting SpinLaunch’s requests for reimbursement for allowed expenses and employment reports verifying SpinLaunch is meeting employment goals.
The agreement states SpinLaunch expects to invest $45.5 million at the Spaceport over the course of ten years for “acquisition of building, equipment, tangible personal property and services associated with the construction and equipping of the property.” There is no requirement, however, that the company must invest that amount. If it doesn’t, it “will not constitute a breach of this agreement.”
But SpinLaunch must meet four employment goals and other milestones to get reimbursed in $1 million tranches for “LEDA (Local Economic Development Act) eligible expenses.”
These expenses include, but are not limited to: “land, building and infrastructure, including permanently installed and situated physical assets and the design, labor and permitting required to put them in place. Examples include, but are not limited to: foundation, drainage, improvements, electrical wiring, architecture fees, insulation, landscaping and equipment rentals for construction.”
Expenses incurred prior to signing of the LEDA deal are not eligible for reimbursement. Neither are lease payments or equipment purchases.
The first $1 million reimbursement tranche requires SpinLaunch to have obtained a certificate of occupancy for the Integration/Mission Control building. The company must show three consecutive months of payroll for at least 55 employees who had lived in New Mexico for at least one year when they were hired.
The second $1 million reimbursement tranche requires SpinLaunch to have executed its first suborbital launch. The company must show three consecutive months of payroll for at least 78 employees who had lived in New Mexico for at least one year when they were hired.
The third $1 million reimbursement tranche requires SpinLaunch to have hired 88 New Mexican residents who have been on the payroll for three consecutive months.
The fourth $1 million reimbursement tranche requires SpinLaunch to have hired 98 New Mexicans who have been on the payroll for three consecutive months.
There are “claw-back” provisions in the LEDA deal to protect the public purse. SpinLaunch must put up “security” for the full $4 million until December 2025. If it leaves the Spaceport before then, it must pay back 100 percent of the money reimbursed for LEDA eligible expenses.
The claw back is reduced to a maximum 75 percent return of monies reimbursed if Spinlaunch leaves in the fifth, sixth or seventh years of operation and to 50 percent if the company departs in the ninth or 10th years of operation.
The state may also claw back money if the company doesn’t meet its employment goals. For example, if only 80 percent of the required number of employees have been hired by the stated deadline, the claw back would be 20 percent of state money disbursed. The deal gives SpinLaunch half a year to “cure” any such employment issues.
SPINLAUNCH TESTING AND END GOAL
When completed, the SpinLaunch centrifuge at the Spaceport will be “capable of flights in excess of 100km (about 62 miles) in altitude,” according to Winnie Lai, the company’s vice president of business and product development. “The current suborbital test site project will launch a variety of projectiles and test vehicles,” Lai stated in a Jan. 22 email to the Sun. “Test vehicles will include satellite and rocket components and subsystems, but SpinLaunch will not launch into orbit from Spaceport America. The test vehicles will land both near Spaceport and inside White Sands Missile Range property, depending on the trajectory required for a specific mission.”
This is the second centrifuge SpinLaunch has built. The first was a 40-foot-wide centrifuge located in Long Beach, Calif. The Spaceport’s will be 100 feet in diameter, according to Wired Magazine.
The first centrifuge was capable of accelerating an 11-pound object to speeds of up to 4,000 miles an hour, the tethering arm sending it crashing against a steel wall. Aerospace engineers interviewed by Wired expressed doubt that rockets or electronic components could survive centrifugal forces 10,000 times greater than gravity. SpinLaunch founder Yaney told Wired they had accelerated a variety of electronic equipment inside the centrifuge, including an iPhone, which Yaney used to make a call afterward, but, in a correction to the article, Wired stated the centrifuge didn’t get the iPhone up to 4,000 miles per hour.
Even at 100 feet wide, the Spaceport centrifuge is still an experimental size, according to Wired. It will be capable of hurling “projectiles up to 110 pounds.”
SpinLaunch estimates a 300-foot-wide centrifuge will be needed to launch “an SUV-sized rocket,” weighing “thousands of pounds” into space, with a 200-pound payload/satellite inside, Wired said.
The company’s end goal, Wired said, is to devise a centrifuge with a tethering arm holding the rocket, which, when released, will travel at 5,000 miles an hour to a height of about 65 miles. Engine boosters will then burn about one minute to increase the rocket’s speed to about 17,500 miles an hour, which will send it to the “edge of space,” 100 miles up. A second 10-second burn, Wired stated, “helps the rocket slide into orbit around Earth.”
SPINLAUNCH TOO LATE TO THE GAME?
Although NMEDD appears to be comfortable supporting SpinLaunch’s next 10 years of testing and training to get its centrifugal launching system to market, the market leaders are being chosen and decided much sooner.
SpaceX is the undisputed leader in the “smallsat” industry that SpinLaunch is seeking to enter, “disrupting” and changing the market, Janice Starzyk, vice president of commercial space at the market research firm Bryce Space and Technology, observed in an August 2020 interview with SpaceNews.
SpaceX announced its “SmallSat Rideshare Program” in 2019. Yesterday, a Space X rocket with 143 spacecraft and satellites on board lofted the payload into orbit from Cape Canaveral, earning accolades as the “biggest carpool to space” from The Verge.com, a technology news website.
SpaceX is charging $2.5 million per rideshare for objects weighing up to 330 pounds and in the future will offer launches every two weeks. Starzyk pointed out other smallsat launchers cannot yet compete with SpaceX’s schedule or price.
The federal government will play a part in picking winners and losers among the smallsat launch companies, because it has special needs related to national security, Starzyk said. In June 2019 SpinLaunch landed a Department Defense contract for an undisclosed amount to develop its centrifuge launching system, according to SpaceNews reporting at the time.
Since its founding in 2014, SpinLaunch has raised $80 million from private investors who believe that the company will ultimately be able to launch smallsat payloads at a lower cost and higher frequency than its competitors, according to a Jan. 5 article in SpaceNews.
At an expected price of $500,000 for a 200-pound payload, SpinLaunch’s still-unproven services would be one third the cost per payload pound SpaceX is offering now. Will that still be a competitive advantage in as long as 10 years’ time?
Research assistance by Linda King