The Daily Item, Sunbury, PA

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December 8, 2013

Orbital Sciences explores outer space for dollars

WASHINGTON, D.C. — WASHINGTON — Space travel isn’t limited to the dreams of entrepreneurs looking to explore new worlds after making their billions of dollars on terra firma.

David Thompson, 58, has made space travel his life’s work. He runs Orbital Sciences, a profitable space exploration company in Dulles, Va. It employs 3,600 people, half of whom are rocket scientists. About 2,000 of Orbital’s employees work in the Washington area. Most of the others are at Orbital’s rocket factory in Arizona.

Orbital has designed and built nearly 1,000 rockets and satellites in the past three decades, sending aloft commercial and science gear and military spy gizmos. The company launches its rockets from all major U.S. spaceports, including Wallops Island, a remote stretch off Virginia’s Eastern Shore.

The company touches Americans more than they know.

“If you, as virtually all American households do, have something other than over-the-air television . . . you are almost certainly getting that programming, at least in part, through satellites that we built,” Thompson said.

Orbital — based in a series of buildings on Warp Drive (yes, that’s the name of the street) — basks in its gee-whiz glamour. It names its conference rooms after space scientists. It hires former astronauts. Its satellite factory in Dulles looks like a science-fiction movie set.

Thompson’s light-filled office reflects a career that includes stops at the Massachusetts Institute of Technology, Caltech, Harvard, NASA and Hughes Aircraft. Rocket and airplane models, even a chair from the Harvard Business School, decorate the spacious quarters.

Orbital’s mission has been to unlock the commercial possibilities of outer space, making it affordable for clients and profitable for shareholders.

The company earned $61 million last year on revenue of $1.43 billion. Orbital has made money in all but a couple of the 22 years it has been a publicly traded firm.

Orbital’s revenue is sourced about equally between commercial customers, the defense industry and civil government agencies, such as NASA and the National Oceanic and Atmospheric Administration.

Thompson is constantly on the hunt to increase revenue — and now he thinks he has found the next big thing: an unmanned cargo delivery vehicle called Cygnus that resupplies the international space station.

Cygnus, launched by an Orbital-built Antares rocket, successfully completed in September the first of what Thompson hopes is a series of cargo runs that could supply the space station as long as it orbits the Earth — maybe for decades.

“It’s a big deal,” said Thompson, who has bet a big chunk of the company on Cygnus.

Thompson has had the space bug since he was a kid growing up on the East Coast. He studied aerospace engineering at MIT and Caltech, and worked at NASA before graduating with a Harvard MBA in 1981.

While he was at Harvard, he and two classmates worked on a project that focused on the possibility of making money from outer space.

“We thought there ought to be a way to do things in space that are just a lot more affordable,” he said. “I mean, you don’t need a billion dollars and 10 years to do these things. That was the idea.”

They eventually turned the idea into reality, pooling $500 each to start in the early 1980s. They exhausted their credit card limits. The first offices were in the extra bedroom in Thompson’s Southern California townhouse. They knocked on doors for funding and for customers. Their first $250,000 came from oil entrepreneurs, space technologists and real estate businessmen — all from Houston.

Some of his first business ideas involved commercially reliable space ventures built around the emerging space shuttle program, including power generation, solar farms, manufacturing, pharmaceuticals and even passenger travel.

“The space shuttle, however, did not turn out to be the railroad to space that the space community had hoped,” Thompson said.

By the mid-1980s, they had moved to the Washington area because, as Thompson put it, “to the extent there was a commercial satellite hub in the U.S., D.C. was it.”

After the 1986 Challenger disaster, the company pivoted from its space shuttle plans and invented Pegasus, a kind of oversized cruise missile.

“Pegasus was our first blockbuster product,” he said.

Pegasus was designed to be taken up a few miles above the Earth by a giant B-52 bomber borrowed from the government. The rocket that was dropped from the plane would release its cargo — which could be a satellite the size of a TV set — into space. Eventually, the B-52 was replaced with Orbital’s own plane.

Costing $6 million to $7 million per launch, the Pegasus was cheaper to use than other rockets available at the time.

The rocket, said Thompson, “clearly met a market need that was not being well-addressed.”

The Pegasus project — which won some big scientific awards — has lasted more than two decades, during which time Orbital has branched out in building and carrying satellites into outer space.

Throughout the 1980s and ‘90s, Orbital made its money in three areas: building communications and imaging devices, missile defense systems, and scientific and environmental satellites.

Not everything has worked. The company lost a half-billion dollars on an ill-fated communications venture a decade ago that almost took Orbital under. An early version of a hand-held Global Positioning System showed some potential, but that petered out as well.

About eight years ago, the company began focusing on other possibilities for growth, including what Thompson calls “the human space flight market.”

Thompson knew that human space flight was fraught with high risk and high costs.

“We concluded that the best way to get into that business initially was not to try from the very beginning to develop a rocket or capsule that could carry people up and back.”

Instead, he said, they wanted something that would require less investment, carry less risk and have a faster effect on profits.

“Carrying cargo, while not easy, is easier than carrying people. If something goes really bad and the rocket explodes and the system malfunctions, you lose the cargo. OK. There’s a monetary loss. But that’s a whole lower level of problem than if something goes bad and you kill a bunch of people.”

Thompson and his team are betting that the space station will be around for decades, creating a need for everything from food, water, oxygen and clothes to spare parts and scientific experiments.

“You’ve got this hundred billion-dollar laboratory up there and you got typically six people up there all the time, and it takes a lot to run.”

The company does not have the space station supply market all to itself, however. A pesky California upstart called SpaceX — led by media-savvy entrepreneur Elon Musk, inventor of Tesla Motors’s battery-powered car — has also launched a successful cargo mission to the space station.

As for human space travel for the masses, Thompson said that will not be affordable anytime soon:

“Unfortunately, going into space is still a really, really hard thing to do. And over time, it will become less expensive. But it’s not going to become a whole lot less expensive in a hurry.”

 

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