Russia to Undertake Major Reform of Space Industry

Deputy Prime Minister Dmitry Rogozin. (Credit: A. Savin)
Deputy Prime Minister Dmitry Rogozin. (Credit: A. Savin)

ITAR-TASS reports that Russian officials will be moving ahead with a plan to transform the nation’s space industry into a joint stock company:

Shortly after the tragic incident Deputy Prime Minister Dmitry Rogozin declared plans for reforming the Russian space rocket industry and pooling its enterprises. “A decision has been made to create a special commission that will draft a presidential resolution to reform the space rocket industry,” Rogozin declared. As follows from what he said, some “unified integrated entity” will be in charge of all space rocket technologies soon. The proposed structure – likely to be called a United Space Rocket Corporation – will have the status of an open joint stock company, and not a state corporation.

Rogozin’s announcement came in the aftermath of yet another failed launch attempt. On Tuesday, a Proton rocket carrying three satellites crashed shortly after liftoff from the Baikonur Cosmodome.

The website doesn’t provide any further details on Rogozin’s plan. It’s not clear, for example, whether this change would affect the launch industry or the entire space program.

Roscosmos head Vladimir Popovkin floated a similar plan last October, one that involved consolidating the entire space sector under a transformed space agency:

In order to sort out the space industry, the Russian Space Agency (Roscosmos) needs to be turned into a state corporation for a period of 5-7 years and then reorganized into a joint-stock company, Roscosmos head Vladimir Popovkin said in an interview in Vedomosti published on Monday.

“The state corporation is needed for a maximum of 5-7 years, in order to clean everything up, create several divisions that produce engines, rockets, satellites for near and deep space. Then it should become a joint-stock company and enter the normal market,” Popovkin said.

A state corporation needs to be created in order to whip “the sector into a normal condition that would correspond to corporations such as Boeing or Lockheed Martin,” he said, adding that “changes require a strong concentration of power.”

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“The capacity that existed in the Soviet Union is not needed today. There is a lot of obsolete technology that needs to be gotten rid of. It is also impossible to continue to maintain 242,000 workers with the industry using about 48 percent of capacity. The country can’t feed them. There should be a maximum 150,000-170,000 people working in the sector,” Popovkin said last October.

Popovkin’s approach has Roscosmos spending five to seven years as a state corporation before becoming a joint-stock company. Rogozin seems to rule out the state corporation option.

Critics have questioned the need to consolidate everything under Roscosmos, saying it would eliminate any competition within the industry. The proposal has come at a time when the upstart American company SpaceX has been winning numerous launch contracts.

The type of mass reorganization that Popovkin has described would likely create a lot of chaos. The situation could become very disorganized and confusing before the dust settles and operations begin to improve. In the meantime, they have to keep launching rockets and try not to lose too many more of them.

Laying off 72,000 to 92,000 people would cause morale to crash. Making sure they don’t lose invaluable talent along the way would be a significant challenge. At the same time, they would have to cycle in a new generation of younger workers who have avoided the industry due to poor pay and conditions.

The other question is what do all these laid off people do? Will they go off and sell their rocket expertise to rogue regimes to keep food on the table? This was a big concern 20 years ago after the Soviet Union collapsed and its space sector went into a sharp decline. The International Space Station project was, at least in part, an attempt by the United States to keep Russian space experts gainfully employed.

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