Cracks starting to show in UK space consortium as they criticise local council & government

While we try to remain positive about the UK’s space ambitions and the efforts to reach the point where we are actively competing on the world stage in this exciting and ambitious sector, it is often difficult when you start seeing the cracks forming and questioning the motives of some of those involved. We want our country to flourish and realise its true potential by demonstrating to the world that we can take the lead in Europe’s new space ambitions and reaping the rewards from those efforts.

It has become clear to us for a while that the UK government is in danger of making the same mistakes as America has in fostering relationships with huge military contractors and expecting nobody to pay much attention. The problem with this is that it does exactly the opposite for those in any way curious about the government’s end goals.

The moment that Lockheed Martin were mentioned in the UK’s plans to establish launch facilities on home soil, alarm bells immediately started ringing. Not because they are one of the world’s largest military contractors and not even because they have a horrendous reputation, but because it simply carried with it the aroma of “keeping it in the family”.

This was supposed to be an opportunity to lead Europe in the new space sector. To show that the UK is ready to demonstrate its ability to innovate and to do things better. But, instead, we have followed in the footsteps of America, a country which, thankfully now, has seen private companies step up to take the lead in showing true innovation and progress. The stagnation of America’s space efforts was becoming quite embarrassing until SpaceX and Blue Origin stepped up.

And beyond just the stagnation, we witnessed the likes of Lockheed Martin and Boeing frequently failing to deliver anything of substance. Boeing in particular have a horrendous history of attempting to deliver on space projects. And yet, smaller, more agile companies like SpaceX step in and deliver what the established players failed to do for decades – with apparent ease.

The fact that a company like Lockheed Martin should come anywhere near this country’s space ambitions should have caused far more outrage than it did. This is a company that has clocked up 88 violations in the States in only 20 years. Most of them pretty serious, resulting in “fines” of over $240m.

This included 16 violations categorised as “government contracting-related offenses”.

But that’s not the only thing that gave us cause for concern. We spotted a “news” article about their “partners” in the project just last week – a previously unknown company called Orbex, who appeared out of nowhere, who, in their own words “had emerged from stealth mode”.

The article looked innocent enough and simply said that if the UK doesn’t get a move on they will need to launch from somewhere else. Which, of course, makes perfect commercial sense. But, there is a massive problem in them making this sort of statement, aside from the arrogance of it (a mostly Danish & German company making such threats to the Highland Council and the Scottish Government is never a good look).

Orbex were awarded a £5.5m grant from the UK Space Agency back in 2018 and stated that they have a war chest of £30m to build their rockets. Their crunchbase entry lists £30m investments into the company from 2018, which would back up that statement. Although oddly only shows £50k in grants.

So, back to the “news” article that caused us some concern. We are almost two years down the line since Orbex secured over £30m in funding, some of it from the British taxpayer. And yet, the article wasn’t about progress made using their significant funds. Instead, it was an unashamed bash at the local council and Scottish government for failing to make progress with planning. So, why is that of concern? Well, Orbex role is to build a rocket, not a spaceport. The delay in building the spaceport shouldn’t impact on them making progress on building a rocket. They’ve secured over £30m, and in the article have said that they didn’t furlough any staff and continue to work through the Covid19 crisis. They mentioned something about doing ‘simulations’.

Then they said something really stupid…

No. Not the bit where they say their best sign of progress is that they haven’t sacked anyone (although that is pretty dumb).

This…

“Mr Larmour said he could not give exact current employee numbers for commercial reasons but said he had a list of 70 roles that he had to fill over the next 18 months.” The number of employees they have is a secret? According to Wikipedia they had 15 employees in 2018 and according to their won Annual Accounts they had 13 staff in the group in 2019.

Later in the article it became clear why the number of employees was a secret. Because it would have indicated how much cash the company was haemorrhaging. And now we get to the main point of why we were concerned.

This wasn’t a company updating us on their remarkable progress, this was a company declaring that they were bleeding cash and that they were unwilling to do so for another year (despite being one of the best funded European private launch providers).

So, while Orbex remain pretty tight lipped about how many staff they have, we were keen to see whether their company accounts gave a better picture of the company’s financial health. After all, if this was a company in trouble and struggling to weather the Covid storm, this would have huge implications for the UK’s space efforts and if they are threatening to go elsewhere to launch, could then set back the UK ambitions. And that would be a disaster.

We found that Orbital Express Launch Ltd (the company’s official registered name) had three entities registered in various countries.

UK: Orbital Express Launch Ltd.
Denmark: Orbital Express Launch ApS
Germany: Orbital Express Launch UG

The accounts up to May 2019 for the UK-registered entity showed a loss of £1.2m, Cash at bank and in hand of £521,047 (compared to £2.6m in 2018).

There is also an entry showing how much the company have raised in grants in both 2018 (£0) and 2019 (£100,000).

At least the “secret employees” question has been answered. There are 13 employees shown as of May 2019, costing the company £282,819 per year in addition to the Directors’ Remuneration of £180,376.

So far there is no sign of anything near to £30m showing in the 2019 accounts and certainly not the kind of money needed to sustain just their normal outgoings, never mind the development of a rocket. So we thought it may be sitting in one of the subsidiary company accounts.

It certainly wasn’t in Germany if the 2019 accounts are anything to go by…

And no sign of anything like £30m kicking about in the Danish accounts. However, it was interesting to note that the Danish wage bill is significantly higher than that of the UK, so we can only guess that’s where the secret staff are.

 

 

We are starting to see why they are increasing nervous and highly concerned about potential delays to the Sutherland Spaceport being built.

So their threat of maybe having to launch from elsewhere doesn’t look like an empty one, but rather out of necessity to survive.

Remember that “best funded European private launch provider” statement?
Well, they had to borrow £675,000 from the UK taxpayer via the HIE just a couple of months ago to keep afloat (secured against their property). Yes, you read that correctly… they didn’t borrow from a bank… but from the UK taxpayer funded Highlands and Islands Enterprise.

Summary

The UK’s “space consortium” consists of one of USA’s largest military hardware manufacturers with a questionable track record resulting in hundreds of millions of $$ in fines, a highly secretive group from Denmark and Germany straight out of “stealth mode” making empty threats towards our local councils and government, while burning taxpayers money and extracting huge directors bonuses. And who make incredible claims about job creation (130 new jobs was the number quoted in the article above), but who won’t even say how many people they have employed (because it’s a secret… despite it being available on public record), and whose statements about being the “best funded” company of its kind are not matched when public records are scrutinised.

Let’s keep in mind that The Herald is a consumer newspaper title, so it is the general public they are talking directly to when they make statements in such interviews. It is therefore the British public that they hold in such disregard that they can’t even give an honest answer to… and that the money that’s “keeping them afloat” is taxpayer’s money.

These are foreign actors, based in Denmark and Germany, criticising our local councils and government, while spending British taxpayers’ money and using Scottish soil to launch their rockets (likely manufactured in Denmark… under the pretense of being made in their “Scottish rocket factory”).

The sheer silence of Lockheed Martin (who we would imagine know fine well that’s the best way to avoid public scrutiny or criticism) tells us all that we need to know. They know that the moment they start branding their name around in Scotland, the people will start to pay close attention to them, and that attention may not result in any sort of love bombing.

We remain hopeful that our country will achieve its ambitions, however, we may need to shed some “burdens” along the way.