SpaceX announced the layoffs to employees on Friday, and the Los Angeles Times reported the cuts shortly thereafter. The workforce reduction will terminate hundreds of employees at SpaceX facilities across at least seven states by March 12.
“This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary,” a SpaceX spokesperson said in a statement sent to Business Insider (the full statement is below).
The company declined to provide a total number of people who will lose their jobs, though it said more than 6,000 employees will remain after the layoffs. That suggests about 700 positions were eliminated, given the company’s last-reported size. (A rocket engineer and entrepreneur unaffiliated with SpaceX suggested on Twitter that as many as 850 people were let go.)
However, details about most of the layoffs can be found in a legally mandated document that the company sent to California’s Employment Development Department. Business Insider obtained a copy of the document from the department; it states that SpaceX plans to terminate 577 people at its headquarters in Hawthorne (a city in the Los Angeles area), and it lists their job titles.
The chart below summarizes the main types of jobs SpaceX plans to eliminate at its headquarters, and what percentage of the 577 people laid off that each job represents.
Technicians — a critical role at any rocket company — make up the lion’s share of laid-off employees, with 174 positions eliminated (30.2% of all layoffs in Hawthorne). Engineers come next with 97 jobs let go, or nearly 17% of the locally terminated workforce.
Managers and supervisors together make up about 7% of the layoffs in Hawthorne. Positions listed under “Other” include baristas, dishwashers, drivers, recruiters, writers, and an investigator.
Descriptive words used in the titles of the laid-off positions are summarized below.
The word “Sr.” (senior) was attached to nearly 6% of the eliminated positions. “Structures” and “propulsion” — two key areas in the development of rocket bodies and engines — were associated with nearly 17% of all the jobs cut in Hawthorne.
Why SpaceX said it needed to lay off hundreds of people
The document that lists these job titles is a notice required by California’s Worker Adjustment and Retraining Notification, also known as the WARN Act. The law says companies must tell workers and the state about layoffs at least 60 days in advance if more than 50 people are let go within a 30-day period.
This major reduction in workforce is not SpaceX’s first round of cuts.
In fact, after the company terminated hundreds of workers in July 2014, some former employees sued the company based on what they saw as a lack of compliance with language in the WARN Act. SpaceX fought the class-action lawsuit but ultimately lost, according to Los Angeles County court documents.
SpaceX may have adjusted its layoff strategy this time after weathering that litigation — according to the LA Times, the company is now offering affected employees about eight weeks’ severance pay and access to career resources.
Because SpaceX facilities outside of California are not subject to the state’s WARN Act, it’s not yet clear whether other locations saw job losses similar to those at the Hawthorne headquarters.
However, Musk said in 2018 that work on developing SpaceX’s Falcon 9 rocket— a workhorse launch system for the company — was ending. That’s because the latest version of the rocket has a booster that Musk says can be reused 10 to 100 times. The company launched 21 of the rockets last year, breaking its own record.
Musk has also hinted that SpaceX is refocusing its resources on two keystone projects: a launch system for reaching Mars known as Big Falcon Rocket (or BFR or Starship/Super Heavy), and Starlink, a global satellite internet project.
The statement provided to Business Insider from a SpaceX spokesperson also attributed the cuts to this shift:
“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. 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. This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary.”
SpaceX has been working relentlessly in recent weeks to build and start launching a “test hopper” prototype of the interplanetary rocket system in question.
Musk hopes to use that system to send a Japanese billionaire and a crew of artists around the moon and create the world’s fastest transportation system. But the ultimate goal is to launch crewed missions to Mars, perhaps as soon as 2024. Each flight may be capable of ferrying up to 100 people and 150 tons of cargo, according to Musk and his top engineers.
Plans for SpaceX’s global space-based internet project, Starlink, call for launching 11,943 satellites into low-Earth orbit — many times more spacecraft than humanity has launched throughout history. The FCC approved the scheme on the condition that SpaceX complete its launches by December 2027. So far, the company has launched two prototypes into space.
The layoffs — which might save SpaceX up to $100 million per year, based on some back-of-the-envelope calculations— come less than a month after SpaceX announced plans to raise another $500 million in investment funding. The company had previously raised $507 million in April 2018.
Walt Hickey contributed to this story.