NASA: Lost in Space

It's 9 a.m., and 100 employees of the Kennedy Space Center are lining up for the chance to do some freelance work. Director Michael Bay will use the famed NASA facility—origin of the Apollo moon shots and home of the flare-winged Space Shuttle—as a backdrop for Transformers 3, the finale of his alien robot war trilogy, a Hollywood tip-of-the-hat to a place that once launched the future. Bay needs extras—and Kennedy has no shortage.

The facility's main mission, launching Space Shuttles, is about to end. Eight thousand engineers, technicians, and other employees are losing their jobs. Nearby towns that were built around NASA's programs—Cape Canaveral, Cocoa Beach, Titusville—are already in a defensive crouch, like wobbly boxers waiting for a knockout punch.

NASA management is holding "morale events" to elevate spirits. A few days before the casting call, agency officials eased security rules to allow employees' families to witness what is expected to be the final "rollout" of the orbiter Discovery. In a majestic evening ceremony, the Shuttle was transported from the 52-story Vehicle Assembly Building to the launchpad. Bathed in xenon spotlights, the white spaceship, attached to its twin solid rocket boosters and orange external fuel tank, crept 3.4 miles on the back of an enormous tractor called the Crawler. An armed helicopter and a nearly full moon hovered overhead. Husbands and wives and children stood in a roped-off parking lot next to minivans, clapping and whistling. Some wept.

In February, the Obama Administration abruptly canceled an over-budget program called Constellation that was supposed to take Americans back to the moon for the first time since 1972—and then on to Mars. For 30 years, NASA has flown the Shuttle, built and maintained the International Space Station, and overseen unmanned scientific probes. But no one seems certain where Americans should go next in space. Implicitly acknowledging NASA's lack of direction, the White House has instructed the agency to take a deep breath, marshal resources, and chart a new course. Routine trips to what is known as low earth orbit—the Space Shuttle's traditional responsibility—are supposed to be outsourced to private industry. Trying to protect jobs and existing contracts, Congress has slowed the Obama reform initiative without entirely stopping it. That leaves NASA trapped in what James E. Ball, an agency program manager in Florida, calls "a period of sustained ambiguity." This much is clear: The Shuttle will fly for the last time next year, and NASA has no new manned government rockets ready to go anytime soon. For five years, or maybe more, any American astronaut heading to the heavens will have to get there by renting a seat in a Russian Soyuz capsule or one of the several corporate-owned spacecraft now in development.

Rather than use the end of the three-decade Shuttle program to streamline NASA and sharply articulate new goals for space exploration in a way that would command public attention, much of the political leadership in Washington appears to be ignoring the issue. Communities along Florida's Space Coast, built on the optimism and industry of the space program, are in economic peril. The area's 12 percent unemployment rate—2½ points higher than the national average—is expected to rise to 15 percent over the next year, mostly as a result of the space industry contraction. Meanwhile, as America dithers, Russia, China, India, and other countries are expanding their shares of the space market.

Travis T. Thompson sits in an air-conditioned conference room talking about the end of the Shuttle program. A compact man with a handlebar moustache, he heads the orbiter closeout crew; he's the guy who shakes hands with each astronaut just before they lift off. "You come back and see me now," he tells them. Thompson, 52, speaks of his work with quiet pride. "What I do," he says, "is put astronauts in spaceships and close the hatch."

After three final flights—one scheduled for Nov. 1, two in 2011—the trio of tile-skinned orbiters will be cleaned, stripped of classified gear, and sent to museums. Thompson's job will end. The customized 747s that piggyback Shuttles to Florida after California landings will be retrofitted for less exotic cargo. The mighty Crawler, which ferried Shuttles to the launchpad, will be reduced to hauling more terrestrial freight around the Space Center.

The weathered beach towns and small inland cities where space workers live and patronize local businesses were already hit hard by the recession, and now things will get worse. The Kennedy head count—civil servants and contractors—will fall from 15,000 in 2009 to 7,000 or lower. Nearly all the cuts will affect private sector workers; the 2,100 direct NASA employees currently are not targeted for layoffs. Overall, the Space Center workforce earns an average annual wage of $75,000, compared with $47,000 "outside of the gate." Nationally, the loss of space jobs in Florida, California, Louisiana, Texas, Utah, and other states could approach that of Kennedy.

In Cocoa Beach, south of the Space Center, the Durango Steakhouse and a large Chinese restaurant have shut their doors in recent weeks. Strip malls have been emptied of their manicure salons and home furnishing shops. Tourism remains, but the seasonal surf shacks and burger joints can't make up for the lost economic activity.

"I've seen this picture before," says Thompson, tugging on his NASA baseball cap. He works for United Space Alliance, the main Shuttle operator, which is jointly owned by Boeing (BA) and Lockheed Martin (LMT). As a young man, he lived through the local slump that accompanied the end of the Apollo program in 1975. In an earlier period of indecision and funding debates, NASA spent the late 1970s scrambling for sufficient political support to get the Shuttle built and aloft. Thompson's hometown, Titusville, "became a ghost town after Apollo," he says. "People were walking away from houses, leaving the keys under the mat." Shuttles didn't begin to fly until 1981, after which Kennedy and its environs enjoyed a period of relative economic stability. Now the highways are lined with billboards that say: "Changing Jobs?" They advertise financial advice for people who are unsure of what to do with their uprooted 401(k) accounts.

Thompson has worked at Kennedy for 31 years. He knows he should be looking for a new career. So far, he hasn't summoned the will. He distracts himself from the coming bad news by focusing on safely launching the final Shuttles. Even as résumé workshops and job fairs have proliferated, many in the area are struggling to imagine life after the Shuttle, says Lisa Rice, president of Brevard Workforce, a county agency. She has placed around 100 ex-Shuttle workers out of the 1,900 let go since last year.

Opportunities could still arise from the turmoil. Once Congress and the White House clarify short-term funding issues, Boeing, Lockheed, and smaller rivals such as Elon Musk's Space Exploration Technologies could jostle for pieces of an increasingly privatized market. Frank DiBello, 67, a space industry consultant and investor, has come out of retirement to lead a state-sponsored economic diversification initiative, with the goal of bringing tech-based businesses to Florida that could scoop up some of the laid-off NASA workforce.

Much will have to happen before the Space Coast realizes DiBello's shiny aspirations. "We are going to go through a lot of hurt in regard to layoffs of a highly skilled workforce that Florida needs to ensure its future," he says.

Robert D. Cabana, the director of the Kennedy Space Center, visited his future workplace for the first time in 1970 as a member of the U.S. Naval Academy's Physics Honor Society. The brainy midshipman gaped at a Saturn V rocket, the kind that took Apollo astronauts to the moon. "That was our future and our pride at that time," Cabana recalls.

After graduation, he flew A-6 Intruders in the U.S. Marine Corps, became a test pilot and colonel, and, on his second try, was accepted in 1985 into the elite astronaut program. He flew on four Shuttle missions, including the one in 1998 that inaugurated the assembly of the International Space Station. Today, Cabana, 61, is in charge of thinning the ranks of employees in the hangars and labs and control rooms scattered across 140,000 acres of alligator-infested swamp and scrub.

Wiry and intense, Cabana seems surprised, and maybe insulted, when asked to explain the Space Shuttle's value. "It's just a phenomenal vehicle," he answers. With it, NASA took the lead in creating the space station, where humans have learned how to survive for months in micro-gravity and do biomedical and astronomical research. The Shuttle launched and serviced the Hubble telescope, which revolutionized our understanding of the cosmos. The craft has also facilitated robotic probes of the earth's climate, Jupiter's atmosphere, and the sun's radiation. Its science contributes to the ongoing search for distant planets that support life. Closer to home, its spinoffs such as advanced home insulation and biodegradable lubricants have improved everyday life.

The frustrating truth is that relatively few Americans care about the scientific missions that came after Apollo's giant leaps for mankind. Since the last trip to the moon 38 years ago, NASA, for all the skill and bravery of its employees, has given the impression of an organization on a space walk to nowhere. A succession of agency leaders have grasped at grandiose proposals—go back to the moon, on to asteroids and Mars—that have fallen through for lack of support on Capitol Hill. To justify an annual budget now in the $19 billion range, the agency has kept the Shuttle flying, no small feat, given its aging late-'70s technology. Even a Shuttle enthusiast like Cabana has to admit—and does, reluctantly—that the venerable craft has proven with more than sufficient repetition that man can achieve low earth orbit.

In 2004, the space agency commissioned a consumer study by the Center for Cultural Studies & Analysis in Philadelphia. "Despite a strong emotional attachment to NASA," the think tank reported, "many of the agency's achievements since the end of the Apollo program have failed to resonate, or even register, with the public." Why? "In the mind of the public," the research showed, "human exploration of space is NASA's brand." The brand having badly eroded, the Bush Administration announced in 2004 that the Shuttle program would end this decade. Outside NASA and aerospace contracting circles, few people seemed to notice. "The space program," says the business veteran DiBello, "has become too much of a federal jobs program."

DiBello earned a math degree at Villanova University, advised the Defense Dept. on missile performance, and consulted with corporations that manufacture and service rockets while working for KPMG Peat Marwick for 25 years. In the 1990s he launched SpaceVest, a venture capital firm in northern Virginia. Throughout, he watched as politicians and bureaucrats spread NASA resources around the country: launches at Kennedy, mission control at the Johnson Space Center in Houston, propulsion engineering in Huntsville, Ala., rocket testing in southern Mississippi, management of astronomy missions at the Goddard Space Flight Center in Greenbelt, Md.

"Everyone gets a piece of the action," says DiBello, who has deep-set owlish eyes and a Philadelphia-accented baritone. "The program gets pulled in different directions based on which senator or congressman wants business for his or her district." As a result, he adds with a sigh, "We have been foundering from the moment we set foot on the moon."

To replace the Shuttle, the Bush Administration said the Constellation program would lead to a manned Mars landing. In a speech a year after the lethal explosion of the Space Shuttle Columbia, Bush promised a rededication to bold voyaging. "We choose to explore space," he said, "because doing so improves our lives and lifts our national spirit." The retirement of the Shuttle was supposed to free up money for a new family of long-distance, heavy-lift rockets.

The Bush Administration's proposed funding for the program was "grossly inadequate," according to DiBello. The Shuttle flies for about $3 billion a year. An optimistic bill to get to Mars would come to half a trillion dollars over time. The Bush Administration suggested that, somehow, Constellation could get off the ground within NASA's existing inflation-adjusted budget. By 2009, Constellation was already way over budget and far behind schedule. The Obama White House decided to cut the losses at about $10 billion. A 355-foot, $300 million steel tower that would have launched Constellation's rockets now stands without an immediate purpose at the Kennedy Space Center.

The latest White House plan has several components—and just as many risks. Private sector corporations, rather than the government, are supposed to provide transportation of cargo and crew to the Space Station. Contractors such Space Exploration Technologies, started in 2002 by Musk, the founder of PayPal (EBAY), are testing proprietary rockets for this purpose. In June, Musk's company staged a successful inaugural flight of its Falcon 9 launch vehicle from the Cape Canaveral Air Force Station adjacent to the Kennedy complex.

In theory, the outsourcing of low earth orbit will make available resources for NASA to focus on farther-reaching manned exploration. How this strategy will be implemented—and at what cost over what period of time—remains unclear. The $58 billion, three-year NASA authorization legislation passed by the House on Sept. 30, and earlier by the Senate, endorses Obama's mandate to use taxpayer money to spur commercial rocket development. But it cuts back on the amount of money devoted to that goal. The legislation, which Obama signed in October, instructs NASA to move ahead with a new spacecraft that could land on an asteroid by 2025. But in a nod to Boeing, Lockheed Martin, and lawmakers representing states with existing Shuttle operations, Congress also exhorts the space agency to rely as much as possible on existing technology and personnel.

A new round of legislative jockeying will commence when congressional appropriations committees—the panels that cut federal checks—turn their attention to the space program after the election. "My fear is that Congress will continue to set ambitious but vague goals without giving NASA the resources needed to accomplish them," says DiBello.

One assumption built into the Obama plan is that private industry will get routine space work done much less expensively than the government. But given that corporations already do a lot of this sort of labor under contracts with NASA, the premise raises questions about how they will suddenly become more cost-effective, especially without sacrificing safety.

Patty Stratton, a senior manager with United Space Alliance, the contractor jointly owned by Boeing and Lockheed Martin that operates much of the Shuttle program at Kennedy, offers the metaphor of a lightbulb. "When you come into a room, you flip the light switch, and the light goes on. You replace the bulb from time to time," she says. "With the Shuttle, we put in a new bulb every single time. It gets expensive." Contractors claim they can operate faster and leaner once they're freed of NASA bureaucracy.

Following similar reasoning, the Pentagon and the State Dept. in recent years have outsourced large portions of logistical, infrastructure, and even security work in Iraq, Afghanistan, and other war zones. The results have been disappointing, with government auditors having identified billions of dollars in corporate waste, fraud, and other misconduct.

The comparison NASA and its contractors prefer is that of the postal service and commercial airlines. In the 1920s, when air travel was still new, the federal government allowed nascent airlines to bid on mail delivery contracts. Washington's backing allowed the airlines to expand into cargo and passenger service. Costs came down as they were spread across more profit-generating businesses. The idea is that as space travel becomes more common, it will foster new commercial research and adventure tourism. Corporations will be able to defray costs and reduce bills for taxpayers.

The potential flaw in this argument is that, for the foreseeable future, there just isn't that much that absolutely has to be done in space. Beyond launching and maintaining communications satellites, where is the profit-driven space market? How many tourists, apart from a few millionaires, really want to spend their vacations in stomach-turning micro-gravity? DiBello insists that the greatest potential is in fields such as medical research, and in technologies yet to be discovered. Space activity has produced valuable inventions such as global positioning devices that have had lucrative commercial applications.

Whether or not privatization saves money, it has already changed attitudes and reversed roles at the Kennedy Space Center. NASA officials for the first time are pitching the center's capabilities—and its potential improvement—to audiences of corporate executives who will decide where to locate new commercial space operations. In September, Boeing formally announced that it would get into the space tourism and astronaut transport business, with flights scheduled to start as early as 2015. What site will host those launches hasn't been determined, but the Kennedy complex is a leading contender.

Avera Motors, a 2009 spinoff from Mainstream Engineering, a Florida-based developer of energy conversion products, also hopes to capitalize on the ferment at Kennedy. The company occupies an 11,000-square-foot facility in Brevard County where its 20-person team has fabricated a prototype of a low-emission, high-mileage sports car it plans to sell in late 2012. In addition to privately raised seed money, Avera's chief executive officer, 27-year-old R.J. Scaringe, has received $2.5 million in state financing, some of it secured by DiBello. Scaringe, who has a PhD in mechanical engineering from Massachusetts Institute of Technology, plans to step up hiring early next year. If his car finds buyers, he foresees employing 1,100 people by 2015—a bold goal. "The skilled technical workers becoming available because of the Shuttle layoffs," he says, "are perfect for us."

Rob Schneider, 44, cannot wait around for Avera to start hiring. The heavy machinery mechanic employed by United Space Alliance has logged 10 years fixing Kennedy's forklifts and cranes. He expects to lose his position within a year and wants to sell his Brevard County house before the real estate market dips further. His wife, Sherry, has already moved to Columbia, S.C., where she found work as an elementary school principal. One of their two sons moved with her; the other is finishing high school in Brevard. Schneider talks over coffee and donuts in the local lodge of the International Association of Machinists and Aerospace Workers, where he is a member. Looking out from the wall, a yellowed poster of the space center's namesake, John F. Kennedy, states: "The work you are doing is vital to our national security."

Schneider tries to sound upbeat. "We got it good compared to a lot of people, because my wife already found a new job," he says. He is interviewing for railroad work in South Carolina. The best scenario he envisions would involve taking a 20 percent pay cut.

"The tradition around space is what I'm worried will go away," says Roberta Wyrick, 56. A United Space employee, she oversees orbiter testing and is integrally involved with launches. In her spare time, she takes Boy and Girl Scouts on tours. Wyrick has a math degree from the University of Central Florida and 31 years of experience at Kennedy. She has heard that there may be jobs at NASA's Wallops Flight Facility on the eastern shore of Virginia, where smaller research launches take place, but she has not formally inquired yet. "I've got a house here, and I thought I would retire from Kennedy," she says. "I launch Shuttles....When I see it on the pad, getting ready, my heart just starts beating faster."

Weeks after my visit to the Space Center, the director, Bob Cabana, calls out of the blue. "NASA," he wants to remind me, "is not going away by any means." But actually what prompted him to reach out, he explains, was a sense of loss. "I just said goodbye to 900 good people for the last time," he says of the latest stage of layoffs. "I can't put into words what that feels like." There is a long pause. Then the former Marine test pilot and astronaut reiterates his invitation to come back down for one of the last Shuttle launches: "It's just a phenomenal thing to see," he says. "Phenomenal."

    Before it's here, it's on the Bloomberg Terminal.