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Lockheed, the world’s largest defense contractor, said Sunday that it will not move forward with its purchase of El Segundo-based Aerojet Rocketdyne after the FTC sued last month to block the transaction. The merger, which was first announced in December 2020, raised antitrust concerns that Lockheed could “cut off” other defense contractors from key missile components built by Aerojet, described by the FTC as the “last independent U.S. supplier of missile propulsion systems.”
“Our planned acquisition of Aerojet Rocketdyne would have benefitted the entire industry through greater efficiency, speed, and significant cost reductions for the U.S. government,” Lockheed Martin CEO James Taiclet said in a statement. “However, we determined that in light of the FTC's actions, terminating the transaction is in the best interest of our stakeholders.”
The deal has sparked conflict within Aerojet Rocketdyne’s hierarchy, as well—leading to a proxy war between board members vying for control of the company, Law360 reported last week. Aerojet CEO Eileen Drake and three other board members have sued four fellow directors including executive chairman Warren Lichtenstein, who allegedly opposed and sought to undermine the Lockheed deal. Lichtenstein has leveraged his investment firm, Aerojet shareholder Steel Partners Holdings, to propose a new CEO and board of directors at the company.
Aerojet’s lawsuit alleges that Lichtenstein was “clandestinely telling industry participants that he is unhappy with Aerojet’s agreement to merge with Lockheed Martin,” and that he planned to take over the company if the merger failed. In turn, the lawsuit seeks to remove Lichtenstein from Aerojet’s board. Lichtenstein told Law360 that the board was “evenly split” regarding the Lockheed merger and claimed that Aerojet Rocketdyne is seeking to discredit him with its lawsuit.
With the Lockheed deal now in tatters, Aerojet could still market itself for a similar buyout by another company—though that may have to involve a smaller aerospace and defense firm, or a private investor, in order to avoid further antitrust scrutiny. Aerojet said it will update investors on its acquisition strategy when it reports its quarterly earnings Feb. 17.
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One of the most significant aerospace industry deals in years is now in jeopardy after the Federal Trade Commission announced it is suing to block defense contractor Lockheed Martin’s $4.4 billion purchase of Aerojet Rocketdyne, the rocket and missile propulsion manufacturer based in El Segundo.
The federal antitrust regulator is arguing that if the acquisition goes through, it would allow Lockheed—already the world’s largest defense contractor—to maintain a monopoly over the missile industry. Aerojet Rocketdyne is currently an independent supplier to many other defense contractors, and the FTC expressed concern that if “our nation’s last independent supplier of key missile inputs” is bought out, Lockheed would have a stranglehold on components needed by the rest of the industry.
“Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe,” FTC Bureau of Competition Director Holly Vedova said in a statement Tuesday. “If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles.”
Lockheed Martin and Aerojet Rocketdyne first inked the merger in December 2020. The transaction has been under review ever since by federal regulators, who are now proceeding with a federal district court complaint looking to stop the acquisition. A trial is currently scheduled to begin on June 16, meaning that Lockheed Martin can either defend the deal in court or simply back out of the transaction.
Both companies did not immediately respond to requests for comment. In its fourth-quarter earnings report on Tuesday, Lockheed said it “continues to believe in the benefits of the transaction for the United States and its allies, the industry, and all of the company's stakeholders.” Aerojet Rocketdyne—whose stock slid more than 18% Tuesday on the back of the FTC announcement—issued an identical statement.
The vote to block the merger was unanimous among the FTC’s four current commissioners, with the body’s two Democrats and two Republicans all agreeing to challenge the deal. The FTC’s rebuttal is rare; the agency said the intervention is its “first litigated defense merger challenge in decades.”
While Lockheed competes with several other large U.S.-based aerospace and defense firms for government missile contracts—including Raytheon, Northrop Grumman and Boeing—it’s by far the largest company of its kind, with revenues surpassing $67 billion in 2021.
The FTC noted that Aerojet only competes directly with one other firm, Northrop Grumman, to sell vital propulsion inputs for missiles and other weapons systems. If the deal is allowed to close, it argued, “The combined firm could disadvantage rivals by affecting the price or quality of the product, the quality of the engineering support, and the schedule and contract terms for developing and supplying” those components.
The agency also expressed concern over Aerojet Rocketdyne’s status as a subcontractor for many of the firms that Lockheed competes against; it said Aerojet’s access to “sensitive information” about those firms’ technical innovations and business strategies could allow Lockheed to “exploit its access to its rivals’ proprietary information to gain an advantage in competitions against them.”
Regulators added that the acquisition’s impact on competition could also raise prices on Lockheed’s largest customer: the U.S. government.
“Without competitive pressure, Lockheed can jack up the price the U.S. government has to pay, while delivering lower quality and less innovation,” Vedova said. “We cannot afford to allow further concentration in markets critical to our national security and defense.”
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When Perseverance arrives on Mars early next year, it will be the first landfall for a rover carrying 3D-printed metal parts and a small victory for proponents of the technique in the high-cost, high-risk world of the U.S. aerospace program.
NASA's Jet Propulsion Laboratory, nestled in the foothills of La Cañada Flintridge, has seen a slow cultural shift over the last decade toward the adoption of 3D printing techniques, more formally known as "additive manufacturing," in spacecraft design. The technology uses lasers to melt metal powder that is layered to precise computer modeling, until that metal takes the shape of whatever engineers need.
For years, 3D printing has been relegated to the realm of nerdy hobbyists, but its adoption by startups and big business has helped push NASA leaders toward accepting more innovation despite the risks. These days, 3D printing has been used on airplane engines, houses, hearing aids, chocolates, Tesla car components and even a pair of Adidas shoes.
"I have seen a 3D printed burrito, and it didn't look as delicious as Chipotle," said Scott Roberts, a JPL materials technologist, with a laugh.
The evolution has been decades-long, and partly propelled by the private sector push of aerospace companies like SpaceX, Relativity Space, Blue Origin, Maxar Technologies and Lockheed Martin.
While no panacea, some of the benefits of 3D printing come from its ability to save time in the otherwise time-consuming machining process and to engineer bespoke components that cut down on mass and simplify parts. All are crucial, as aerospace missions are often timed to planetary alignment and can cost millions more dollars per kilogram.
The goal is to use additive manufacturing to enhance performance, solve problems and make parts "you just can't make any other way," Roberts said. "If your schedule is slipping and all of a sudden you have to wait two years, the monetary cost is enormous."
JPL technologists are still working on understanding its uses and how to improve it. But there remains a culture and learning gap that's prevented its widespread adoption. The largest barrier, however, is the worry by old timers: Why risk screwing up a historic mission and ruining future opportunities by replacing tried-and-true manufacturing techniques?
NASA's 3D Printing Technique www.youtube.com
The Nuts And Bolts of Printing Rover Parts
Amid planning for the Mars rover mission, Andrew Shapiro, who manages technology formulation at JPL, said he was interested in which parts made sense to manufacture additively and which didn't.
When Shapiro checked out work on MOXIE, which is testing a technology to produce oxygen on the Red Planet carried by the rover, engineers told him they had a problem sealing its crucial heat exchanger, a complex system with lots of very fine channels.
"It was very expensive to machine, they were going to blow their budgets and schedules, and it was going to take months," Shapiro said. "My office has advanced technology experiments, so I said, 'I'll fabricate one using additive for you, see if it works. If you like it, use it.'"
The part was far less expensive to print than it would have been to create through traditional manufacturing methods — and it solved the MOXIE engineers' problems.
The Perseverance rover, which lands on Mars on Feb. 18, 2021, carries 11 metal parts that were 3D printed. Five of those are on its PIXL instrument, which is about the size of a lunchbox and will be used to help the rover search for signs of fossilized microbial life by shooting out X-ray beams.
The instrument was designed with a two-piece titanium shell that has to be extremely thin, which made traditional machining methods very challenging, time consuming and therefore costly. Using metal 3D printing, JPL outsourced the work to Carpenter Additive, in Camarillo, Calif., which created components that were several times lighter than they would have otherwise been able to achieve.
The MOXIE heat exchanger, however, was 3D printed in-house at Caltech, which manages JPL. Rather than welding together two separate parts, JPL's engineers 3D printed it in one single piece.
Andre Pate, the group lead for additive manufacturing at JPL, called the use of 3D metal printing on the rover "a big win for us at JPL."
"We are trying to convince our own people here who are more conservative and less willing to take on risk -- rightfully so," Pate said. "We're trying to prove that, that there isn't as much risk or that there's ways to mitigate that risk."
This X-ray image shows the interior of a palm-size 3D-printed heat exchanger inside Perseverance's Mars Oxygen In-situ Resource Utilization Experiment (MOXIE)NASA/JPL-Caltech
The Private Sector Forges Ahead
In the meantime, a broader ecosystem of startups is pushing ahead with incorporating additive techniques.
SpaceX is hiring for multiple roles, including a materials engineer and a manufacturing technician, who can "support 3D printing technology for production of components used on both the Falcon 9 rocket and the Dragon spacecraft." Its rocket resupply, which recently traveled to the International Space Station, had 3D printed parts, Shapiro said.
Canoo, the electric vehicle company, is also hiring an additive manufacturing lead as it prepares for its first vehicle launch. And of course, Relativity Space is 3D printing rockets with the ultimate goal of doing so on Mars.
"JPL is very slow moving in this way," Shapiro said. "Places like SpaceX or Maxar, they 3D print dozens of parts. [These] other companies have been quicker to adopt the technology. Interestingly enough, I think we know more about the technology than they do because SpaceX isn't willing to pay a lot of universities to develop models and that kind of thing."
Plus, Shapiro added, "they all want to keep their stuff secret and don't want to share it with the rest of the world. But the rest of the world passes them by when they do that."
Regardless, as more of its subcontractors and other aerospace companies use 3D manufacturing techniques, JPL has been pushed to gain a better understanding, and it has shared that expertise with the companies even if lab leadership is less willing to incorporate it themselves, Shapiro said.
"JPL will actually adopt things more easily from the outside than the inside," Shapiro said. "So it's easier for me to go buy a part from a subcontractor using additive than it is for me to say 'we should design this using additive'."
Relativity Space hopes to make Mars-bound rocketships with 3D printing. assets.rebelmouse.io
Part of the reason is that NASA management is still reluctant to adopt new untested technologies for building parts that have otherwise been effectively created using longstanding conventional manufacturing processes.
"So when someone says 'would you...risk a billion dollar mission on it'? You have to argue, it isn't really that risky," Roberts said.
Several years ago, JPL vendor Lockheed Martin built the spacecraft Juno to collect data and take photos of Jupiter. Lockheed slipped in a couple additive parts into that spacecraft, Shapiro said.
"They didn't tell us until after it had launched," Shapiro said, noting that "our vendors are willing to go a little further than we are."
It became the first planetary spacecraft to make use of 3D printed parts, specifically titanium metal brackets.
A Slow Start
The first time Andrew Shapiro — now a JPL thought leader in additive manufacturing — was approached by a colleague about using 3D printing for metal parts was around 11 years ago, when he was the chief technologist of the engineering enterprise division. Shapiro was aware of the tech, but it was not taken seriously for space flight.
"I told him to go away," Shapiro said. "I said, 'Naw, I don't think this will ever work.'"
Shapiro said he gave in to his colleague's persistence and traveled to a spin-off company of nearby Sandia Labs in Albuquerque, New Mexico to take a look. Soon, JPL was studying how to create a gradient of metal from, say, steel on one end of a part to titanium on the other, enabling the steel ends of two separate parts to be bolted together more effectively if need be.
"It turns out this is not easy to do. It took us about 10 years to figure it out," Shapiro said. "That's because that transition between the two metals can create brittle structures that break or fracture."
JPL ended up sponsoring a slew of studies at universities, with Shapiro urging professors to look into how additive manufacturing works. At the time, Shapiro said, JPL realized nobody understood the process. JPL worked with the universities to set standards so that results were comparable and compatible. Today, every major university with an engineering program in the country has a significant program modeling additive processes.
Adopting and proving out the technology also required computer power to improve to study variables like air vortices created by a laser hitting metal powder and massive temperature gradients that go from a couple thousand degrees to room temperature in a tiny area, Shapiro said.
"I don't think the culture is there yet," Shapiro said. "It's being selectively adopted still [but] we haven't turned our whole design force into using additive."
Roberts said that sometimes it's a matter of an engineer saying " 'Oh man, we need this part,' and to make it traditionally is going to take two years" and that's when additive manufacturing, which can instead make the part in six months, gets its chance.
Another problem is there aren't great classes out there for teaching 3D printing at JPL's level.
And, the reality is that some people are intuitively very good, while other engineers just don't think that way, Shapiro said. "Designing parts of a spacecraft really shouldn't be just left to intuition," he said.
Shapiro said he believes the future of 3D printing includes integrating functions — much like today's phone is a combination of telephone, calendar, calculator and notepads. One example of this might be printing the antenna on a spacecraft directly as part of its structure. But no one knows how to design for this yet, Shapiro said, there's no guidebook or design rules. That's why he is working with colleagues to put together a course and some guidelines.
A 3D printer head scans over each layer of a part, blowing metal powder that is melted by a laser. - NASA/JPL-Caltech s3.amazonaws.com
"It's quite complex, and it's probably going to take me another 10 years to come up with it," Shapiro said. "We've just scratched the surface in terms of what the capabilities are."
For now, Shapiro believes JPL will continue to put more 3D-printed pieces into spacecraft, but doing larger prints like an entire space craft requires a major shift in culture and engineering understanding.
"It's difficult to answer when will people change their minds," Shapiro said. "JPL management tends to reflect NASA management, and NASA management is extremely risk averse, because they don't want to spend billions of dollars on a spacecraft, have it fail, and have a congressional hearing on why their multi-billion dollar spacecraft failed."
Even though many in JPL management would like things to progress faster, there are concerns that proposals that include 3D printing won't get the necessary buy-in, and could potentially put JPL's competitive edge at risk for NASA projects.
Still, Roberts is optimistic:
"We didn't have the computational power to do it until 10 to 15 years ago," he said. but with that power, "it's going to change the way we design things in the future."
Are you using 3D printing in new ways? My DMs are open on Twitter @latams. You can also email at tami[at]dot.la, or ask for my Signal.
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