Jen DiMascio, Michael Bruno, Irene Klotz COVID-related shortages impinge on launch schedules and satellite manufacturing
Jen DiMascio, Michael Bruno, Irene Klotz
The launch of NASA’s Landsat 9 was delayed due to COVID-19-related shortages of liquid nitrogen. Credit: Northrop Grumman
Long-feared problems in the aerospace and defense supplier base due to the pandemic are suddenly surging, industry executives say, with visible setbacks emerging in space launches and satellite manufacturing. Under the surface, large defense companies are fretting about the long-term effects of COVID-19 that are beginning to show up in workforce and quality control issues.
The space industry had been managing the COVID pandemic without major incident to this point. Months after the onset of COVID-19, SpaceX in May 2020 launched humans to space for the company’s first time. Early on, United Launch Alliance (ULA) scrutinized its supply chain and stocked up on as many components as possible. SpaceX and OneWeb have continued launching hundreds of satellites to low Earth orbit. And this July, Virgin Galactic and Blue Origin sent space tourists beyond the atmosphere. But as time passes, issues in the space supply chain are causing disruptions.
SpaceX is experiencing limited supplies of liquid oxygen as demand from hospitals caring for COVID-19 patients rises. NASA and the U.S. Geological Survey (USGS) delayed a ULA Atlas V launch from California because a liquid-nitrogen supplier was supporting COVID-19-driven hospital oxgyen needs in Florida.
Other commercial spacecraft manufacturers, the Pentagon and defense contractors are carefully monitoring the supply of microelectronics, as the industry encounters a scarcity of semiconductors for everything from automobiles to washing machines and stoves. During the pandemic, companies funded by venture capital in Silicon Valley, which made its name manufacturing semiconductors, have been scrambling to find chips in a market dominated by China, South Korea and Taiwan.
“We’re actually going to be impacted this year with the lack of liquid oxygen for launch,” SpaceX President and Chief Operating Officer Gwynne Shotwell said during an Aug. 24 panel session at the 36th Space Symposium in Colorado Springs. Shotwell did not elaborate on which launches were facing delays due to the liquid-oxygen limitations.
The launch on an Atlas V rocket of the Landsat 9 spacecraft, a joint project of NASA and the USGS, was delayed due to shortages of liquid nitrogen at Defense Logistics Agency supplier Airgas. The company converts liquid nitrogen to the gaseous nitrogen used during launch-vehicle testing and countdown operations, but it has been supporting Florida's COVID-19 needs.
In addition to a shortage of elements vital to launch, defense and space companies are having trouble obtaining microchips, chemicals and glass for solar panels and power supply systems.
SpaceX’s computer chip shortfall is delaying the company’s next design iteration of user terminals for its Starlink satellite broadband network, Shotwell said.
DARPA and other agencies buying fewer small satellites are struggling because of their lack of bargaining heft. “When you’re talking about components that are sold in hundreds of thousands, and a satellite manufacturer is buying a couple of dozen, they’re never going be the top dog,” says Joshua Duncan, business development lead at Blue Canyon Technologies, who stresses that the Raytheon Technologies subsidiary, which makes many of its own components, has not suffered to date. “It’s definitely something to keep an eye on,” he adds.
Derek Tournear, director of the Pentagon’s Space Development Agency (SDA), says supply chain difficulties with microelectronics are prompting some suppliers to modify their designs or find alternate vendors. Those pressures are not likely to delay planned launches because vendors either made design changes to mitigate the supply issues or were able to obtain the microelectronics they needed, he says. The agency, soliciting bids through October for nearly 150 satellites for its next tranche of low-Earth-orbit constellations, has made the supply chain a part of its key evaluation criteria.
Future SDA contracts may help small-satellite manufacturers make purchases in more economic quantities in the long run, says Paul Meyer, vice president of Raytheon Intelligence & Space, which is making Blackjack satellites for DARPA. “The opportunity is there for us to take our supply chain relationships and turn those into much, much stronger and better ones,” he says.
Risk in the supply chain has been a topic of discussion for the Space Acquisition Council since COVID-19 began, says Lt. Gen. Michael Guetlein, who leads U.S. Space Force’s Space Systems Command. Similarly, ULA conducted a detailed survey of its supply chain at the start of the pandemic and preordered as much as possible to try to head off potential shortages. Though supply chain issues have not been a problem yet, a shortfall of semiconductor chips is a possibility. For now, ULA has several months of supply available and hopes deliveries will resume before it runs out.
And Northrop Grumman Chief Financial Officer Dave Keffer says the company has been able to mitigate the effects of shortages by partnering with suppliers, sharing demand signals in advance and maintaining communication with semiconductor suppliers. “We’re careful about labor and semiconductor costs and other key elements of our supply chain as well,” he says.
Congress is weighing in with fiscal 2022 legislation that, if passed, would help fund research and development efforts to seed U.S. manufacturing of microelectronics.
Still, lower-tier suppliers across aerospace and defense are increasingly struggling, according to recent comments by industry executives at a different, closed-door event. Prime contractors, OEMs and upper-tier suppliers are starting to see Tier 3 and lower levels struggle to meet timelines and maintain quality control.
The executives pinned the increasing problems largely on the delayed effects of the pandemic and smaller suppliers wrestling with raw material prices and availability, as well as reduced workforces. They have been hit especially hard by departures of veteran employees, whose work has been taken up often by less experienced managers and workers, all pushed to perform. While companies and workers pulled together through most of 2020 as the pandemic took hold, and suppliers were still operating under preexisting orders and price arrangements, the supplier base is finally having to confront the effects of disruption.
“We have seen the biggest issues,” said a function leader at one of the largest OEMs. “I’ve never seen the highest number of notice of escapements and nonconforming material; it’s staggering,” he continued. “By no means do I think we’re though this. I’m more worried this is a longer-term trend.”
A top manager at a defense electronics prime echoed the expectation for ongoing reverberations. “We seem to be learning more and more every day about the breadth and depth of these challenges in our subtier vendors,” he said.
Another executive at a leading Tier 1 said scheduling has become chaotic. Lower-tier suppliers will quote 10-12 months for parts that used to reliably show up in 6-8 weeks, but then they will suddenly be delivered at the eighth week almost unannounced. “Predictability in the supply chain has been awful,” he said. “In some cases, you get these dire stories that it is going to be out a long time, and then it shows up on your porch like the next day. It’s really been both unpredictable and much longer than we’ve expected.”
At the August event, these executives and others agreed it could take 18-24 months for the supplier base just to recover from the initial impact of pandemic disruptions. Some said they were adding employees to their supply chain management offices to boost communication and coordination with lower-tier suppliers. But the assistance that the largest companies can provide to their suppliers is expected to be noticeably less than before the pandemic because OEMs, prime contractors and Tier 1s have cut their own workforces.
