Folks here in Midland, Texas, have endured a carpet bombing of news reports these past few days -- see here, here, here and here for example -- about Midland Development Corporation's $10 million taxpayer stake as unsecured creditor in XCOR.
Anyone contemplating investing in a company would first want to know what product it sells, who its customers are, what kind of competition it will have, and how much money it expects to make. But when government invests in a private company those things might not matter as much as the short term glamor and publicity that might result.
XCOR's goal is to build rocket engines and fly sub orbital short flights with its experimental plane called the Lynx. The primary customer base appears to be individuals who will to pay $95,000 for a half hour flight of which 4.6 minutes will be in micro-gravity at about 62 miles up.
One important source of funds will be from taxpayer supported community development corporations like the MDC which are willing to pony up huge sums of money for the right to claim that they persuaded a glamorous sounding business to open a branch in the region. See NewSpaceJournal.com:
“XCOR sees this as an expansion opportunity,” a source familiar with the deal said in a phone interview today, emphasizing that XCOR would be expanding to Midland, not moving there entirely from Mojave. “They plan on maintaining a presence in Mojave. This is all about growth.”
They're still shopping. From MyWestTexas.com:
The company will maintain an operational base in California and plans to seek a location for an operational base on the East Coast.
There appears to be a lot of competition in the industry, including, SpaceX, Orbital Sciences, Blue Origin, Bigelow Aerospace, Sierra Nevada Corporation and Virgin Galactic.
Virgin Galactic has a $200,000 ticket price and could be the price leader. So is this a product where a competitor can undercut the industry leader? My own theory is that there aren't nearly as many potential customers out there as they want us to believe. But they are all out of my price range, so who am I to say?
Anyway, it's lots of sizzle. Lots of glamor. Lots of glitter. Lots of competition.
Post Script: Note to reporters -- You forgot to tell us how much the consulting company will get as a finder's fee for bringing the MDC and XCOR together.
George ... good points, and I hope they will get some consideration by them's in charge, and by those who might be thinking of investing.
Don't look for me to be booking (or even be ABLE to book) a flight anytime soon - if ever.
BUT, I remain enthusiastic aboput the prospect, and I would very much like to see it work as planned ... and see some return on those MDC dollars.
My own take on this ( http://archaeotex.blogspot.com/2012/07/is-this-time-for-aerospace-in-west.html ) looks back upon an earlier aerospace venture in West Texas.
Posted by: Jeff | July 11, 2012 at 04:23 PM
Jeff, thanks for that history at Archaeotex.
As for this one, I would be all for it if they could do it without the subsidy. But since residents have put so much of their own money (involuntarily) into it they should be entitled to something more than a glimpse through the fence.
How about free flights to a dozen taxpayers picked at random.
Posted by: Geo | July 11, 2012 at 05:09 PM