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How high the moon?
Even as NASA sets its sights on Mars and moon, that's not enough to lift Boeing and Lockheed.
January 14, 2004: 2:37 PM EST
By Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - If it seems the possibility of a U.S. mission to Mars or the moon would be a boon to the nation's aerospace industry, industry officials and the analysts who follow it are more down to earth.

NASA may soon be looking at a manned mission to Mars or a permanent moon base.  
NASA may soon be looking at a manned mission to Mars or a permanent moon base.

The Bush administration plans to announce Wednesday new goals for the nation's space program, including manned missions to the moon and Mars, NASA administrator Sean O'Keefe told CNN in an exclusive interview.

But analysts in the sector said profit margins would be relatively thin for whatever company is awarded a prime contract for such efforts, which would probably be Boeing Co. (BA: Research, Estimates) or Lockheed Martin Corp. (LMT: Research, Estimates)

"Neither of those companies makes a significant portion of their money in the segment," said Deutsche Bank Securities analyst Chris Mecray. "It's a low-margin business. It's not bad business, but it's not going to move the needle more than a big defense contract, (or) maybe even a medium-size defense contract."

Even company executives, while expressing interest in any big new human space flight effort, agree that the impact on their bottom lines would be limited.

Contractors believe plans for a shuttle replacement won't be derailed by efforts to go to Mars or back to the moon.  
Contractors believe plans for a shuttle replacement won't be derailed by efforts to go to Mars or back to the moon.

"I personally don't see a huge increase in NASA's budget, or a huge windfall for contractors," said Michael Coats, a former astronaut who is vice president of advanced space transportation for Lockheed Martin Space Systems.

Part of the reason is that Coats and others doubt that NASA will ever see the significant commitment of resources to human travel that it saw during the space race of the 1960s and 70s, when NASA's budget reached as high as 4 percent of the federal budget. The Mercury, Gemini and Apollo programs combined cost $23 billion then, which would equal hundreds of billions in today's dollars.

Even with inflation and the growth of the federal budget, NASA's budget for human space flight is currently about $6 billion a year, and the agency's total budget is less than 1 percent of the entire federal budget.

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"They had virtually an unlimited budget, an open check book," Coats said, referring to the race to the moon. "We're not going to have that."

Still, the contractors are likely to see benefits from such an effort, just not immediate or dramatic benefits easily measured on their bottom line.

"The work you do for NASA doesn't look that attractive on a straight profit investment standpoint. But it allows people like ourselves to develop technologies we would not have developed otherwise, and really pushes the technology envelope," said Richard Aubrecht, vice president of strategy and technology at Moog Inc., a subcontractor on the space shuttle and other NASA spacecraft dating back to Mercury.

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CNNfn's Chris Huntington takes a closer look at which companies would benefit from the proposed missions to Moon and Mars.

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"If you can use the technology you're developing there, then it's a very good deal for everyone – for your company, for NASA and for the country."

There is a risk that a new major mission to the moon or Mars could divert resources away from existing programs. Both Boeing and Lockheed are competing to develop a shuttle replacement known as the Orbital Space Plane by 2008. Plans for the project were in the works even before February's Columbia disaster.

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"I guess my belief is the space plane will be part of whatever plan is put forth," said Lockheed Martin's Coats. "What I don't want to see happen is a delay in the program while they figure out what the overall scheme is."

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One of the keys for the contractors' returns from such any new effort in space is whether the program is an ongoing one or if it's scaled back once its initial goals are reached.

Mike Mott, Boeing's vice president of space systems, is hopeful that whatever goal is set this time, it's more long term than the drop-off of funding that followed Apollo.

"What I have not heard is that it would be a one-shot deal. It would be a different vision for the future," said Mott. "I would be very surprised if we go to the moon, declare victory and then come home, like we did in '69."

-- This is an updated version of a story that originally ran on Dec. 12, 2003.  Top of page


Chris Mecray owns neither Boeing nor Lockheed shares, but Deutsche Bank Securities and its affiliates own shares of and have investment banking relationships with both.




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.