Fairchild Industries Inc. has put on hold its massive plan for building 10 factories on platforms in space, a proposal given widespread attention when it was unveiled three years ago.
The Chantilly, Va., company said the "Leasecraft" project, in conjunction with the National Aeronautics and Space Administration, would have allowed commercial manufacturers to lease room in extraterrestrial industrial parks to make everything from pharmaceutical products to ball bearings.
Fairchild made the decision to scale back the project drastically last fall -- well before the space shuttle Challenger disaster -- after failing to secure certain financial terms it needed from NASA for space platform services that would have been provided to NASA for some of its own projects.
"We simply couldn't come to an agreement with them -- the two issues were insurance and termination liability," said William Fulwider, a Fairchild spokesman.
"NASA felt it could not assume the insurance liablity and could not provide the level of termination liability we felt was necessary," Fulwider said. Building a space platform would have cost Fairchild more than $100 million. But NASA was willing to assume only a "small fraction" of that cost if NASA's plans to use Leasecraft were canceled by the government, he said.
The joint agreement NASA signed with Fairchild in 1983 is still in effect, Fairchild and NASA officials said. Under that agreement, NASA would not pay for construction of the satellites, but would launch the Leasecraft for free and use the space shuttle to service the factories by picking up payloads or dropping off supplies as needed.
Industry observers and analysts said yesterday that Fairchild simply was not in financial shape to go through with the Leasecraft project.
Over the last three years, Fairchild has taken $300 million in losses associated with a commuter plane project it was developing with Saab Scania of Sweden and with the T46A jet trainer it manufactures, said Wolfgang Demisch, an aerospace analyst at First Boston in New York.
"The Leasecraft program was in trouble because Fairchild was in trouble, and, even before the [Challenger] shuttle disaster, you couldn't count on revenues until the next decade," Demisch said.
Earlier this fall, Fairchild also had a setback with McDonnell Douglas Corp., which the company hoped would be its first commercial customer to lease a factory in space. McDonnell Douglas, which is working on a process to make drugs in a weightless environment, "parted ways with its partner" after Johnson & Johnson decided it could accomplish the same process through genetic engineering, Fulwider said.
Fairchild remains "hopeful the program will continue," Fulwider said. But he added that space commercialization is going to be a lot slower than originally expected because of skyrocketing or unavailable space insurance and the magnitude of capital needed for such projects.
A McDonnell Douglas official said further complicating matters is "the shuttle tragedy that will cause some delay and disruption" in commercializing space. McDonnell Douglas, which is now teaming up with 3M Corp. and others to make drugs, was going to run some tests this summer with the help of the shuttle. "Now we don't know what happens," the official said.