Washington State is set to lose its investment from Japanese firm Mitsubishi Heavy Industries (MHI). On Friday 22nd May, the company announced that it would be closing its flight testing centers and HQ in Renton but would keep a small crew to maintain some aircraft. The company plans to consolidate its operations as it confirms it’s cutting the SpaceJet budget in half.
Trouble for SpaceJet program
Just 10 days ago, it became apparent that Mitsubishi Heavy Industries’ SpaceJet program was in jeopardy. MHI announced that with the coronavirus pandemic taking its toll, the company could only afford to offer half the budget for its SpaceJet program. Over a week later and it’s now clear what MHI meant by that statement.
It will be shutting down operations in Washington State to focus on a centralized operation in Nagoya, Japan. The company will release its employees at its headquarters in Renton as well as the majority of staff at the flight test center it had in Moses Lake.
The only employees that MHI will retain are those that will form a small group to maintain the aircraft that will stay in Washington. Currently, Mitsubishi Heavy Industries has four test aircraft at its Moses Lake center. These will now be put into storage and will require occasional maintenance until a solution is found.
The shutting down of the operation in the US also means that Moses Lake will not receive the fifth M90 SpaceJet that it was expecting. The aircraft was due to arrive from Japan, where it is ground-tested.
Coronavirus causes budget cuts
The reason for Mitsubishi shutting down its SpaceJet project in Washington State is purely financial. During the fiscal year that ended in March 2020, MHI posted a loss of $275m. The SpaceJet program is not a low-cost venture at any rate, but the restrictions of the coronavirus pandemic have made it even harder.
MHI has spent billions testing out its aircraft only to come into problems. In the last fiscal year, it spent $2.4bn, including $1.1bn in costs to cover prototypes and flight tests after it reconfigured wiring.
The budget for the SpaceJet in the coming year is just $560m. MHI may also suspend the M100 development. The company says its approach is cost-first. It wants to evaluate where it can cut budgets and then analyze the viability of the product moving forward.
What does the future look like for the SpaceJet?
“The COVID-19 pandemic presents an unprecedented challenge for society as a whole, and there are parts of MHI Group’s business that are already facing significant impact, especially in industries like commercial aviation…MHI Group is working on measures to help us overcome this crisis.”
Unfortunately, the closure of operation in Washington may only be the tip of the iceberg. MHI has not released any information about what packages it will offer its employees. It says that it will share this information with staff in the coming weeks. No doubt, this will also incur some costs.
Moreover, without a testing center, how viable is the SpaceJet program in the future? MHI does not have the resources in Japan to carry out the testing it was doing in the US. How will it mitigate this challenge?
The odds certainly don’t seem to be stacked in its favor. With delayed launches for the M90 and some customers dropping orders, the coronavirus pandemic is just one of many issues that are not going its way.
Will the SpaceJet make a comeback? Let us know your thoughts in the comments.