SpaceX spinoffs launch El Segundo into economic orbit

El Segundo’s Chris Pimentel may be California’s happiest mayor. As his counterparts in Los Angeles, San Jose and San Francisco struggle with budgetary nightmares, Pimentel has at his disposal rising revenues, a booming job market and an energetic business community. 

The reason: His small town of 17,000 south of LAX is the birthplace of SpaceX, and has emerged as the aerospace startup mecca in Southern California. 

“We try to reduce friction,” Pimentel, who served with the Marines in Iraq, suggests. “It’s a whole city effort; this is a city that likes business.”

Space and defense have deep roots in El Segundo. Elon Musk started SpaceX here in 2002 at 1310 East Grand Ave, before it moved onto grander things. As of Friday, SpaceX is among the richest companies on the planet. 

Sadly, the company is no longer headquartered  in Southern California, as I can attest having seen their ultra-modern headquarters in Bastrop, 30 miles from the Austin, Texas, airport. 

Thank our idiot state government for booting out what may become the world’s most important company. 

California’s elected officials, and its insane policies, deeply alienated Musk, the world’s predominant space pioneer. Before that, they had already succeeded in losing the headquarters of virtually all the top traditional aerospace firms.

Yet fortunately for California, and especially El Segundo, many Space X subcontractors remain, while others have spun off from the mothership. These smaller firms, despite the best efforts of Sacramento and City Hall, have helped the Golden State to retain its aerospace dominance. 

California has a 19% share of the global space industry, 40% of the US industry, and remains home to four of the government’s largest space-related programs. 

The key lies here lies with our still-powerful talent base. Southern California boasts almost twice as many aerospace engineers as second-place Texas. The allure of this talent has led one of Space X’s strongest competitors, Rocket Labs, to relocate from New Zealand to Long Beach.

Los Angeles County also receives more dollars from DARPA, the Pentagon’s tech fund,  than any county in the nation, accounting for 16% of all funding. Even as signature industries like entertainment and business services struggle, California’s aerospace industry headcount has grown by over nine percent over the past decade.

This is all the more remarkable given that the state seems determine to drive  these jobs to other states, notably Texas and Florida.These states, each of whom has a Space Commission (which California does not), coast lower costs and a generally favorable business environment. 

Someone ought to remind our politicians that while entertainment jobs have been trending down, the space industry has been adding workers at steady pace. 

There’s also a lot of money now coming into the wallets of the “Space X mafia”. “We have some millionaires around here,” notes 26-year-old El Segundo based entrepreneur Cameron Schiller.

Schiller’s Rangeview Corporation has 25 employees who make components used in both aerospace and the energy industry. It is now raising private equity amidst investor frenzy over space. 

Critically, Schiller suggests, these companies keep California in the evolving space future. El Segundo firms like Varda Aerospace, cofounded by X veteran Will Bruey and Delian Asparouhov, is among the firms testing pharmaceuticals in zero gravity.

Firms like Varda and Rangeview may not be on the radar of Sacramento or LA City Hall, but they are welcomed by El Segundo. The city boasts roughly one hundred, mostly small, aerospace firms in total. These, Pimentel notes, have recently drawn $6 billion in venture capital.

And it’s not the only local hotspot. Many firms, particularly as they grow up, head to  Long Beach’s Douglas Park, to Torrance, and to Orange County, home of another emerging aerospace giant, Anduril. They mostly pop up outside LA city limits.

“Overlarge governments,” notes Pimentel, whose father was a B-52 mechanic, are not generally hospitable to small startups. Delays for approvals, common in LA, can be devastating for young firms. 

Many California greens tend to dislike aerospace, since it uses things like electricity and raw materials, while the state’s dominant left dislikes anything that may help national defense. 

But for planet Earth, space offers an enormous opportunity for secondary industries —  everything from pharmaceuticals and mining to generating energy, the latter desperately needed for AI. 

Our lead in space still provides a means to re-establish California’s fading hold as the epicenter of innovation and human progress. 

We just need leaders like Mayor Chris Pimentel to show the way. 

Joel Kotkin is the presidential fellow in urban futures at Chapman University and senior research fellow at the Civitas Institute of the University of Texas at Austin.

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