When Elon Musk announced plans to move the headquarters of Space Exploration Technologies Corp. to Texas earlier this month, it set off speculation as to what exactly it meant.

It was not immediately clear if the company, better known as SpaceX, would move its manufacturing operations from Hawthorne to Texas, as an example. Attempts to reach a representative of SpaceX, founded by Musk in 2002, were unsuccessful.

Christopher Thornberg – an economist and the founding partner of Beacon Economics LLC, an independent research and consulting firm in the Fairfax District of Los Angeles – said that Musk was unlikely to move the entire company to Texas.

“You don’t pick up an enormous, complex operation like SpaceX and move it from one state to another, not without losing half your workforce, which SpaceX can hardly afford to do,” Thornberg said.

SpaceX has a pretty unique workforce of rocket scientists, “who don’t exactly grow on trees,” he added.

“They are not everywhere, and you need to hire them where they live and they start to live where they are hired,” Thornberg added.

Headquarters move all the time, he said, adding that it would only impact 200 or 300 employees, a small percentage of the 13,000 employees SpaceX has overall.

“Would he go as far as to move his production facilities to Texas?” Thornberg asked. “Not a chance.”

It is his belief that Musk made the announcement to generate media attention.

“He’s constantly throwing grenades out there,” Thornberg said. “That seems to be his joy in life.”

Musk is also moving the headquarters of his social media platform X – formerly called Twitter – to Austin, Texas, from San Francisco.

In a posting on X, Musk said the move was happening because of Gov. Gavin Newsom signing a law that will bar schools from requiring teachers to inform parents of gender identity changes by their students.

Thornberg said another factor could be that Musk is a supporter of former President Donald Trump and has made contributions to his presidential campaign.

“And when you are looking at the Republican campaign what is one of their primary cautionary tales? It is California,” Thornberg said.

“Rightly or wrongly, they are constantly throwing darts at California as a cautionary tale of what will happen if, God forbid, the Democrats win the election,” he added. “That is part of that game.”

The new location of SpaceX’s headquarters will be Starbase, a development and launch site for the company’s Starship rocket, a two-stage fully reusable super heavy-lift launch vehicle.

Work on Starbase started in 2014 and continues today. In May, construction began on a second launch site.

In addition to the launch sites, SpaceX also builds the rocket in Texas. That contrasts with the Falcon 9 rocket, which is built in Hawthorne.

‘Death by a thousand cuts’

Tom Lasser, president of the South Bay Aerospace Alliance, a support group for the U.S. Air Force and Space Force and an advocate for the aerospace industry, said that it sounds like it will be the headquarters that will move initially.

“I don’t know how big that is,” Lasser said of the number of employees who may relocate. “But it’s high paying jobs leaving California.”

It’s not the first major aerospace company to relocate outside of Southern California.

Northrop Grumman Corp. moved its headquarters from Century City to Virginia in 2011 to be closer to its government customers. And Aerospace Corp. announced this spring that the company headquarters would move to Chantilly, Virginia.

“To hear this about a local 7,000-employee operation being affected just reminds me about the old Chinese fable of a death by a thousand cuts,” Lasser said. “A little bit here and little bit there and you turn around and there’s no one there.”

It shows a lack of concern on the part of the state, he continued. He believes that businesses are being driven out of California due to certain policies, procedures, requirements, laws and taxes.

“This is a sad example of the indifference and complacency of some people about this vital industry and the jobs and the payroll that is leaving the state,” Lasser said.

While the South Bay remains home to the nation’s aerospace industry, he said it’s not the same as it used to be.

“It’s getting smaller instead of bigger,” Lasser said. “There are a lot of startups coming but the legacy companies keep taking hits and being plundered by other states that are giving them better deals. I don’t think we as a state are taking it seriously to protect our industry.”

The local reaction

Los Angeles County Economic Development Corp. Chief Executive Stephen Cheung said that the organization didn’t know the details about the planned move.

But when other companies have moved their headquarters, it only affected those employees working there, he said.

“A lot of times they cannot move their entire operation because the supply chain is so complex and so tied in with the region,” he said.

That includes another Musk-owned company: electric vehicle maker Tesla Inc.

In December 2021, Tesla announced it relocated its headquarters from Palo Alto to Austin yet kept its factory in Fremont. In February of last year, the carmaker announced it would open a large global engineering headquarters in Palo Alto, moving into a campus once owned by Hewlett-Packard Co.

That being said, it is never a good look when any company announces that they are leaving the region, Cheung said.

“We’ve invested a lot into these industry sectors, and we want them to thrive, we want them to grow, we also want to retain them so they can create good jobs,” Cheung added.

He said the LAEDC has seen the space sector grow in Los Angeles County and attract a lot of new companies and SpaceX is a big part of that equation.

According to an industry sector report released in April, aerospace and defense had a total of 57,000 jobs with an average wage of $136,000 – much higher than the county average, Cheung said.

“This is a massive and growing ecosystem for us, and we want to make sure that this industry thrives here in Los Angeles, and we want to make sure we can retain it,” he added.

Hawthorne Mayor Alex Vargas issued a statement July 16 about the planned headquarters move.

“While this move would represent a significant change for our community, we remain committed to supporting our local economy and fostering growth,” Vargas said. “SpaceX has been an integral part of our community, contributing to our local economy and helping to establish Hawthorne as a hub of technological innovation. While we are aware of their potential departure, we understand the need for businesses to make strategic decisions for their growth and success.

“Despite this potential move,” he added, “Hawthorne remains resilient and optimistic about the future. The city is dedicated to attracting new businesses, supporting existing ones, and continuing to foster an environment of innovation and opportunity.”