Texan construction workers put a rocket up Team SpaceX over 'unpaid bills' Amid the hullabaloo over SpaceX building out its rocket-launching empire in Texas, there are signs it's not all tickety-boo – in that it seems not everyone is being paid on time. At least 72 liens have been filed against SpaceX and its contractors in the US state since 2019 by more than two dozen construction firms and …
When will people realise that he's the Trump of the tech world?
He buys companies, slaps his name above the door, claims he invented/innovated the product and cashes in on gullible investors. All while stiffing contractors for the bills whilst spouting barely cognizant bullshit on the internet to rile up his supporters and distract from his grifting.
Sound familiar?
step 1 : don't pay your contractors
step 2: don't pay your contractors
step 99999 : Ok, what if I give you $0.20 for every dollar I owe you?
step 999999 : watch as contractors go TITSUP and you don't pay them even a bent penny.
SOP for the likes of Musk and Trump.
$19,214, $67,289, $99,591, $129,592. That's back of the sofa money for Musk, so why does he do it?
It's either because he can, "I have a bigger bank balance than you, so sue me." Or he has got so many irons in the fire that such trivial sums just get treated as a rounding error.
Either way it appears that if you do business with Musk you had better have your lawyers on standby.
While it's in their bank account, it's earning them interest. A few extra days on a few thousand dollars won't make much difference, but do it with enough bills for as long as you can and it makes enough difference for some decent champagne on the company yacht.
You need to understand the difference between solvency and liquidity. If you talk up the asset value of a company, it's easier to ignore any liquidity problems, and some companies are famous for low liquidity, ie. cashflow and the ability to pay bills. They know they'll earn more from their asset value than any additional charges on money they owe.
I'll give him his due, be weight of personality he has managed to enable a different approach to space access, although to describe it as "private enterprise" would see Milton Friedman execute a high deltaV in his grave.
Musk the man is clearly unfit for running a major corporation and certainly for high office, so obviously he has succeeded by most measures in the first and would hardly be a surprise as a candidate in the second. What a sorry state of affairs we have allowed to come to pass.
Another musk lie.
The only reason it appears "cheaper" is because well you forgot to mention all the billions in grants and other freebies the gov pays for.
Theres a LA article a few years old where it details how Musk is the equivalent of Branson, always finding billions in grants from governments ...
I'm a bit late coming back to this, apologies. Anyways, the "natural born citizen" requirement is directly from the Constitution. No executive order will be enough to change that; only a new constitutional amendment can do that.
Won't stop the Florida Orange Man from promising to do that; on the other hand he makes a lot of promises that he can't or won't keep...
It’s always been quite unclear what SpaceX’s financial situation is. We know that many dozens of banks have refused them credit which meant they had to rely on private investors (who do less due diligence?) for their funding.
We know that some financial analysts think the company is only one or two disasters away from bankruptcy.
We also know that Musk himself has stated that the company was sailing close to the wind financially a couple of times (though he is an unreliable source of information as he has an erratic relationship with the truth).
We know that some space technology analysts think the company’s Starship is a dud and that the Falcon range is their only viable product (though the majority of Falcon customers are Starlink so SpaceX itself). This significantly undermines SpaceX financial projections.
We know that they use Starlink as a way to get funds into SpaceX but we also know that Starlink uses creative accounting to hide their true costs.
In short, it’s unclear if SpaceX really has that much money to spend.
Gosh, a failing company bankrolled by a billionaire investor to personally profit?
Elon's never done that before *cough* Tesla *cough*.
Tesla has been near bankruptcy several times. Boring Company, SolarCity, etc. are secretive about their actual profits and mostly bankrolled.
All using investment, subsidies and billionaire-bankrolling to pretend they're profitable, but actually are likely haemorrhaging money on a daily basis in real terms.
2023: The Boring Company's annual revenue (not profit!) is $2.7M. The Boring Company has raised a total funding of $908M over 3 rounds. Assuming they aren't making a loss (so that revenue is all going on operations), that's enough to stay in operation for 300 years even if they did nothing.
Just like the Hyperloop fantasy was just a ploy to dissuade Americans from investing in High Speed Rail (Musk even acknowledges this himself), the Boring Company is just a ploy to prevent local governments from investing in light rail, metro, trams etc. Musk doesn't want rail, he wants more cars, and taxpayer money to fund their required infrastructure.
So far he has convinced enough municipalities to divert funding away from public systems towards his projects for him to consider The Boring Company a success, even if most of their tunnels will never be completed and nobody will ever travel through any of them.
You know it is a payments pipeline, yes?
The contractors need to get paid, then they can pay the subcontractors, then they can pay the wholesalers, then they can pay the suppliers, then they can pay the manufacturers, then they can pay the contractors, then they can pay...
And trying to keep their part of the line trickling along, everyone in the middle is beholden to the banks for extending loans based upon the value of the debtors.
You don't care if the guy at the start of the pipeline stops the flow - so you are cheer-leading for the banks, the only ones that win. Good to know where you stand.
That is straight out of the DJT playbook. No 45 is famous for not paying anyone who works for him including lawyers. That's why the likes of Todd Blanche got his $3M upfront.
Most of the subbies on his Atlantic City Casino's went broke waiting for their £0.20 on the dollar that he offered them.
Elon Skum is doing exactly what Trump did for decades and continues to do.
At some point a lien holder is going to get a writ from a judge that allows them to bring a truck(s) to a SpaceX facility and recover goods to match what's owed with bailiffs in tow to provide supervision. Of course, once structural steel is cut into pieces and welded, the resale value drops to scrap prices. Installed concrete has negative value. A fleet of golf carts, a few pallets of tech and a bunch of welding machines will go down a treat. This is to say that if creditors are given a go ahead to take goods to satisfy the debts, it will be the most valuable items that will be collected first leaving SpaceX with a crippled infrastructure.
Boca Chica is way down on the Southern tip of Texas where there isn't a lot of population density. This means that goods, services and labor don't have as many options with regards to local vendors. If you take work there, you have to accept that things are far more limited such as entertainment, shopping, opportunities to meet somebody and it's a long distance to things. For families, schools and opportunities for their children will be important. If a SpaceX employee is used to working at the Hawthorne facility in California or even the MacGregor test site, Boca Chica is a big change. At some point word gets out and people will be hard to find. Suppliers won't bother to supply things and people that are there could feel the tension and decide that it's better to make their move before an mass exodus happens. Some of the welders and fitters came from the oil industry in Texas and may decide to go back. While Midland isn't a fashionable location, it's much closer to more things.
> get a writ from a judge that allows them to bring a truck(s) to a SpaceX facility...
Then they find out that SpaceX doesn't seem to actually own anything on site; oh, maybe the odd spanner, and that tea urn was bought from company petty cash, but everything else is just being leased.
Rockets? What rockets? Oh, *that* rocket! No, no, sorry; yes, we did build it, but on contract from Noel Smuk Holdings Ltd. Cayman Islands, I think. The tower? Let me just check - on hire from Moe Kluns, must be from the old Swiss Kluns, given where we send the cheques each month.
Anything else I can help you with? The clipboard? Ah, no, we have to bring those in from home, see, my daughter painted a rainbow unicorn on it.
"Then they find out that SpaceX doesn't seem to actually own anything on site; oh, maybe the odd spanner, and that tea urn was bought from company petty cash, but everything else is just being leased."
The contractors on-site will want to make sure all of their assets are kept separate and are marked, serial numbers recorded so those things aren't determined to be SpaceX assets by the bailiff. I'm not sure if there are statutes that cover things such as a negligent company causing the inappropriate seizure of an outside contractors assets, but I expect there would be some.
Which is a habit that develops in business owners who have got used to having a hard time keeping their companies afloat, due to their inability to generate sufficient revenue. What happens then is that much effort is put into juggling payments, which takes away time that should be spent on the core business activities, resulting in fewer good things like improving your product and increasing efficiency. This misdirected effort can then become a negative feedback loop, until all effort is simply being expended upon company survival, at which point company survival becomes unlikely.
> This misdirected effort can then become a negative feedback loop, until all effort is simply being expended upon company survival, at which point company survival becomes unlikely.
Ahem. I believe what you are describing there is a POSITIVE feedback loop.
I don't know, next thing you'll be talking as though having a steep learning curve means something us hard to get to grips with.
The situation regarding payments is not unique, in fact it is an universal and ancient practice, and focussing on SpaceX alone is disingenuous, although the high profile might help shed light on the universal sickness of capitalism. (no it won't)
Water is wet - companies do not get paid in a timely fashion. In the UK, the practice of 60-90-120 day ad-infinitum terms is widespread. Productive companies go to the wall with full order books as each new project is being paid from their own capital and loans - it is unsustainable.
Quotations for contracts often specify they must hold for 1+ year, and with tight margins and rapidly fluctating markets, winning a contract can actually bankrupt you when it comes to the reckoning.
In the UK 30 days is supposed to be the legal term for payment. Statutory Claims may be made against companies who have not paid in a timely manner - I would suggest Statutory Claims should be made of the Government and let the Government chase the debt, now that would be effective quantative easing.
The UK's version was to hand the dosh to the banks "You are behind on your loan payments... the quantitive easing? Yes, well all in good time...oh dear, we will have to foreclose on you in the interrim, such a shame"
"Anyone want to buy some lively real estate and a potential going concern? Ahh, Minister, how nice to see you again, yes there is a nice portfolio of liquidated businesses here this month - take your pick. Yes Sir, all these shabby unemployed are indeed what's wrong with this country - have a nice day Sir, see you again very soon"
It should not be complicated for a Government and its Civil Service to settle: Date of Invoice/ Date of Payment + 30 days? Here's your lolly mate, we'll sort them out - but that just isn't the way fortunes, monopolies, and empires are made.
Government (local government in especial) is one of the offenders - try quoting goods, or services for them and see how long you have to hold your prices and their payment terms. Try to specify 30 day payment and 30 day quotes and watch the desperate competition eat your lunch.
Companies are owed money. Water remains wet. Auld man rant over.
Yes a government-backed payment scheme would be interesting. To prevent fraud they could pay half at the 30-day mark.
Of course there are already independent third-party finance companies who will buy your debt off you, typically for a healthy cut. The insurance industry could usefully offer a service of managing all your companies contracts for a smaller cut...
"... local government ... is one of the offenders - try quoting goods, or services for them ..."
Something like 30 years ago I did exactly that.
They said, "We won't accept your terms. You must accept ours." So I read their terms. My guess is that most people didn't.
Their terms included things like "If we buy something from you, and then we find out later that we could have bought it cheaper somewhere else, we can claim the difference back from you."
It didn't say what "later" meant, or how many of them they'd be buying at once, or well, anything that any sane individual might agree to.
So I said, "Not a chance." and had thirty years of (almost) trouble-free business selling stuff to reasonable people, including many schools and colleges who had ordered stuff from "central purchasing" and were often still waiting for it six months later.
"Water is wet - companies do not get paid in a timely fashion. In the UK, the practice of 60-90-120 day ad-infinitum terms is widespread."
It's not a UK problem, it's universal. The kicker with SpaceX is that given the Boca Chica location, the company can run out of employee prospects that are local very quickly in the same way that Amazon has done near some of its distribution warehouses and problem encompasses vendors too. When they need some office supplies, if the local office supply store won't extend terms or take checks, things have to be ordered and delivered. For want of a paper clip...... A down side of the internet for companies/employers is how fast word can get around. If SpaceX contacted me to provide services, I'd require payment up front and make sure it clears first. I know the photographer that made the photos for Solar City of the homes they used for the scam on the set of Real Housewives. He did get paid, but he also has a contract that very specifically emphasizes that non-payment or a returned payment voids the license for the images so it goes beyond a contractual issue and into the realm of Copyright infringement. That can multiply the payment to the photographer and their attorney (most Copyright cases don't go to court).
There's an old adage that if you borrow $1,000 and don't pay it back, you have a problem. If you borrow $1,000,000 and don't pay it back, the bank has a problem. Now extend that to what the banks have lent Elon and how much he's lowered the value through his management of that asset. I'm referencing Twitter. Tesla may have got to where it is with or without Elon and might be on a more solid footing to boot. (see what I did there). SpaceX is a harder bug to pin to the cork since it's private, but in round terms it can be argued that it isn't in good financial condition. Whether Starlink could be spun off is a big question mark and it may require that Starship is completed and operational to sustain it since there aren't alternate launch systems that can handle the volume envelope. If the problem was mass, SpaceX would be launching Starlink sats with the Falcon 9 Heavy but it has the same fairing as it's little brother and making that bigger is a whole new program.
The Boring company isn't riddling subsurface Earth with holes. The promised projects that they had "verbal agreements" on have never come to pass and their flagship Las Vegas Convention Center installation is laughable. When I was there a month ago there was no way I would even go down the tunnel to have a look. Ultra Global, the company that built the automated pods at Heathrow Terminal 5 could have done a better job and been able to provide automated cars instead of chauffeured EV's. Due to a typographic error, things that Elon touches are turned into Glod.
Pretty much all large companies are like this, squeeze suppliers till they go bust. Contract terms can be anything up to 180 days and they know the smaller supplier won't come after them as they are too afraid to lose business so they pay them last minute. At more than one company HQ I've seen bailiffs turn up over unpaid bills.
"Contract terms can be anything up to 180 days and they know the smaller supplier won't come after them as they are too afraid to lose business so they pay them last minute."
That only works until the point where no suppliers will bid on the contract. Word gets out. Lockheed strung me out on an invoice for some replacement parts for a product the company I bought used to make. The next time they needed them, I insisted on COD, which they said they can't do and they wouldn't pay in advance. I told them, no parts for you then. I expect they had to completely redo that test cell as there was nothing else on the market they could buy as a replacement. No skin off my back since it wasn't a huge money spinner but there was enough margin and inventory to make those replacements.
Once you've damaged your reputation, it can take a long time for it to heal. It's not good for purchasing agents to be hearing that the company they're trying to buy for is blacklisted as they contact vendors. It makes their job harder and they might decide that it could be better to find other employment.
Depends on your products and market. For automotive there aren't many customers and so manufactures know its a limited market that isn't so easy to turn customers away. I've seen small suppliers go bust and to be honest most enterprises have an approved list of suppliers that they will have done due diligence on including financial stability. its why many of these smaller suppliers are supplying through a 3rd party which makes recovering money even harder.
As for reputation, everyone in the industry knows what the score is, its all about cash flow.
One place I worked changed from Net 30 to Net 90, and made a habit of not paying until about day 85. For some reason, a number of vendors either refused to do business with them or required payment by credit card. Many of the rest suddenly had notably higher prices. I wish I could have asked the "bright" finance people who came up with that scheme if they would mind their paychecks being delayed 3 months...
& refurbishing them isn't cheap, we have one that we recently completely redid, still going though calibration, snagging & validation, ongoing process since January, never mind the engine jigs.
I've given enough info out without needing to go AC, but at the same time I fucking love my job & the people I work with quality really is in everything we do. .
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