Investing in Space

SpaceX restarts negotiations to build its Starship rockets in the Port of Los Angeles

Key Points
  • SpaceX is talking to government officials about developing a new rocket factory in the Port of Los Angeles to build the company's massive, next-generation rocket called Starship.
  • While the deal is in early stages of negotiations, L.A. City Councilman Joe Buscaino told CNBC that SpaceX CFO Bret Johnsen asked if the facility could "be up and running within the next 90 days."
  • For SpaceX, the deal would add 18 acres in the heart of the Port of L.A.
A SpaceX facility under construction in this aerial photograph taken in April 2018 above the Port of Los Angeles.

SpaceX is talking to government officials about building a major manufacturing facility in the Port of Los Angeles, CNBC confirmed on Wednesday.

The new rocket factory would build SpaceX's massive, next-generation rocket called Starship. But the deal itself is not entirely new: The company already had approval to build the facility in 2018, with the city and port signing off on a 10-year lease at $1.4 million per year. But SpaceX backed out last year, a move that L.A. City Councilman Joe Buscaino said "was just crushing" given the city's high hopes for redeveloping the port.

"We know the significance of building Starship in San Pedro," Buscaino told CNBC. "If San Pedro is good enough for Elon Musk, then it will be good for other innovators."

BOCA CHICA, TX - SEPTEMBER 28: Space enthusiasts look at a prototype of SpaceX's Starship spacecraft at the company's Texas launch facility on September 28, 2019 in Boca Chica near Brownsville, Texas.
Loren Elliott | Getty Images News | Getty Images

SpaceX already leases more than 8 acres of land in the outer harbor of San Pedro. Yet the company largely uses those grounds as a transition point for when its rocket boosters land on a barge and need to be shipped back to SpaceX headquarters near Los Angeles International Airport. This deal would add 18 acres in the heart of the Port of L.A., on Terminal Island.

SpaceX declined CNBC's request for comment on the discussions. Port of Los Angeles spokesman Phillip Sanfield confirmed that negotiations were ongoing with SpaceX but declined to comment further.

The Daily Breeze, a local L.A. daily newspaper, first reported the news.

Buscaino said that SpaceX CFO Bret Johnsen came to his office two weeks ago and apologized for backing out of the deal the first time, adding that SpaceX had a new vision for how to continue developing Starship. The rocket, designed to be fully reusable and carry as many as 100 people to space, has so far been built and tested at SpaceX facilities in Texas and Florida. But the majority of SpaceX's more than 6,000 employees work at its headquarters within driving distance of the Port of L.A., so Buscaino believes it's a natural addition for the company.

"I'm happy to know that Brett saw that it is fitting today, that it is a good business decision to keep its employees in the area," Buscaino said.

According to the councilman, the new factory would bring 300 jobs – more than two-thirds of which would come from SpaceX HQ. Additionally, Buscaino said Johnsen pushed to see how quickly a new agreement could be drawn up. The facility itself would be a large tent-like structure, similar to those used when Tesla was ramping production of its cars in recent years.

"They want to be up and running within the next 90 days," Buscaino said.

The Port of L.A.'s commissioners will discuss the permit next Thursday, with a deal coming as soon as the commission's Feb. 20 meeting.

"We have daily calls with SpaceX and the city entities just to make sure that we're continuing to be on the same page," Buscaino said. "This would be a long-term lease agreement with SpaceX, with the investment coming from SpaceX itself."

The port would provide SpaceX with immediate access to water, key to transporting its immense rocket from a production facility to launch sites in either Texas or Florida. SpaceX currently moves Falcon 9 rockets across the highway on super long trucks, but Starship and its "Super Heavy" booster would be too large to transport on the road.

Buscaino personally is a fan of Musk's, writing in a tweet that the billionaire "is the modern-day Henry Ford, Leonardo Da Vinci, and Howard Hughes all rolled into one."

"My message to Elon Musk and other innovators: If you want to try something new, come to my district," Buscaino said. "We won't get in the way."

Watch SpaceX's Starship rocket blow its top off in pressure test