As the stock price of tech companies plunges, cash that flowed to SPACs and meme stocks has been vaporized, or landed in the pockets of banks and big name sponsors. But some of it has washed up on the shores of the San Francisco Bay.
Astra Space, a company that designs and builds small rockets and satellites, has set up headquarters in a former Naval base on Alameda, an island a stone’s throw from Oakland, California. Last year, Astra went public by merging with a Special Purpose Acquisition Company, or SPAC, led by telecom investor Craig McCaw, part of a trend kickstarted by nascent space firms.
After years of negotiation, the city of Alameda took over the former base from the military in 2013, with plans to build new infrastructure and housing.
“I am thinking that [CEO] Chris Kemp and Astra can do for Alameda what Elon Musk and Tesla did for Fremont, but without any controversies…right, Chris?” Alameda mayor Marilyn Ezzy Aschcraft said at an Astra event last week, as Kemp saluted offstage.
Tesla’s factory in nearby Fremont brought thousands of jobs to that city, along with allegations of abuse. It’s an example of how investments seen as frothy or far-fetched can generate economic spillovers, particularly when they are focused as much on creating physical products as they are advanced software.
Astra now employs more than 300 people, about sixty of whom live in Alameda, and says it is hiring for dozens of roles at its facility there.
What Astra needs to make rockets
Since 1940, Alameda’s economic life revolved around the US Navy Air Field. But the base was closed in 1997 in the defense spending draw down after the Cold War, taking some 14,000 jobs with it. After the closure, the island was split between a charming bedroom community and more than two square miles of abandoned hangars and empty runways, some of which is classified as a Superfund site requiring environmental rehabilitation.
For a company like Astra, founded in a San Francisco garage in 2016, it’s not easy to find a place to build and test rockets near the Bay Area. You need lots of space, access to transportation hubs, and unique industrial requirements that aren’t present if you’re just writing code. Most of Astra’s competitors are in aerospace centers near Los Angeles or Seattle, like SpaceX’s former 747 factory in Hawthorne, California.
“At Alameda Point, we have one of the few areas in the Bay that can offer that kind of real estate, those large format buildings to do a lot of exciting things,” Ezzy Ashcraft says.
Astra Space found what it needed there in 2017—a former Navy jet engine testing facility, with enough room to build 38 foot-long rockets and walls more than three feet thick to dampen the sound of rocket engine firings. It spent $40 million upgrading the 258,000 foot campus in 2021 alone. The once graffiti’d buildings are now filled with automated metal cutters and welders instead of rogue wildlife.
“Meme stocks” can generate real investment
After the transaction completed in June 2021, Astra stock went as high as $15.47; in today’s tougher market, it trades around $2.60 a share. But the SPAC deal left Astra with $500 million on its balance sheet, which it is using in part to build the high-tech manufacturing facility. Executives say the company’s business model demands mass production to drive down the cost of the vehicles, which it hopes to launch on a weekly or even daily basis in the future.
While the jobs are important, what Alameda and California need more is housing. Astra’s facility and its economic impact is part of a larger master plan that includes other businesses and transit infrastructure, but also affordable housing development.
The Bay Area Council, a group of local businesses and political leaders, estimates that Astra’s spending has already contributed nearly $60 million to Alameda’s economy, equal to 1% of the island’s annual economic production.
Astra deployed its first satellites in March, but it faces a crowded field of competitors in a risky business. Investors who were excited about a chance to get in on the ground floor of what they see as the next SpaceX weren’t thinking about whether their money would help clean up a Superfund site. Then again, Elon Musk probably wasn’t expecting his bet on a multi-planetary civilization to reinvigorate a chunk of fading Florida coastline.