Elon Musk’s decision to move SpaceX headquarters from Hawthorne to Texas could be a deep cut for local businesses

Restaurant owner Sonia Contreras is on a first name basis with countless SpaceX employees who frequently dine at the Fabulous Grill in Hawthorne. Her business is located just a block from the company’s headquarters near Crenshaw and El Segundo Boulevard.

But Contreras said she was shocked last week to learn that billionaire Elon Musk is planning to move SpaceX headquarters to Texas. Business has been slow since the pandemic, but her relationship with its employees has helped keep the lights on in recent years. Her staff occasionally wears SpaceX shirts that were gifted to them by a loyal customer from the company.

“It’s scary because I have a lot of business with them,” she said. “If they leave, I don’t know what’s going to happen to us.”

Musk announced last Tuesday that he plans to move SpaceX from Hawthorne to the company’s rocket launch site called Starbase in Texas , a move that could have big implications for small businesses that have come to rely on the thousands of people who work at the site.

How we got here

The Tesla founder said his decision to move comes after California Gov. Gavin Newsom signed a new law that bars school districts from requiring staff to notify parents of their child’s gender identification change, calling it the “final straw.”

But the governor’s office says Musk was already planning to leave San Francisco before Newsom announced he was signing the law. His company, Tesla, recently expanded in California, moving its research and development back to the state and opening a second HQ in Palo Alto.

Newsom responded to Musk’s plans to leave the state with a post on X, saying “You bent the knee,” along with a screenshot of a social media post from former President Donald Trump that includes a photo of the two posing together in the Oval Office.

How Hawthorne became home

Musk started SpaceX in 2002, which has since grown to roughly 13,000 employees. It relocated from several offices in El Segundo and Los Angeles to one giant warehouse near Hawthorne Municipal Airport in 2008, according to the Daily Breeze .

Hawthorne Mayor Alex Vargas highlights the city’s relationship with SpaceX in his official bio , saying “businesses are constantly looking to relocate to Hawthorne, with SpaceX and the Hawthorne Airport corridor as the key point of synergy.”

When reached by phone, a representative of the mayor’s office said the city had no immediate comment on Musk’s decision.

In 2017, SpaceX made a deal to stay in Hawthorne through 2022 as long as the city reduced certain taxes on the business. The agreement included a $260,000 cap on annual business license fees. That allowed the company to maintain a flat tax rate as it grew larger.

According to the Daily Breeze , the Hawthorne deal also included a “corporate citizenship” clause that allowed the city to use the SpaceX logo for its own branding, and encouraged the company to engage with schools and community events.

As of June, SpaceX was valued at $210 billion, making it the world's second most valuable startup. The news broke one day after the company secured a nearly $1 billion NASA contract to decommission and de-orbit the International Space Station in 2030.

What to expect

SpaceX's footprint in Hawthorne and Southern California is huge, experts said, so moving to Texas will be complicated and not overnight.

“You don’t just shutter and walk away from a major aerospace facility without thinking super seriously," said Peter Westwick, who teaches history at University of Southern California.

He described the region as the “global epicenter of aviation and aerospace for the last hundred years.” Now, supply shops for equipment are readily available for companies like SpaceX, and employees have become accustomed to certain lifestyles in Southern California that they may not want to leave.

That's what people like Jasmine Chang, a manager at Vicky’s Donuts in Hawthorne, is hoping for. She described SpaceX employees as “regulars,” who can be easily identified by the company T-shirts they wear to work. The donut shop is located about a mile away from its headquarters.

“If they’re (SpaceX) here, it’s a lot better for us," Chang said.