LOS ANGELES, Jan. 16 (Xinhua) -- U.S. space technology firm SpaceX on Wednesday said it will build and test the prototype of its Mars spaceship in South Texas instead of the Port of Los Angeles, dealing another blow to the local economy days after the company's announcement of massive layoffs.

SpaceX will no longer build its Mars spaceship and rocket booster system at the Port of Los Angeles. Instead, work to build and test the prototype will be done in South Texas to "streamline operations," the Southern California-based company said in a statement.

Last year, SpaceX was permitted to build a giant new facility on a leased port land, which was expected to create hundreds of jobs in the region. But in a Jan. 7 letter provided to The Times, SpaceX Chief Financial Officer Bret Johnsen said the company would terminate the Terminal Island lease agreement.

The move came just days after SpaceX announced that it would lay off about 10 percent of its more than 6,000 employees.

"To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company," said the statement of the company.

"This means we must part ways with some talented and hardworking members of our team... This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary," the company was quoted by media as saying.

According to reports, SpaceX is providing a minimum of eight weeks' pay and other benefits to the fired workers. A company representative said SpaceX remains financially strong and can continue to "manufacture and launch at a reliable cadence in the years ahead."

SpaceX was launched in 2002 by Elon Musk for space exploration. This year the company plans to test hop Starship, a prototype designed for human travel to Mars.