MDA Corp. to U.S. government’s satellite builders: We’re on our way
PARIS — Satellite hardware and services provider MDA Corp. of Canada on Feb. 24 said its No. 1 priority is to obtain U.S. government certification for Space Systems Loral’s satellite manufacturing facility in Palo Alto, California.
Richmond, British Columbia-based MDA said the U.S. government dwarfs all other commercial and government markets for satellites and that SSL’s lack of access to U.S. military work is a handicap MDA can no longer accept.
“The big growth in our company is going to come from the United States,” MDA Chief Executive Daniel E. Friedmann said in a conference call with investors, referring mainly to the U.S. military and intelligence agencies. “That’s our fundamental business plan.”
Unlike its U.S. and European competitors, SSL has focused almost exclusively on the commercial satellite market, where in recent years it has harvested more large telecommunications satellite contracts than any other builder.
Friedmann has long said MDA’s 2012 acquisition of SSL included a strategy to refocus the California operation to win more U.S. government business.
This is the year that this will happen, he said. MDA expects SSL to have received all the necessary certifications to work on U.S. military satellites – at the same facility where the commercial satellites are built – by the end of the year.
“When we purchased SSL we had no pipeline into the U.S. government,” Friedmann said. “It was zero. We had no access from Canada and SSL was out of the U.S. government market. Today our pipeline is about 2 billion [Canadian] dollars [$1.45 billion], almost as big as the rest” of the company’s businesses.
Friedmann defined “pipeline” as outstanding bids submitted by the company, or programs for which MDA has won an initial contract that likely will lead to follow-on work.
Currently MDA must use a proxy or special security intermediary to perform U.S. military satellite contract work.
It’s not just direct contract awards that will gain with the U.S. certification. MDA Chief Financial Officer Anil Wirasekawa said MDA’s acquisition strategy has also been hobbled by the fact that it cannot easily conclude a deal even with targets that do relatively little U.S. government business.
SSL has benefited from its Canadian ownership. Export Development Canada (EDC), the national export-credit agency, has agreed to classify SSL-built satellites as every bit as Canadian as satellites built in Montreal, allowing SSL to offer export credit support at a time when the U.S. Export-Import Bank has been out of service because of U.S. Congressional opposition.
In a Feb. 24 filing with the Toronto Stock Exchange, MDA said in 2015 it provided an indemnity of $26.4 million to EDC in return for the agency’s backing of MDA bids.
SSL has booked work with U.S. government agencies on space robotics, an MDA specialty owing to its work on the international space station’s robotic arm.
Friedmann said the company recently bid on a high-throughput communications satellite by proposing that the satellite’s antennas be launched unattached to the main satellite body, and then assembled robotically in orbit, offering a 30 percent space savings under the rocket fairing.
In addition to positioning itself for U.S. military work, MDA has broadened SSL’s portfolio to include small satellites. Work on Google Skybox’s 13 optical Earth imaging satellites is nearing completion, with most scheduled for launch in the next 12 months.
SSL recently booked an order for six small imaging satellites but did not identify the customer.
MDA in late 2015 invested $25 million in the equity of OneWeb LLC of Britain’s Channel Islands, which plans to build 900 satellites as part of a global Internet-delivery constellation in low Earth orbit. Friedmann said other low-orbiting ventures, for both Earth observation and communications, look promising as well.
Friedmann said MDA in 2016 hopes to book telecommunications satellite awards in India, whose government appears more open to non-Indian satellite builders as it seeks to meet Indian domestic demand for broadcasting and connectivity; and in Turkey, whose government has a two-satellite procurement under way.
The Canadian government in the past has put a stop to MDA’s activities in Russia, where the company had seen a large opportunity. The new Canadian government, Friedman said, may be willing to re-authorize MDA work in the Russian satellite market “instead of just handing it to the French.”
Airbus Defence and Space and Thales Alenia Space of Europe both have booked orders for satellites or satellite payloads in Russia.