MDA Corp. Worries Canada Is Losing Its Robot Edge

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PARIS — MDA Corp. of Canada on May 4 warned that Canada was losing its space-robotics edge because of the government’s decision to pass up collaborative development opportunities in Europe and elsewhere.

In a conference call with investors, MDA Chief Executive Daniel E. Friedmann said MDA and Canada will be largely on the sidelines over the next 10 years with respect to space-based robotics programs, making it all the more important for the company to secure robotic work on U.S. government contracts.

MDA is part of a team led by Lockheed Martin Space Systems of Denver bidding on NASA’s Cargo Resupply Services (CRS)-2 contract to ferry supplies to the International Space Station. The U.S. space agency is expected to announce its selection of winners in September.

“It’s very problematic,” Friedmann said. “Canada has passed on every single international cooperation opportunity in robotics in the last year and a half. We’re out – until past 2024. Our role has been picked up by the Germans and the Japanese and so on.”

Richmond, British Columbia-based MDA is prime contractor for the Canadarm and Dextre robotic manipulators aboard the International Space Station, part of the Canada-built Mobile Servicing System.

The Canadian Space Agency earlier this year contracted with MDA to continue maintenance work on the Mobile Servicing System through July 2017. More recently, the Canadian government said it would remain a space station partner with NASA until 2024.

But operational support does not sharpen the company’s competitive edge. Friedmann said the contract “is good news. We get to maintain the existing robots. But there is no new planned development. Our response has been to pursue business in the States.”

Lockheed Martin's concept for NASA's Commercial Resupply Services 2 program.
Lockheed Martin’s concept for NASA’s Commercial Resupply Services 2 program.

He said the Lockheed Martin-led CRS-2 bid “is based on MDA robotics.” Lockheed’s team includes Thales Alenia Space Italy, whose pressurized cargo container is now used by Orbital ATK of Dulles, Virginia, for space station resupply and is also part of Orbital ATK’s CRS-2 bid.

The space-robotics alarm is the latest in a series of MDA issues all stemming from the fact that the company is too big for the Canadian government to nourish.

MDA’s purchase of satellite manufacturer Space Systems/Loral (SSL) of Palo Alto, California, was one answer to the problem, and MDA is working on smaller but similar local-ownership efforts in Brazil and India.

For the CRS-2 and many other U.S. government contracts, Friedmann said MDA positions itself — through SSL and MDA’s recent acquisition of General Dynamics Advanced Systems radar-sensor division in Ypsilanti, Michigan — as a U.S. company.

“We bid most of [the U.S. government contracts] from the U.S. and do most of the work in the U.S. when we win,” Friedmann said. “So we’re really an American company in that sense.”

Friedmann said that after recent U.S. government budget battles all but froze contract awards for U.S. government use of MDA’s Radarsat-2 radar Earth observation satellite, “the two-year hiatus … seems to have broken. We had record bookings in the last two-three months in the U.S.”

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In a May 4 filing with the Toronto Stock Exchange, MDA said that for the three months ending March 31, U.S.-based customers were the company’s largest revenue source, accounting for 30 percent of total revenue. Asia was next, at 24 percent, followed by Europe (19 percent), Canada (13.5 percent), South America (10 percent) and Ausralia (2.5 percent).

Canadian business accounted for 18 percent of MDA’s revenue a year ago.

MDA said it booked contracts valued at more than 40 million Canadian dollars ($31.6 million) in contracts for surveillance and intelligence services in the first three months of 2015, most of them with the U.S. government.

In Europe, where Canada is an associate member of the European Space Agency, MDA signed a six-year contract with ESA for Radarsat-2 imagery with an initial firm value of 14.5 million Canadian dollars and a potential value of 29 million Canadian dollars.

In satellite telecommunications, MDA said it contracted to supply electronics payloads to Boeing Space and Intelligence Systems of El Segundo, California, and to Turkey’s Aselsan Electronics Industries, which is building the Turksat-6A telecommunications satellite.

MDA said its Communications division reported 389 million Canadian dollars in revenue for the three months ending March 31, up 13 percent from a year ago. Much of the increase was due to the rise of the U.S. dollar versus the Canadian dollar. The Communications division’s operating EBITDA, or earnings before interest, taxes, deprecation and amortization, was 13.5 percent of revenue, up from 12.5 percent a year ago.

The Surveillance and Intelligence division reported revenue of 145 million Canadian dollars, flat from a year ago, with a 28.3 percent operating EBITDA margin.