Profile | Michael Pley, Chief Executive, Com Dev International

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Canada’s Com Dev enjoys a strong position as a component supplier to satellite manufacturers worldwide, with content aboard most of the competitively awarded commercial telecommunications satellites being launched today.

The commercial market represents more than half the company’s business, and that share could grow larger given the uncertain outlook for Canadian government space spending. Com Dev recently laid off some workers in its government division and transferred others to its faster-growing commercial division.

Michael Pley said the prospect for additional layoffs depends on whether the Canadian Space Agency makes good on its promise to press forward with the three-satellite Radarsat Constellation Mission.

Pley spoke recently with Space News correspondent David Pugliese.

Com Dev recently announced the layoff of 31 employees from its Canadian government space division. What is the reason for that?

The core reason for that is that we looked at what is being forecasted for the Canadian Space Agency’s program and we found there’s actually nothing of significance in the pipeline outside of the Radarsat Constellation Mission. That group has done the vast majority of payloads and scientific instruments for space agency projects, and essentially the forecast is that there is no work for them. So we’re taking action to deal with that now.

Are more layoffs expected?

Right now it’s highly dependent on us winning some new business, primarily on the Radarsat Constellation Mission. If all that works out accordingly there would not be any significant changes in manpower numbers, but if that doesn’t pan out, obviously that will take another swipe out of our work force. The positive news has been that our commercial space business has been quite strong. We’ve absorbed a fair number of people from our Canadian government space division into that division. Hopefully we can continue to do that to mitigate against bigger impacts going on.

A number of Canadian companies have complained that the government has missed opportunities to secure more domestic work on programs like the U.S. Wideband Global Satcom project, in which Canada is participating. What is your view?

As the process was happening on Wideband Global Satcom we felt industrial regional benefits (IRB) should be dealt with. Eventually they were and there was an IRB commitment made. But our point is that you don’t do this after the fact. You try to do it upfront to find out what is it that Canadian industry is capable of doing on some of these programs. Quite frankly, we supply to Boeing. We supply to Lockheed. We supply to Northrop Grumman. And dutifully every time we supply them they can tick an IRB box and say they’ve got a certain amount of Canadian content. But we would have won that business anyway, so it’s not actually accelerating development in Canada — it’s acknowledging there was some Canadian content being supplied. If you do a bit more upfront work you can really make additional content available to Canadian companies provided we have that upfront collaboration going into it. One of the things we are endorsing is the idea of if you’re investing in space it has a multiplier effect on a prime’s IRB credits. So a dollar spent on space is worth $10 on IRB credits compared with companies buying run-of-the-mill equipment. IRBs for space would have a higher value so therefore that would encourage more Canadian content.

Has Com Dev lost business due to problems obtaining Canadian government export licenses for Chinese and Indian projects?

We did. We certainly lost some market share for a period of time, particularly in China. It was a timeliness issue. Can you get an export license fast enough to be able to close the contract? We were actually turning down business because we didn’t have an export license in place. I will say that Canada’s Department of Foreign Affairs, in particular, but the whole bureaucracy that deals with export licenses has responded very well to that criticism. The process of decision making on export licenses is happening at a much faster pace than it has in the past. I can see now that our part of the Chinese civil satcom market is growing, so we’re seeing the benefit of that.

So no structural changes to the export control regime are warranted?

The interesting thing is that our competitors in Europe by and large don’t even need export licenses or seem to be able to do the process much easier. I think they’re taking a different approach. Their approach is that a standard switch that is used in commercial frequency bands on tens to hundreds of satellites out there in the commercial satcom world is not strategic missile technology and therefore doesn’t require that level of export control. I think the problem is that Canada and the U.S. take this really broad view that anything being built for space can potentially be dual-use missile technology. If you take a more discerning approach you can reduce the number of export licenses you have to consider.

What is the latest on the Fine Guidance Sensor built for NASA’s James Webb Space Telescope?

We’ve delivered it to NASA’s Goddard Space Flight Center. It’s going through its checkout paces and some level of integration. From our perspective we are funded to do what is called sustaining engineering to support those activities. It’s still quite a few years before it gets launched. One of the things that I’ve always said is that people don’t realize how iconic this telescope is; when they actually launch it, it’s going to be like watching the Hubble again. We’re going to have that level of visibility and fascination for the world. It’s an absolutely terrific mission, but the technological challenges associated with it are enormous.

What is the status of Com Dev’s plan to provide search and rescue transponders for the U.S. GPS 3 satellites?

We actually haven’t received the contract yet. We developed a search and rescue transponder, which was destined for Europe’s Galileo system. If you recall the history there, politically we got frozen out when Canada didn’t have a so-called defense certificate or defense status to be able to supply to that program. We took that same technology, worked with Canada’s Department of National Defence, and it’s now destined, we hope, for GPS 3. That would be a large, multiyear commitment. Given that the Canadian civil program is not funding a lot of work, this is great that we have a Canadian space defense requirement that is hitting us at this time.

What are some of the other major market opportunities for Com Dev?

From a commercial and civil and military satcom perspective our equipment is everywhere. The new high-throughput satellites, the Ka-band satellites, offer an opportunity for future growth. We have to see how that pans out over time. I’ve always been one who has said, “I love the idea that people are going to put up lots of Ka-band satellites because we supply a lot of equipment to those,” but the question is how will this sustain itself over time? Will the ground side of it and selling subscriptions keep up with the capacity that is being put up there? That remains to be seen. But right now it’s a very good market to be in and we’ve been growing in that.

What’s your reaction to the European Space Agency proposal for a satellite automatic identification system program, which arguably poses a competitive threat to your exactEarth subsidiary?

Institutionalizing something that’s already available and is being developed commercially doesn’t seem to be the right approach from my perspective. I’m a bit surprised by it, but it will be years down the road before their system is available. The capability we’ve got is a discriminating capability for what we call the high-end market, which includes the defense intelligence community.

Does Com Dev see any issues with MDA Corp.’s purchase of Space Systems/Loral?

Space Systems/Loral is a large customer of ours. MDA Montreal is a customer of ours on a smaller scale. From our perspective nothing has changed. I think it will be really interesting to see how MDA takes Space Systems/Loral forward into some of the U.S government opportunities. I’m sure that is something they’re looking at from a strategic perspective and hopefully that opens up some other opportunities for us.