In the realm of big-government satellite manufacturing, Lockheed Martin Space Systems is the undisputed king, having garnered the lion’s share of the plum contracts for recapitalizing the major operational U.S. government constellations.
In the commercial satellite sector, not so much.
Once a market pioneer, Lockheed Martin in recent years has barely averaged one commercial contract annually. This year the company suffered two high-profile competitive defeats: the JCSat-14 satellite for Sky Perfect JSat of Tokyo and the Falcon Eye imaging satellite for the United Arab Emirates. Losing JCSat-14 had to hurt: Sky Perfect JSat, Asia’s biggest commercial satellite operator, had previously ordered seven satellites from Lockheed Martin.
Now, with its big government development programs moving into the less-lucrative production phase, and not much in the way of new government opportunities on the horizon, Lockheed Martin is determined to become a force in the commercial arena.
“We are deadly serious about this,” said Linda Reiners, who has led Commercial Ventures since its creation more than a year ago in a reorganization of Lockheed Martin Space Systems.
On Sept. 9, during the World Satellite Business Week conference in Paris, Lockheed Martin announced it was updating and enhancing its signature A2100 satellite product line with an eye toward capturing a bigger share of the commercial market, which averages 20-25 geostationary satellites orders per year. In a press release, the company touted features including lower prices; component commonality; propulsion system flexibility, including an all-electric option; and a lightweight platform option sized to be launched two at a time on a single rocket.
Reiners spoke with SpaceNews Editor Warren Ferster.
Component commonality seems like a straightforward way to reduce cost and risk. What’s the challenge there?
The real trick is what’s the right level of commonality such that you don’t end up building inefficiencies in the platform itself. Anyone who’s trying to do a common bus is potentially doing it at such a high level they’re suboptimizing the rest of the system design. You’ve literally got to go through each component and each subsystem and do that trade that says, “If I try to envelope all these potential applications I get the benefit of volume and repetitiveness and I don’t lose the efficiency of what I’m trying to have that product deliver.” It’s a very laborious process to do it right.
Can you give me an example?
If I envelope both military and commercial applications for a given part, and some of the military applications require unique things like hardening, am I better off having a common part because I can buy across each of these platforms or, because it’s unique enough, am I better off getting two different parts? And if I have to have two different parts, is there a different level of assembly that I can make common? So, for example, I could have a box that I make common but the cards going into the box have to be different. And you just keep working your way up through the assembly to do that. It could have been as simple as, you as an Air Force program needed to test 1,000 cycles and you as a NASA program only wanted to test 800 cycles. What’s the trade if I make everything cycle at 1,000? Do I still maintain the efficiencies and the savings? We literally went through every part of the satellite that way. It took us quite a while.
Why are you undertaking this activity only now?
We were very much in development [with government programs] for the last five to eight years. Those systems are now entering production — they’re entering a new phase. That frees up a tremendous amount of engineering bandwidth. We have this engineering workforce that’s been through this development; now we can apply them to this set of problems. Even though we just stood up Commercial Ventures a year ago the work that we’re talking about began the year before that so we’ve actually been involved in this refresh of our product line for over two years.
When do you expect to finish?
We won’t be finished for several more years. It’s evolutionary and incremental in nature. Each of the enhancements will be incrementally phased in over the next several years.
You’ve said your electric-propulsion satellite design, by all accounts derived from Lockheed Martin’s work on the U.S. Air Force’s Advanced Extremely High Frequency satellite system, will be capable of reaching geostationary orbit in half the time of comparable all-electric satellites. Can you be specific?
You’re typically six to seven months. So we’re three to four months.
What’s the trade-off — is it a more expensive or heavier system?
It’s a different technology.
Are you offering the electric-propulsion design on the commercial market today?
What can you tell me about the dual-launch option for that platform?
I’m not going to discuss how we’re going to do that yet — I consider that fairly proprietary at this point — but when we introduce it on the market you’ll see that it actually does it in a pretty innovative way.
When do expect to begin offering that?
In a year or so. Part of the equation is when the right customer comes along. We are incrementally introducing the A2100 enhancements because one of the key drivers is to keep the risk low. You don’t want to load up all of the enhancements on the first or second or third platform. We have already started to bid approximately half of the changes and over the next several years you’ll see us roll out the rest of them.
How much cost do you think you could shave off a comparable A2100 platform with this new architecture?
As we went through this product architecture we assessed cost targets to each of the subsystems and components — it’s a classic systems engineering process. We laid out specific design-to-cost targets based on ensuring that we would be in a competitive position, and our intention is to be under where the competitive market currently is. It won’t happen today. But as we introduce each of these incremental changes we’ll get better and better.
What’s your bidding strategy?
We are looking for the opportunities where what we currently have — in terms of what’s matured and ready to go — best fits the customer’s requirements. We’re involved in a number of opportunities but we’re also saying “no” to a number of opportunities still because we’re not ready there. We’re in the middle of a transformation of not just the product but of our company, and we’re looking for where the fit is right. That obviously will get bigger and bigger and bigger in terms of a capture set over the next year or two years.
Many were surprised when the JCSat-14 satellite contract went to Space Systems/Loral given Sky Perfect JSat’s longstanding relationship with Lockheed Martin. What happened?
We lost. And we will work very, very hard to win that customer back. I think it’s fair to say that we need to get our price down and we’re working hard to do that. The full focus of the Lockheed Martin Space Systems leadership team is on making this project that we’ve described to you successful.
How much money is Lockheed investing in this product update?
It’s a significant investment that actually goes over a period of five years. We’re in our year three. Now you’re starting to see us talk about it more and we’re starting to bid. I think a year from now you’ll see a significant difference in what we’re able to bid and win.
Where are your commercial platforms built?
In the case of our commercial A2100, the engineering, program management and business development are done in Newtown, Pa. We also do some of the power, antennas and payload work there; we build up a module there; and depending on the size of the satellite we may take it all the way through single-lane flow and environmental testing and ship it out. For some of those high-priced items in the satellite business like thermal vacuum chambers, acoustic chambers, that sort of thing, we have capabilities in Sunnyvale, Calif., as well, particularly for larger birds. Loral comes and tests some of their birds at our facility. A lot of the government work is done in Newtown and brought to Sunnyvale.
Are you building components using 3-D printing these days?
We are introducing some components that are 3-D printed. Those are currently in test and will be some of our future enhancements.
Can you give me an example?
One of the things we’re really focused on is part reduction. The fewer times I make something or fewer parts I use — those are good things in terms of reducing risk and cycle time. So, for example, one of our structures had 118 unique parts. We now have five common parts that replaced those 118 parts and one of those parts is used to connect the other common parts. That will be one of our printed parts and it’s currently in environmental testing.
I know it’s early in your effort, but what’s the realm of the possible in terms of Lockheed Martin commercial satellite contract awards for the remainder of the year?
Zero to two.
Will you be competitive across the full range of communications satellite capabilities?
We will be competitive from relatively small to as large as you want to talk about. And we will go where the market goes. I would say we’re not as focused on that small end with the A2100.
European companies currently dominate the international remote sensing satellite market. What are your ambitions there?
I’m pretty committed to busting that trend. There is no company better than Lockheed Martin at building high-resolution electro-optical satellites. I think the market is more in tune with catching up to that capability than the other way around. There are a number of opportunities in development that we will be pursuing.
Where are these opportunities?
South America. Western Asia.