Comtech To Shut Down AeroAstro Small-satellite Operation

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WASHINGTON — Comtech Telecommunications Corp. is closing down its AeroAstro small-satellite manufacturing business following the loss of a contract with the U.S. Navy to build a star-mapping satellite, according an industry source.

Ashburn, Va.-based Comtech AeroAstro had struggled of late due to cutbacks in U.S. government spending, and the cancellation of the Navy’s Joint Milli-Arcsecond Pathfinder Survey, or JMAPS, mission was the last straw, the source said. Comtech AeroAstro was building the JMAPS satellite platform under a pair of contracts valued at $43.5 million, with a launch tentatively scheduled for 2015.

The U.S. Naval Research Laboratory here warned last October that JMAPS was facing cancellation, and officials with Comtech in March acknowledged that funding for the program had slowed dramatically.

Rick Fleeter, who founded AeroAstro in his basement in 1988 and sold it in 2007, said the company had become more vulnerable in recent years due in part to a shift in focus from satellites weighing 50 to 100 kilograms and costing under $5 million to satellites weighing up to a few hundred kilograms costing tens of millions of dollars. In addition, Comtech absorbed AeroAstro’s communications business into other units of the parent company, leaving AeroAstro almost solely reliant on satellite manufacturing.

The result, Fleeter said in a July 17 email, was a less-diversified AeroAstro. “So the loss of JMAPS which was huge and the lack of collateral projects that might be countercyclical was the problem,” he said.

Fleeter said AeroAstro has weathered down cycles before — the company at one point shrunk to 13 employees — and probably could have survived its most recent challenges had the desire been there. “But Comtech has its own quarterly reporting pressures and carrying a loss forward for several quarters probably is even more difficult,” he said.

Comtech, a major supplier of satellite telecommunications electronics hardware, has been hurt in the last two years by the loss of a pair of contracts with the U.S. Army to provide troop tracking gear.

Comtech considered a number of options for AeroAstro, including additional layoffs and taking the company private, before deciding to shut the operation down, the industry source said. The company will close out or transfer its remaining contracts and expects to shut down the small-satellite manufacturing facility in Ashburn by Aug. 31, the source said. Work on some of those contracts will be completed at the company’s Littleton, Colo., engineering and component manufacturing facility, but that operation also will be closed eventually, the source said.

AeroAstro currently has about 50 employees, down from about 85 a year ago. The last day for employees deemed nonessential for the closeout operations will be July 31, this source said.

Reached by telephone July 16, Paul Lithgow, president of Comtech AeroAstro, declined to comment.

Michael D. Porcelain, senior vice president and chief financial officer of Melville, N.Y.-based Comtech Telecommunications, did not immediately return a phone call seeking comment.

Over the years, AeroAstro built small, one-of-a-kind satellites primarily for U.S. government customers including NASA and the departments of Defense and Energy. Fleeter sold the company in 2007 to Phoenix-based Radyne, a satellite equipment manufacturer that was looking to tap what at the time appeared to be a promising small-satellite market, particularly at the Pentagon.

Comtech acquired Radyne in 2008.

When Fleeter cashed out, the Defense Department was investing in Operationally Responsive Space, a collection of programs intended to prove the utility of low-cost space capabilities that could be developed and deployed rapidly in response to emerging needs from forces in the field. But as budgets began to tighten, the initiative lost steam. The Pentagon proposed closing the Operationally Responsive Space office along with its long-running Space Test Program — which served as a means of launching small, experimental satellites — in its 2013 budget request, unveiled in February.

Fleeter said that contrary to what he believed when he sold AeroAstro, the long-anticipated revolution in small satellites has yet to take hold.

“I work with many space organizations around the world, and there is widespread lack of understanding of what small space is and what small missions can do,” Fleeter said. “The world is still quite frozen in concepts of the past in terms of what we can do in space and how we can do it.”

He did say, however, that there remains a place for small-satellite makers and that the niche is being filled by companies like Sierra Nevada Corp. of the United States and Surrey Satellite Technology Ltd. of Britain.