Deal Gives Company More Than 50 Percent Share of European Market
KOUROU, French Guiana — Contraves Space completed the purchase of the solar-array drive business of Safran of Paris Nov. 30, making the company Europe’s biggest manufacturer of these components.
The new solar array drive mechanism business, which Contraves purchased in October 2005, adds around 5 million euros ($6.6 million) to Contraves’ existing annual revenues of some 90 million Swiss francs ($74.5 million) per year, Contraves Space Chief Executive Axel Deich said in a Nov. 30 interview. When added to Contraves’ existing solar-array component business, the purchase gives the company more than a 50 percent share of that market in Europe , Deich said.
And while Contraves Space’s overall revenues are expected to remain stable in 2007 before growing again, the solar array business is growing by 20 percent a year.
“Eighty percent of our solar array work is commercial, with the rest governmental,” Deich said. “Europe’s Galileo [satellite navigation constellation] accounts for maybe 20 percent of this, but the broader commercial market is growing for us. We expect to deliver 30 solar-array mechanisms next year, equivalent to 15 satellites. These range from satellites with 1-2 kilowatts of power, to satellites with 18 kilowatts.”
Contraves Space also builds rocket fairings — it supplies fairings for Lockheed Martin’s Atlas 5 and Europe’s Ariane 5 launch vehicles — and has a small division that is building pointing mechanisms and optical devices, hardware used for satellite laser communications terminals, for Tesat Spacecom of Backnang, Germany. These terminals are still in the experimental stage and will be tested in 2007 aboard U.S. and German satellites. Contraves and Tesat see a market in providing laser links between Earth observation satellites and communications satellites in higher, geostationary orbit to speed ground receipt of data.
Deich said Contraves’ employee head count of 290 people will not be increased to accommodate the new solar-array business. “As a cost-reduction effort we had planned some small cuts in staff and these cuts will now not be made,” Deich said. “The head count will stay about the same now.”
Snecma’s solar-array drive mechanisms suffered several high-profile in-orbit anomalies in the past several years, but Deich said all the technology has been fully qualified and that “any problems there may have been are now resolved.” He said the company expects to be able to grow the existing business in part by expanding beyond Europe. “If we succeed in delivering on schedule and with quality, I believe we can grow,” Deich said.
One possible obstacle is the continued presence among solar array drive mechanism builders of Europe’s two principal satellite prime contractors, Alcatel Alenia Space and Astrium Satellites. Both have indicated that they will be shedding non-core businesses but as of now both have retained their solar-array manufacturing divisions.
Deich said Contraves likely will be a candidate if either of the two prime contractors decides to sell its solar-array drive divisions. He said Europe’s space-hardware suppliers will need to consolidate further to match the long-term demand. “The supplier landscape is not yet in shape for the proven needs of the market. We are interested in both internal and external growth as the market consolidates, and we would of course prefer to be a buyer rather than a seller.”
One defining contract in the next couple of years could be the 30-satellite Galileo navigation and timing constellation. Contraves has contracts for the first four Galileo satellites, whose development is being managed by a company including Alcatel Alenia Space and Astrium but overseen by European government agencies.
The contract for the 26 remaining Galileo satellites will be managed by a private-sector consortium that includes Alcatel Alenia Space and Astrium.