ESA Satellite Testing Center Struggles To Make Ends Meet

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PARIS — Financial management of Belgium’s Liege Space Center (CSL) will be tightened and brought more closely under the control of the University of Liege following financial losses in 2009 that triggered an outside audit, the university’s board of directors announced Feb. 25.

CSL Director Jean-Marc Defise said Feb. 26 that he agrees with the audit’s conclusions and is optimistic that more-direct involvement in CSL’s financial affairs by the university will permit the space center to better predict its future cash flow as it seeks to diversify beyond the highly volatile space sector.

In an interview, Defise declined to comment on the audit’s specific findings, deferring to the university’s rector. The rector’s office did not immediately respond to requests for comment.

Defise said CSL’s basic problem is that it must maintain its satellite-test facilities at a relatively high fixed cost at a time when revenue from satellite projects is at an ebb. At the same time, he said, CSL is financing a diversification into sectors that are not in the space industry but can profit from technologies developed for space applications.

CSL has about 70 spin-off projects in various phases of development, and their cash demands, plus the maintenance cost of the satellite-test facilities, in 2009 proved more than could be financed by CSL revenue. As a nonprofit organization, CSL bills customers for its spin-off technology work only for the cost of CSL personnel.

Defise said that while tighter control by the university will not insulate CSL from the feast-or-famine work flow that often characterizes the space hardware business, it will provide the center with the university’s financial management expertise and better arm CSL as it diversifies.

CSL is one of four satellite test facilities used by the 18-nation European Space Agency (ESA). The others are IABG of Ottobrunn, Germany; Intespace of Toulouse, France; and European Test Services, a joint venture of Intespace and IABG based at ESA’s European Space Research and Technology Centre in Noordwijk, Netherlands.

As part of a long-term and politically difficult effort to reduce duplication among European space centers, ESA has been guiding the four competitors toward a specialization in different satellite sizes and payloads.

CSL has developed expertise in cryogenically cooled satellite sensors, mainly for science missions. But CSL’s competitors are commercial companies seeking to maximize return to their shareholders. They compete with each other and with CSL for satellite work.

Defise said he hopes that one consequence of the CSL audit and the alarm raised by the university is that ESA, as Europe’s largest space hardware testing customer, sets guidelines for the competing test centers that ensure their long-term survival.

Defise said CSL, which several years ago had 100 full-time employees, now has a work force of about 85 people and reports revenue of about 10 million euros ($13.5 million) per year. In 2009, he said, delays in work to be done on ESA science missions, coupled with cutbacks among the private-sector customers for CSL’s non-space technologies, resulted in a substantial loss.

In its Feb. 25 statement, the university administration said CSL showed an operating loss of around 2 million euros. Defise declined to confirm this figure, saying the center has not yet reported its 2009 financial performance. The statement said that forecasts show further losses in the coming years.

“The audit also highlights management problems and differing views among the center’s management,” the university statement said. “The budget situation at CSL is of concern and requires that urgent measures be adopted to guarantee the continued high-quality activity of a center that is one of the jewels of space expertise and research in Wallonia and in Europe.”

CSL has always been a part of the University of Liege but has evolved into a quasi-independent body that will now be brought back into the fold, the university said in its statement.

“[The outside audit] argues for a review of CSL’s governance to reduce its autonomy, improve the management of its human resources and put into place efficient financial management tools to permit a rapid return to budget equilibrium,” the statement said.