Profile: Building a Solid U.S. Foothold

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  Space News Business

Profile: Building a Solid U.S. Foothold

By WARREN FERSTER
Space News Editor
posted: 22 January 2009
02:24 pm ET






Gonzalo Garcia

Vice President of Operations, GMV Space Systems Inc.

Madrid-based GMV has enjoyed a strong run in the last four years, more than doubling in size to over 1,000 employees and topping the 100 million euro ($134.8 million) revenue milestone. Some 50 percent to 60 percent of that business is space-related, primarily in satellite ground control software, solutions and engineering services.

In 2004, the privately held company created a U.S. subsidiary called GMV Space Systems to strengthen its business with U.S.-based clients, both government and commercial. Although the , , outfit has just 25 employees, it has made its presence felt: GMV has a role in three NASA missions slated to launch this year – the Lunar Reconnaissance Orbiter, Orbiting Carbon Observatory and Glory – and recently won a contract to support the Landsat Data Continuity Mission.

Gonzalo Garcia, who has run GMV Space Systems from the beginning, says one of the keys to the company’s success is its ability to leverage commercial-off- the-shelf (COTS) products to offer lower- cost solutions that are becoming more popular with an increasingly price-conscious customer base. GMV also has been a proponent of so-called service-oriented architectures, which allow discrete services or functions within a system to exchange data.

Despite the economic crisis and uncertain government budget outlook, Garcia is bullish about the future and is looking to expand the office. Meanwhile, GMV announced Jan. 15 the appointment of Jesus Serrano as its new chief executive officer, replacing Luis Mayo. Garcia, who is in the process of becoming a citizen, spoke recently with Space News Editor Warren Ferster.

Did the International Traffic in Arms Regulations (ITAR) play a role in GMV’s decision to open a subsidiary?

ITAR is an important restriction in doing business; it’s a law that restricts the transfer of defense or dual-use technology between the or companies and foreign companies or foreign persons, and that was becoming an obstacle for us doing business from So we needed a fully owned subsidiary and we needed U.S. persons – citizens and permanent residents of theU.S. – to avoid ITAR issues.

Does your office handle work for any non-U.S. customers?

We get involved from the in a lot of international commercial activities because a lot of times there are opportunities that are driven by manufacturers and four out of the six manufacturers that sell commercial satellites are American. We’ve also seen that in some parts of the world, it helps to sell from the as opposed to selling from

Can you elaborate?

We’ve found in some parts of it does become an added value to sell as a company. This may be changing, but if you look at the satellites that have been bought and the ground systems that have been bought in the last few decades, a good part of them are American. Asian operators have bought mostly American satellites and American ground systems. That could change, but there are reasons why being presented as an American supplier sometimes helps.

Do you expect GMV’s growth to level off given the state of the economy?

The current situation is a big uncertainty, obviously. Everybody’s looking at the global situation, the financial markets, and next year is going to be a complicated year for many markets. We are confident about next year. In the space business, we’re involved in many programs that are long programs, multiple years, and have been signed recently, which means they’re immune – they will not be impacted because the budget has been approved and that gives us a lot of stability. This year we’re going to turn 25 years old. We’ve been growing mostly at double digits since inception. Next year may be a little bit less than that, but we’re very confident about the next five years. We’re getting more and more involved in large contracts, which is also helping our revenue go up.

What’s the split between GMV’s government and commercial business?

It varies. Globally for GMV it’s probably half and half. As we grow in the in terms of government contracts, and definitely once we address the U.S. Defense Department opportunities, maybe the government side will grow and that’s probably something that in the current situation of global concerns might be a good thing.

Do you have much Pentagon business now?

We have very little and it is through partners. It has not been a prime goal for us initially for different reasons but that’s something that we intend to address.

Why wouldn’t winning military work be a prime goal?

We wanted to base our strategy on the opportunities we thought we were most likely to succeed in when we started four years ago, and we thought that commercial operators and NASA missions were the best fit for our products. We also had to structure the company in a certain way to be able to address Defense Department opportunities because the company is foreign owned and that is a fact of life. Having said that, it’s clear that in the long term we’ll go there.

Are there any big Pentagon opportunities on the horizon?

Potentially yes. Nothing I can really talk about.

Is GMV involved in the competition to supply the ground segment for GOES-R, the next generation of geostationary weather satellites?

We are not publicly announced as a member of any of the teams but we do expect to be involved in a certain way in the program. The contract is going to be awarded sometime this year toward the second quarter but there are some decisions to be made on how some of the pieces of those contracts will be divided up, and we are in conversations – we have some agreements with the consortiums – but I cannot give you more information than that.

Might GMV have a role regardless of who wins the prime contract?

Potentially yes, because like I said there are decisions to be made on some of the elements of the ground system and we do think there’s a lot we could contribute to that.

Does GMV ever bid directly on government contracts?

In most cases it has been through U.S.- based partners. But again, GMV Space Systems is a U.S.-based corporation. So if there’s an opportunity where we think we’ll be more competitive presenting a proposal directly, we’ll do it.

Which of your markets right now have the most growth potential?

In the right now there’s a high degree of uncertainty over how NASA’s going to evolve. The budget is probably not going to grow strongly. But for us it’s not so important how the NASA budget is growing as a whole; it’s more important to know how it’s distributed internally, the weight that is given to different types of missions, because in some of them we’re very strongly positioned and in others we don’t participate so much. Right now we have a very strong presence in the unmanned side, so scientific missions, robotic missions, things like that are definitely missions where we’ve participated extensively. For manned missions, it’s a different approach and their development is usually not so much COTS-based. It’s more customized software done by companies that have been working with the for a long time and it’s a different business. It’s harder to get into that.

Is acquiring other companies a part of GMV’s growth strategy?

It is, and we keep looking for opportunities both outside and inside the

How would you describe GMV’s cash position?

Extremely solid. GMV has been very conservative in some decisions in the last few years and that’s a very good thing now in terms of being able to deal with the financial crisis. And we’ve had profits pretty much since inception for 25 years so that’s built a pretty large amount of reserves in the company.

Has the financial crisis provided any opportunities for GMV?

The crisis means that our customers are more sensitive to cost than before and that is definitely an area where we can be very competitive. We’ve invested over the years 12 percent of our budget is research and development and that has made our products very competitive.