Profile: Looking Ahead to a Post-Merger Evolution

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  Space News Business

Profile: Looking Ahead to a Post-Merger Evolution

By PETER B. de SELDING
Space News Staff Writer
posted: 14 August 2007
12:20 pm ET











Carlo Alberto Penazzi

Chief Executive Officer, ThalesAlenia Space Italy







Given what has happened to his company in the past two years, Carlo Alberto Penazzi has become an expert at mergers and acquisitions in an industry that is often accused of not having enough of them.



AleniaSpazio, Italy’s biggest space-hardware company, in mid-2005, was involved in a complicated merger with the space-hardware unit of Alcatel of France. As a result of that merger,




Alcatel took a 67 percent ownership in the new company, Alcatel Alenia Space, and Finmeccanica of Italy retained




a 33 percent stake. A year later, Alcatel sold its stake to Thales Group, creating what is now ThalesAlenia Space.





Europe’s other big space-hardware contractor, the Astrium division of EADS N.V., said it took several years after the company was formed in 2000 to begin to see the once-autonomous British, German, French and Spanish divisions work as a single team.

Penazzi
is confident that ThalesAlenia Space will accomplish the task more quickly, in part because the mergers occurred after the difficult period in 2001-2004, when the space-hardware sector in Europe was forced to thin its ranks




because the global market for satellites was producing very few new orders.





Penazzi says the business has a healthy future for the near term,




with new Italian and European programs likely to keep the company’s work force busy. Penazzi spoke about his company’s prospects with Space News staff writer Peter B. de Selding.









What changes have occurred since Thales became your majority shareholder in 2006










?




The main changes have to do with integrating our procedures into those of our new shareholder. We are harmonizing our practices and developing the necessary interfaces. I would say we are on schedule with this and there has been no disruption of our work.






Has there been any shift in strategy now that you have a defense-electronics specialist as your major shareholder, instead of a telecommunications equipment supplier?







The discussion about strategy is ongoing as regards both national activities and in the international export realm. Thales is of course very active in many projects generally found under the term of net-centric systems. This is something that could be interesting for us as well. But there is no revolution planned for us. It’s more of an evolution.




Will your work force be reduced?





We have about 2,200 people working in Italy and this is a fairly stable figure giving our workload. Our industrial plan supports this level of employment. Remember that we performed a lot of our restructuring before the merger with Alcatel. So our work-force reductions were already completed during the space industry crisis of several years ago.




What is your revenue level now?





We are at about 500 million ($682 million) to 550 million euros annually broken down into defense and other institutional customers, and commercial business. We have had commercial customers in Russia, Israel and elsewhere, but the majority of our business is for government customers.






Do you project that this will remain stable?






No, we think this figure will increase, in part because we are now in a larger group and we can grow with it. When you look at the plans in the defense and institutional markets, including the market for telecommunications and scientific satellites, and for space infrastructure, there are growth possibilities. In fact in some areas, the growth we see now is higher than we forecast.





If the growth materializes, will that mean new hiring?





There are no plans for hiring internally. But some of our work packages can be contracted outside if necessary.




As part of the merger with Alcatel and now Thales, did the Italian government insist that certain technologies remain in Italy and not be transferred?





Our institutional customers of course wanted certain assurances. With technology you have to talk about facts, and the fact is that the Italian government, especially through ASI [the Italian Space Agency], has made a substantial investment in certain fields over the years. What we have done is discuss in detail with these institutional customers what we want to do to reach our goal of having a single company, while assuring that these customers’ concerns are respected.

This effort was a big part of the preparation we made for the merger.






You are prime contractor for the Sicral 1B military telecommunications satellite, and are likely to be prime for Sicral 2 as well. Is the military telecommunications market likely to be a steady source of business?






Both France and Italy have plans to remain active in this field. Currently defense telecommunications is about 20 percent of our annual business. Commercial telecommunications is about 10-12 percent.






Is military Earth observation also a big revenue line for you




now because of the Cosmo-Skymed radar Earth observation satellite project?






We prefer to call it a dual-use business line because Cosmo-Skymed, while we treat it in many ways as military satellite, it is a dual-use system. Earth observation including our dual-use programs are about 40 percent of our current business mix, mainly because of the effects of Cosmo-Skymed.




You






recently sold a radar Earth observation payload to the government of South Korea based on the Cosmo-Skymed work. Is radar one of the technologies that will remain in Italy?




Yes, as we develop the different centers of expertise, radar is one that is in Italy.




Here in Turin you build much of the pressurized volume for the international space station – the Cupola structures, and the structures for Europe’s Columbus laboratory and for the Automated Transfer Vehicle (ATV) cargo vehicle. How big is this division?




It is less than 30 percent of our current volume, and we will have to see how this develops with future ATV production. This division also includes our science work.






The new ASI president, Giovanni Bignami, has been talking about a more ambitious national program. In your view does this have the support of the government?





I believe so. From what I know so far I am confident of a reasonable increase in the ASI budget in the coming years. We are co-prime for Europe’s Bepi Colombo mission to Mercury, and Italy has also staked out a prime position in Europe’s ExoMars [Mars lander] program.