Profile: In Transition

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  Space News Business

Profile: In Transition

By LON RAINS
Space News Editor
posted: 17 April 2006
02:02 pm ET


Profile: John Klineberg

Interim Chief Executive Officer

Swales Aerospace

W hen Swales Aerospace Chief Executive Tom Wilson retired suddenly last year, Chairman Thomas G. Swales called fellow board member John Klineberg to gauge his interest in taking the reins for a while. It was, as Klineberg remembers, the right moment to ask.

Klineberg left his job as president of Space Systems/Loral, the satellite manufacturing arm of Loral Space & Communications, in 2001 as the parent company was being dragged toward bankruptcy by the debt it took on to finance the doomed Globalstar venture . “Had I stayed I would have had to lay off a tremendous number of our staff and I said ‘I’m too old for that’ and then unfortunately my wife got sick right at that time. … She had cancer, so I spent three years at home with her, taking care of her.”

They traveled when they could and he got used to retirement.

The call from Swales came around the first anniversary of his wife’s death. “It was right after Thanksgiving, and I was kind of in the dumps and I said ‘well maybe this’ll be something fun to do for a while.’ But I wanted to make sure he didn’t suck me in and keep me here forever.”

Swales agreed to make it an interim appointment for about six months and asked Klineberg, who has been on the Swales board since 2002, to help in the search for a permanent chief executive officer.

Klineberg has been more than a caretaker at Swales, an employee-owned company with about $200 million in annual sales, about 75 percent of which comes from engineering services contracts primarily with NASA field centers. The remaining 25 percent comes from building space hardware.

Klineberg, a former director of NASA’s Glenn Research Center and Goddard Space Flight Center, spoke recently with Space News Editor Lon Rains and military space reporter Jeremy Singer.

What was the reason for the change in leadership at Swales?

Tom Wilson decided to retire. [Most of the] management had been here 25 years. According to Tom Swales, it was a good time to change, to bring in some fresh outlook, and put the company on a more firm basis for the future.

Are you acting as just a caretaker?

No, we’ve restructured. We’ve redone the five-year plan and have a very positive notion of where we are going.

Where are your growth prospects brightest?

Our big growth area is probably the national security business. It’s growing dramatically. Five years ago it was one or two million dollars . It was $25 million in 2005 and it should continue growing. We have a large number of people who have been cleared and we have a whole bunch of secure facilities. We’re postured to make a major contribution in that area.

What are the big opportunities in the national security sector ?

First of all, it is in small spacecraft; that’s what we do the best. There is also a major opportunity to team with some of the primes. There are always things they don’t do. One of the things we do as mechanical engineering specialists, for example, is pointing mechanisms and things like that.

There’s a lot of work looking at smaller spacecraft, smaller systems, the ground systems associated with spacecraft. We don’t really talk about those programs but we have won some and they are growing and so we’re building in that area.

All of us in the business have been waiting for the national security agencies to really get their act together so we could move out with them and it’s been slow but it’s been growing and I think it’s going to continue to grow.

Are you referring to classified programs?

I don’t know if I can say that. I can just say we are working.

What is the overall financial picture for Swales?

We were at $200 million a year [in 2005]. Five years ago we were at about $130 million. We’ve grown about 15 percent a year. We expect that to continue.

How did 2005 compare to 2004?

Almost the same. It was $195 million in 2004, which was unusual. That was the first year that happened.

What is the biggest chunk of your business today?

The major contract is the Mechanical Systems Engineering Support Contract with Goddard. That’s up for re-bid right now.

We also have a support contract with Langley, 100 people over there, with [smaller contracts with] the Jet Propulsion Laboratory (JPL) and with the Naval Research Lab.

Is satellite-component hardware a growth area for Swales?

I think our heat pipe business and the tailored composite structures for commercial satellites are a good business and we should be a prime supplier in that.

Has Swales been adversely affected over the years by the International Traffic in Arms Regulations (ITAR)?

Less than other companies [but] mostly because ITAR has forced the Europeans to develop their own suppliers, so they go preferentially to local suppliers and don’t come to us. That’s too bad because what we could offer, Alcatel Alenia and EADS would love to have.

What changes would you like to see to ITAR?

I’d like to see it go away. I don’t see why you’d put commercial vehicles like communications satellites on the ITAR list at all.

There are some decent arguments to that, but it just leaves the door open for our commercial competitors. If you prevent the U.S. companies from competing on an even footing with the two European ones, you’re going to lose out.

Do you have a plan for addressing the cutbacks in NASA spending on science programs?

We’re on the big satellite programs when Goddard is involved and when JPL is involved. At Goddard, I loved the Explorer Program. It was really great to train people in house, it was great to get the universities involved and small companies like [Swales].

But NASA is in a tough position. I’ve never seen it where you’ve had a mission that is so exciting like [the Vision for Space Exploration] with no new money. Something has to give. Until the shuttle is retired — and I don’t know if that is going to be that money-saving — there is no wedge to fund everything.

The NASA guys are under constraints to implement as much as possible of the exploration program as they can within the existing budget. Now, that’s an opportunity for us as a company because we know space hardware and we know space systems, so we should be able to help.

Part of our JPL effort is working with them on various aspects that are part of exploration. For example, we’re doing prototypes and precursors for mechanisms that would drill down into the permafrost of the Moon or Mars. You have to do that to get samples. We just tested it in North Dakota. So there are opportunities — as long as the NASA budget is robust.

Have you looked at anything yet in the Operationally Responsive Space area?

Yes. We’re a small company, and don’t have the overhead that some of these big guys have. Having spacecraft that you could configure quickly and launch quickly is something that we could do.

Are there opportunities with the Missile Defense Agency?

The Space Tracking and Surveillance System satellites that they are talking about building in the next decade are an opportunity. It really depends on how they want to implement that. Our real strength is in precursor systems where you’re trying to do a technology demonstration. Sometimes the big primes overwhelm that kind of system and make it very expensive. We could be a prime in a first-of-its-kind system and then maybe subcontract to somebody manufacturing large numbers of them.