Purchase of Snecma Unit Positions Contraves for Galileo Work

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Contraves Space of Switzerland has purchased the solar-array drive production business of Snecma of Paris in a deal that moves Europe’s space-component industry one step closer to a consolidation that industry officials see as inevitable.

In purchasing Snecma’s facility for producing solar-array drive mechanisms, Zurich-based Contraves also is positioning itself to better compete for the biggest single satellite order expected in Europe in the next decade: the 30-satellite Galileo navigation constellation.

“Snecma would surely have been a strong competitor to us for the Galileo business,” Contraves Space Chief Executive Umberto Somaini said. “But we will have others for this business, including perhaps Alcatel and Astrium.”

Alcatel Alenia Space of France and Italy, and EADS Astrium are both satellite prime contractors with major equity-ownership stakes in the consortium expected to build Galileo. Both build solar-array drive mechanisms, although Snecma has been a regular supplier to Alcatel Alenia Space.

Better known for its rocket fairings — Contraves equips Europe’s Ariane 5 and the U.S. Atlas 5 vehicles — Contraves Space has developed, with financing from the European Space Agency (ESA) and using its own funds, its own line of solar-array drive mechanisms tailored to the Galileo satellite design.

Contraves Space reported revenues of about 100 million Swiss francs ($77 million) in 2004. Sales have fallen by about 15 percent over the past three years with the contraction of the worldwide commercial space industry and Europe’s stagnant government space budgets. The company has reduced employment by about 10 percent, to 300 people.

“Our top line, like just about everybody else’s in the space business, has suffered in the past three years,” Somaini said. “Right now we think the market has somewhat improved and we can hold sales to where they are, and hold our employment to where it is. But it won’t be until 2007, in our view, before the market turnaround is really felt.”

Solar-array drive mechanisms steer a satellite’s solar panels and transfer the electrical energy generated by them to the satellite’s payload.

Snecma recently merged with electronics-manufacturer Sagem to create a company called Safran. Snecma’s principal space-hardware business is Ariane rocket motors, but the company also makes satellite thrusters in addition to its solar-array drive business. With the sale to Contraves Space, Snecma’s Villaroche operation in France will shut down and the affected employees will be transferred to positions elsewhere in Snecma.

Snecma spokesman Vincent Chappard declined to discuss the sale and whether it is part of a broader Snecma strategy to shed smaller operating units as it refocuses its business following the merger with Sagem. Industry officials have speculated that Snecma also would unload its satellite-propulsion business.

Europe’s space-component business is scattered throughout a dozen nations. This in part is because Europe’s biggest space-hardware customer, ESA, is obliged by its member governments to distribute contracts to all nations participating in each program in close proportion to each nation’s level of investment .

How to marry this requirement — called juste retour — with the need for economies of scale in component manufacturing is an ongoing dilemma for ESA managers.

Somaini said Snecma’s Villaroche operation will close out work on existing contracts in the coming months. The Snecma solar-array drive production tools , equivalent to several truckloads of equipment including vacuum chambers and vibration-test hardware, would gradually be transferred to Contraves in Zurich.

The full transfer is expected to be completed by mid-2006. It remains unclear how many new jobs will be created at Contraves as a result; Somaini said perhaps 10 or 15. “It will be a significant enlargement of our existing solar-array drive facility,” Somaini said.

Financial details of the sale were not disclosed for competitive reasons, he said.