The satellite manufacturing industry in the United States and Europe has stabilized its employment base, and in the case of two prime contractors, actually added new engineers to meet backlog requirements.

The hiring at Space Systems/Loral and Orbital Sciences Corp. is occurring despite the increasing trend among prime contractors to outsource development of satellite components to others when they do not have an existing in-house expertise.

Palo Alto, Calif.-based Space Systems/Loral, unlike all its principal competitors, does not have a large government satellite business whose work force can be reassigned to commercial work if necessary.

That partially explains why Loral is in the midst of an historic hiring boom that began in 2005 and will expand in 2006.

“We hired 165-175 new people in 2005 — about 85 percent of them for our engineering, manufacturing and test operations business,” said Eric J. Zahler, president of Loral Space and Communications of New York, Space Systems/Loral’s parent company. “In 2006, we plan on adding 400 to 500 more positions.”

The employment binge will bring Space Systems/Loral’s work force to nearly 2,000 people by the end of 2006.

“Training the new people in tools and processes — it’s a challenge. The talent pool is out there, but getting people used to how we do business is a hurdle we face,” Zahler said. “Some of the people we are rehiring after letting them go in the past couple of years. Others are new [engineering] graduates, and some are coming to us from our competitors.”

Zahler said Loral typically outsources about 30 percent of the value of the satellite it builds, including batteries, traveling wave tube amplifiers and certain subassemblies. This percentage, he said, will remain despite the arrival of more than 500 new people.

Like Loral, Dulles, Va.-based Orbital Sciences has seen a flush of new commercial orders and has been adding people since 2005 to its Space Systems Group, according to Ali E. Atia, president of Orbital Communications, the satellite manufacturing arm of the company.

Orbital Sciences made net employment additions of about 100 engineers in 2005, bringing its satellite production work force to around 1,200. The company plans to add 40 to 50 new positions in 2006. “It’s a nice position to be in and a nice problem to have,” Atia said. “We are growing gradually and selectively — less than 10 percent per year.”

Atia said Orbital subcontracts between 40 percent and 50 percent of the value of the satellites it builds to a network of regular suppliers and that the company is not using its current growth to develop new in-house expertise. “We have not vertically integrated and we don’t plan to,” Atia said. “Our policy is: If we’re buying it, we’re not going to build it. If we don’t have it, we don’t develop it. Price-wise, we are holding the line with our suppliers, which include U.S., Canadian and European companies.”

Orbital Sciences has been moving staff from government satellite work to commercial work, meaning its work force is not growing as fast as its commercial backlog.

That is also the case with Lockheed Martin Commercial Space Systems (LMCSS) of Newtown, Pa., the commercial division of Lockheed Martin Space Systems.

Lockheed Martin’s military satellite work is much larger than its commercial business and that continues to be the case despite recent commercial successes for the company.

Rick Masoni, LMCSS executive vice president, said the 900 people working in Newtown and 50 to 100 in Sunnyvale, Calif., for LMCSS represent a slight growth from three years ago. The work force is now stable given the commercial prospects, he said. Satellites are assembled in Newtown, and the larger ones are then shipped to Sunnyvale for final integration and testing.

Lockheed outsources about 40 percent of a typical satellite following a downsizing that occurred around 2002 when the commercial market crashed. “We see the growth opportunities mainly on the government side,” Masoni said.

Boeing Satellite Systems International and its Satellite Development Center in El Segundo, Calif., whose main current business is for U.S. government systems, also plans no increase in employment, Boeing said in a written response to Space News questions.

Boeing has made an effort in the past two years to shed non-core satellite production work and develop a network of regular suppliers that can serve government and commercial programs. “The commercial market is inseparable from the government satellite market, especially from a technology standpoint,” Boeing said in its statement. “Technology developed for commercial applications can bolster government programs, and vice versa.”

EADS Astrium of Europe expects no major change to its current employment base of 6,800 people in France, Britain, Germany and Spain. The company recently purchased solar-array manufacturer Dutch Space of The Netherlands, but that company is being placed not in EADS Astrium but in sister company EADS Space Transportation, reflecting Dutch Space’s core value as a conduit for Dutch government spending in areas outside of satellite communications.

Bruno Le Stradic, director of telecommunications satellites at EADS Astrium, said each of the company’s plants develops expertise partly as a function of the technology priorities of its host government. The job of EADS Astrium’s management is to reduce duplication in these governments’ spending priorities.

For Alcatel Alenia Space, 2006 will be a restructuring year following the July 2005 merger of Alcatel Space of France with Alenia Spazio of Italy. The new company is majority-owned by Alcatel.

Patrick Fournier, Alcatel Alenia Space’s executive vice president for operations, said no major layoffs have been planned despite the merger. The company operates 11 production sites in France, Italy, Belgium and Spain.

“There is not much redundancy between the different production sites,” Fournier said. “But I can’t deny that there will be some evolution of activity.” Alcatel Alenia Space, he said, expects to wield greater negotiating power with respect to its suppliers in return for higher-volume contracts.