The Top 5 Industry Manufacturing and Services Companies
Boeing managed to hang on to the top spot in this year’s Space News Top 50 list for the fifth year in a row, despite some setbacks and two divestitures in its space-related business.
Chicago-based Boeing saw its space-related revenues dip to $9.1 billion in 2005, compared to $10.31 billion in 2004.
In August 2005, Boeing sold its Rocketdyne propulsion unit to United Technologies’ Pratt & Whitney division for $700 million. Earlier in the year the company sold its Electron Dynamic Devices business, which builds space and defense components, to L-3 Communications.
Boeing lost about $100 million in 2005 as a result of a machinist strike that grounded its Delta 4 rocket fleet, delaying satellite launches for the U.S. National Oceanic and Atmospheric Administration, the U.S. Air Force, the U.S. National Reconnaissance Office and NASA. That strike was settled in February 2006. The company also suffered the loss of part of its multibillion-dollar Future Imagery Architecture spy satellite contract in 2005.
2006 has brought mixed news for the company’s space business. The year started with Boeing announcing that it had received a contract to build three satellites for Reston, Va.-based Mobile Satellite Ventures, a win that could earn Boeing close to $1 billion, depending on options. In July, however, Boeing said it would take a charge of about $615 million related to a settlement with the U.S. government over an ethics breach on its Delta 4 launch vehicle program.
Looking ahead, Boeing is teamed with Northrop Grumman in the competition to build NASA’s Crew Exploration Vehicle. That contract is slated for award as early as September.
Government satellite contracts and missile defense work in 2005 helped boost Lockheed Martin to within a whisker of rival Boeing as the world’s largest space contractor.
The Bethesda, Md.-based firm posted just over $9 billion in space-related revenue in 2005, pulling to within $94 million of Boeing, which has been the world’s largest space contractor since acquiring satellite maker Hughes Space & Communications in 2000.
Space remains less than a third of Lockheed Martin’s overall business, which is dominated by military aircraft programs and other non-space defense work. Overall, the company brought in $37.2 billion in revenue during 2005, up from $35.5 billion in 2004.
Among Lockheed Martin’s challenges in 2005 was a reduction in its Space Based Infrared System (SBIRS) contract. After seeing SBIRS’s costs balloon by $8 billion and the first launch date slip from 2002 to 2008, the government decided to reduce its purchase of satellites from at least five to no more than three.
Lockheed Martin is competing against a Boeing-Northrop Grumman team to build NASA’s Crew Exploration Vehicle, a contract that is expected to be worth billions of dollars .
Lockheed Martin executives predicted July 25 that the company will see double-digit revenue growth in the space systems sector for 2006, based largely on a strong performance in the first six months of the year.
In 2005, Los Angeles-based Northrop Grumman saw higher revenue from its civil space, and intelligence, surveillance and reconnaissance businesses, gains that were offset partially by lower sales in satellite communications, missile defense and software-defined radios.
Northrop Grumman booked $4.86 billion in space-related revenue during 2005 , up from $4.57 billion in 2004 . Space represents about 16 percent of the company’s overall revenues .
The company secured some significant missile defense wins in 2005, including a $145 million follow-on contract during the first quarter on the Airborne Laser program. Northrop Grumman also nabbed a contract, potentially worth $1 billion, to be the prime support contractor for the U.S. Missile Defense Agency’s Joint National Integration Center.
Among Northrop Grumman’s biggest unclassified space programs is the National Polar-orbiting Operational Environmental Satellite System (NPOESS), which is jointly funded by the U.S. Air Force and National Oceanic and Atmospheric Administration. That program was restructured earlier this year due to delays and massive cost growth, but prime contractor Northrop Grumman escaped most of the blame, which instead has fallen on subcontractors and the program’s government managers.
Northrop Grumman also is the main contractor on NASA’s James Webb Space Telescope, which in November 2005 had its launch delayed by two years, to 2013, to counter $1 billion in projected cost growth.
The company now has its sights set on winning a major role in NASA’s planned return to the Moon as the prime contractor on the Crew Exploration Vehicle, the space shuttle’s designated replacement. Northrop Grumman is teamed with Boeing for that contract, which could be awarded as soon as September.
Raytheon’s space and missile defense business continued its trend of double-digit growth in 2005, with sales rising from $3.4 billion in 2004 to $3.9 billion. The company remains the biggest on the Space News Top 50 list that is not considered a prime system integrator.
Raytheon provides software, ground systems and sensors for both unclassified and classified satellite programs, as well as missile-defense interceptor hardware. This work is carried out across several business segments.
As the provider of one of the main instruments for the National Polar-orbiting Operational Environmental Satellite System, Raytheon took much of the heat for the cost growth that led to the program’s restructuring. The company is building the Visible Infrared Imager Radiometer Suite, which has encountered development problems.
The company began 2006 with the disappointment of losing the competition for a 10-year, $2 billion contract to build the ground segment for the U.S. Air Force’s Transformational Satellite Communications System. That contract went to Lockheed Martin.
Missile defense , a Raytheon staple, continues to be a strong performer, with the company securing four contracts worth more than $100 million each during the second quarter of 2006. However, future funding for the Kinetic Energy Interceptor program, on which Raytheon is a major subcontractor to Northrop Grumman, is uncertain.
EADS Space’s 4 percent sales increase in 2005 in euros appears as a slight decline in revenues when translated into U.S. dollars.
EADS Space’s total revenue for 2005 reached 2.7 billion euros ($3.2 billion), topping its 2004 total revenue of 2.6 billion euros.
But the more important figure for the space division of aerospace giant European Aeronautic, Defense and Space Co. is the pretax earnings figure. Profit before interest and taxes reached 58 million euros, or 2.1 percent of revenues, in 2005, compared to 0.3 percent of revenues in 2004. EADS Space Chief Executive Francois Auque says the company should be able to raise its pretax earnings to 6 percent of revenues in 2007 or 2008.
EADS Space’s revenue base is just 29 percent defense-related, a fact that sets the company apart from its U.S. competitors. It divides its business into three divisions — Space Transportation based on the Ariane 5 rocket, for which EADS Space is the prime contractor; Astrium Satellites for satellite manufacturing; and Space Services for turnkey satellite communications management.
Space Services was 7 percent of revenues in 2005 but is expected to increase its sales contribution steadily in the coming years on the strength of the British Skynet 5 military telecommunications business, and a similar, but smaller, program called Satcom-Bw being managed, with ND Satcom of Germany, for the German armed forces.
PRIVATE tabstops:<*t(0.000,0,” “,18.000,0,” “,)> EADS Space has not provided a detailed forecast for 2006, but the Satcom-Bw win in Germany, the stabilization of the Ariane 5 production line around the now fully qualified Ariane 5 ECA and more than 1 billion euros in Astrium satellite bookings so far in 2006 suggest the company will be increasing revenues.
PRIVATE tabstops:<*t(0.000,0,” “,18.000,0,” “,)> Comments: Missy Frederick, email@example.com