[Satellite News 12-17-08] Boeing Satellite Systems International (BSS) President Stephen O’Neill said the company’s year cannot really be viewed as a success after the loss of a major U.S. government satellite contract.
NASA announced Dec. 2 that it had selected Lockheed Martin to build the next-generation Geostationary Operational Environmental Satellite R-Series, known as GOES-R, for the U.S. National Oceanic and Atmospheric Administration (NOAA), a contract valued at $1.1 billion. O’Neill told Satellite News prior to the contract being announced, “It will be a good year if we win that, but a bad year, if we don’t.”
Boeing has filed a protest with the U.S. Government Accountability Office (GAO) over Lockheed Martin's win, and despite the loss of the contract, O’Neill is hopeful BSS can turn things around in 2009. “BSS continues to be impacted by a retreating marketplace, however, there are satellite programs that we are competing for in both the commercial and military sectors, including TSAT, and expect award decisions in 2009. We will continue to align our staffing levels to the needs of the business, and it would be premature today to speculate how this [GOES-R] program loss will impact our overall staffing needs,” he said.
BSS also hopes to improve its fortunes with more commercial satellite wins. “The commercial business has been quite robust in the last two years,” said O’Neill. “I had been forecasting 15 to 18 orders for worldwide satellites per year. I think it will be closer to 20 to 25 this year.”
However, O’Neill believes the global credit crunch could have an impact on the commercial market. “We have seen satellite manufacturers have to extend financing to companies. I don’t see it improving quickly. I think the credit crisis is going global, and I think more and more people are becoming risk averse,” he said.
The competition for Boeing is perhaps tougher than ever before, with the satellite manufacturing space, one of the most crowded in the industry. “I think there is probably a more level playing field than perhaps there was 10 years ago,” said Marco Caceres, an analyst at the Teal Group. “The top satellite manufacturers were Boeing, Lockheed Martin and Loral, but I think over the past five or six years, you have seen the Europeans such as Thales Alenia Space and Astrium bring technologies that are the equal to their U.S. counterparts. In many cases, they don’t need U.S. companies whether they are subcontractors or prime to help build their satellites.”
One area where BSS believes it can make a strong impact is in satellite broadband. BSS built the Spaceway 3 satellite for Hughes Network Systems, one of the biggest satellites manufactured in recent years, and O’Neill hopes the company can capitalize on this experience. “The interesting part of that is the technology we are taking from the commercial side of our business, we are using on the U.S. government TSAT business. We think that it is integral to exploit the synergies between the commercial and the government business,” he said. “We have seen the Ka-band business become highly successful with Hughes Network Systems and WildBlue. Hughes has publicly said they are going to buy another satellite. ViaSat is proceeding with a satellite. It is a high-demand area that requires high power to be able to keep the user equipment as small as possible. It is clearly an area we have expertise in, and one we hope to sell satellites into.”
O’Neill said there could be potential business cases for satellite broadband in other areas of the globe. “I believe that demand for broadband by satellite exists outside of the United States It is unclear what the demand will be in Europe. There is better terrestrial penetration in Europe then in rural United States As GDP grows, Ka-band could be particularly strong in areas that do not have wide terrestrial penetration. I think India and Brazil are two countries that have the ability to really grow and have the GDP to support Ka-band satellite services.”