- Email: [email protected]
The success of the European space industry
The SudCZess .’ of the European Space Industry Jean-Claude
HUSSON
European satellite manufacturers have been extremely successful during the first half of 2000, winning contracts for more than ha/f of the commercial geostutionary satellites ordered by international operators during this period. Does this mean that European satellite manufacturers are more competitive than their American counterpan’s? ~~~~~he answer to this question must 8 be: Yes and No! $$ No, because European manufac.z$ turers benefited from the high US “L Dollar exchange rate, which made their offers more attractive. No, because most American manufacturers have a large workload generated by governmental space programmes from their national administrations, so that they do not feel the same need to be very aggressive on the open market. Yes, the technical trade-off between all international competitors does not show any major advantage in favour of American companies, so one can reasonably argue that the European success is due to a combination of competitive prices, high level technicalperformance, proven quality and comprehensive programmatic offering. In fact, the reasons for the success of European industry are more complex.
Reliable space systems In some cases, since American manufacturers are also operators, they are often considered by other operators as competitors and not as potential suppliers for satellites. Due to successive mergers and the trend to ‘cheap and dirty’ the number of failures both during launch and in orbit were extraordinary high in 1998and 1999for allAmerican spacebusiness. Insurers fell into the red
in 1998and 1999,with 99% due to American launcher and satellitefailures.So,despite the high level of confidence from all intemational customers regarding US technology, it has now become more and more obvious that European manufacturers were able to provide equally reliable space systems.
The profit factor Up to now, European Spacemanufacturers have been satisfied with a ‘one digit profit’. Will they accept this for very long knowing that satellite operators get a ‘two digit profit’ by exploiting satellites that they have bought for a very low price and from which they will get very large profits? This is why some American manufacturers became operators, selling their manufacturing activities once their operations activities were sufficiently profitable. The result of course is that the number of competitors for satellite contracts is decreasing on the export market - for the Intelsat IX contract there were only 2 bidders! In an extreme case, we could imagine the dream (or nightmare for customers!) of a major international RFP (Request For Proposal) with only one manufacturer making an offer! Is it because of the important US internal market that export business represents a smaller proportion of total sales (export plus Agency) for American manufacturers than for European manufacturers?
The importance of new technologies European companies devote significant efforts to R & D, dedicating large sums of money to develop new technologies,thus increasing their competitiveness. Financing R & D is inescapable and crucial to remain at the top level and gain new markets. For instance, technological programmes like Stentor allow the firms concerned to develop leading edge technology, such as plasma propulsion, which can then become a major factor for success in the commercial market. As operators are very reluctant to be the first customer using new equipment that has no flight heritage, this type of technologicalor scientific programme is an essential means of obtaining a ‘flight proven’ label. As the number of programmes financed by Agencies is limited, companies have to take advantage of all development programmes. For instance, when developing a new AOCS (Attitude and Orbit Control System) specifically for a scientific programme, its future modification to meet the requirements of a telecom mission must be kept in mind.
To stay competitive, if is necessary to develop new technologies every 3-5 years.
The Evolution Presently, there are few Ministry of Defence-financed satellite programmes in Europe, and only one very limited programme financed by other Agencies. That satelhte, Stentor, is expected to be launched in 2001. The time is ripe for Europe to launch a very ambitious new technological programme!
Alcatel Space develops creative solutions The way Alcatel Space manages to be a major Spacemanufacturer illustrates these remarks. Maintaining and improving expertise,knowledge and competitiveness of space segments implies a full control of all segments from system level to equipment level. That is AlcateI Space’s challenge and key factor for success.This is why production of equipment, whether standard products, so-called commodities, or added value products, is fundamental to the business of Alcatel Space. The company’s commercial strategy is not only to use its equipment for its own needs, but also to market them. This approach offers the advantage of maximizing volumes, maintaining the company at a peak of technical and commercial competitiveness, and keeping it abreast of the constant market evolution.
of the EuroDean .
Today, equipment designed and produced by Alcatel Space is used in more than half of the satellites currently in orbit. This market position is basedon skills originally developed for institutionat and governmental markets, together with R&D efforts.Alcatel Space’sEuropean dimension, with operations in six European countries, allows optimisation of R&D effort and resources necessary to meet the market needs. Its cooperation with the European SpaceAgency in R&D and technological projects like Stentor gives Alcatel Spacethe capability to develop creative solutions in terms of equipment design at a very early stage which would not be possible when facing the constraint of delivery deadlines of commercial satellites. Spectacular drops in equipment prices and time to market have driven a product
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policy to enhance the efficiencyof equipment design, integration and testing. The market for commercial telecommunication satellite equipment has, in recent years, followed the global trend of ‘faster, better and cheaper’.Equipment for institutional and governmental satellitesis now following the same trend leading to a mandatory standardization of the design, manufacturing and testing processeswhile maintaining a high quality assurancelevel to comply with new requirements of increasedlife time and reliability, The European Space Industry gets a number of winning cards. International operators know they can count on the European manufacturers’ will to meet their needs Their continuous objective is to be more and more competitive while maintaining a very high level of I performance and quality.
About the oufhor: Jean-Claude HUSSONis President and Chief Executive Officer of Alcatel Space.
For further information, p/ease contocf: Thierry Deloye. Director of Communications,Alcatel Space Alcatel Space 26 avenue J.-F.Champollion BP 1187 31037 Toulouse cedex 1, France Tel.: +33 5 34 35 60 80 Fax:+33534356341 [email protected],fr
HUSSON
European satellite manufacturers have been extremely successful during the first half of 2000, winning contracts for more than ha/f of the commercial geostutionary satellites ordered by international operators during this period. Does this mean that European satellite manufacturers are more competitive than their American counterpan’s? ~~~~~he answer to this question must 8 be: Yes and No! $$ No, because European manufac.z$ turers benefited from the high US “L Dollar exchange rate, which made their offers more attractive. No, because most American manufacturers have a large workload generated by governmental space programmes from their national administrations, so that they do not feel the same need to be very aggressive on the open market. Yes, the technical trade-off between all international competitors does not show any major advantage in favour of American companies, so one can reasonably argue that the European success is due to a combination of competitive prices, high level technicalperformance, proven quality and comprehensive programmatic offering. In fact, the reasons for the success of European industry are more complex.
Reliable space systems In some cases, since American manufacturers are also operators, they are often considered by other operators as competitors and not as potential suppliers for satellites. Due to successive mergers and the trend to ‘cheap and dirty’ the number of failures both during launch and in orbit were extraordinary high in 1998and 1999for allAmerican spacebusiness. Insurers fell into the red
in 1998and 1999,with 99% due to American launcher and satellitefailures.So,despite the high level of confidence from all intemational customers regarding US technology, it has now become more and more obvious that European manufacturers were able to provide equally reliable space systems.
The profit factor Up to now, European Spacemanufacturers have been satisfied with a ‘one digit profit’. Will they accept this for very long knowing that satellite operators get a ‘two digit profit’ by exploiting satellites that they have bought for a very low price and from which they will get very large profits? This is why some American manufacturers became operators, selling their manufacturing activities once their operations activities were sufficiently profitable. The result of course is that the number of competitors for satellite contracts is decreasing on the export market - for the Intelsat IX contract there were only 2 bidders! In an extreme case, we could imagine the dream (or nightmare for customers!) of a major international RFP (Request For Proposal) with only one manufacturer making an offer! Is it because of the important US internal market that export business represents a smaller proportion of total sales (export plus Agency) for American manufacturers than for European manufacturers?
The importance of new technologies European companies devote significant efforts to R & D, dedicating large sums of money to develop new technologies,thus increasing their competitiveness. Financing R & D is inescapable and crucial to remain at the top level and gain new markets. For instance, technological programmes like Stentor allow the firms concerned to develop leading edge technology, such as plasma propulsion, which can then become a major factor for success in the commercial market. As operators are very reluctant to be the first customer using new equipment that has no flight heritage, this type of technologicalor scientific programme is an essential means of obtaining a ‘flight proven’ label. As the number of programmes financed by Agencies is limited, companies have to take advantage of all development programmes. For instance, when developing a new AOCS (Attitude and Orbit Control System) specifically for a scientific programme, its future modification to meet the requirements of a telecom mission must be kept in mind.
To stay competitive, if is necessary to develop new technologies every 3-5 years.
The Evolution Presently, there are few Ministry of Defence-financed satellite programmes in Europe, and only one very limited programme financed by other Agencies. That satelhte, Stentor, is expected to be launched in 2001. The time is ripe for Europe to launch a very ambitious new technological programme!
Alcatel Space develops creative solutions The way Alcatel Space manages to be a major Spacemanufacturer illustrates these remarks. Maintaining and improving expertise,knowledge and competitiveness of space segments implies a full control of all segments from system level to equipment level. That is AlcateI Space’s challenge and key factor for success.This is why production of equipment, whether standard products, so-called commodities, or added value products, is fundamental to the business of Alcatel Space. The company’s commercial strategy is not only to use its equipment for its own needs, but also to market them. This approach offers the advantage of maximizing volumes, maintaining the company at a peak of technical and commercial competitiveness, and keeping it abreast of the constant market evolution.
of the EuroDean .
Today, equipment designed and produced by Alcatel Space is used in more than half of the satellites currently in orbit. This market position is basedon skills originally developed for institutionat and governmental markets, together with R&D efforts.Alcatel Space’sEuropean dimension, with operations in six European countries, allows optimisation of R&D effort and resources necessary to meet the market needs. Its cooperation with the European SpaceAgency in R&D and technological projects like Stentor gives Alcatel Spacethe capability to develop creative solutions in terms of equipment design at a very early stage which would not be possible when facing the constraint of delivery deadlines of commercial satellites. Spectacular drops in equipment prices and time to market have driven a product
Sr>ace lndustrv T.
,....,..,,.,..
I
?.
policy to enhance the efficiencyof equipment design, integration and testing. The market for commercial telecommunication satellite equipment has, in recent years, followed the global trend of ‘faster, better and cheaper’.Equipment for institutional and governmental satellitesis now following the same trend leading to a mandatory standardization of the design, manufacturing and testing processeswhile maintaining a high quality assurancelevel to comply with new requirements of increasedlife time and reliability, The European Space Industry gets a number of winning cards. International operators know they can count on the European manufacturers’ will to meet their needs Their continuous objective is to be more and more competitive while maintaining a very high level of I performance and quality.
About the oufhor: Jean-Claude HUSSONis President and Chief Executive Officer of Alcatel Space.
For further information, p/ease contocf: Thierry Deloye. Director of Communications,Alcatel Space Alcatel Space 26 avenue J.-F.Champollion BP 1187 31037 Toulouse cedex 1, France Tel.: +33 5 34 35 60 80 Fax:+33534356341 [email protected],fr