By Brian Orlotti
The quarterly MacDonald Dettwiler (MDA) earnings calls are never truly complete until CEO Daniel E. Friedmann has his chance to complain about the lack of Federal government support for his company. The latest call, on May 4th, 2015 was certainly no exception to this rule.
As outlined in the May 5th, 2015 Space News article, "MDA Corp. Worries Canada Is Losing Its Robot Edge," Friedmann criticized the Federal Government for not providing the company additional space robotics contract opportunities in Canada, a situation which has essentially forced MDA to seek new business in the US, Europe and Asia.
Of course, Richmond, BC-based MDA's discontent, may have more to do with a loss of preferred status under the Harper government as compared to other parties.
Whatever the real reason for the comments, Friedmann was in fine form.
He stated that MDA and Canada would be sidelined for the next decade with respect to space-based robotics programs, a situation which would make securing more US government contract work all the more important for the company. According to Freindmann:
And then there's the planned Polar Communication and Weather (PCW) mission, an estimated $600Mln CDN chunk of Federal government funding for the winning contractors.
As outlined in the February 24th, 2014 post, "'Team Canada' Solution for PCW Mission Competing Against US Bid," the PCW program is expected to kick into high gear around 2016 and Freidmann's comments could certainly be part of the inevitable jockeying for a favorable position to bid on the project.
It's also quite possible that Friedmann is reminding the Federal government about the need for "capacity building," the notion that innovative Canadian firms should be given a surplus of funding as an incentive to remain in Canada rather than relocating to other countries with more money (i.e. the US).
During the 1990's, the Liberal government of Jean Chretien embraced the concept and encouraged the CSA to provide Canadian firms a premium on large projects in order to build up their domestic capabilities and discourage moves to the US in search of larger contracts.
The Liberals based this policy on the known cases of the CF-105 Avro Arrow and SPAR Aerospace's STEM antennas, two projects that saw the bulk of their human resources and technology eventually end up in US hands.
This would certainly relate to MDA and it's current situation with so many of its assets focused around its US based Space Systems Loral (SSL) subsidiary. CEO Friedmann could also reasonably use capacity building arguments to lobby for Canadian government support to tide his company over until 2016, when the next round of PCW funding is expected to kick in.
But there is also perhaps also an element of sour grapes in Friedmann's disapproval of the Harper Government's space policy. The Harper Government's 2008 blocking of the sale of MDA to US-based Alliant Techsystems Inc, as well as its support of Magellan Aerospace's new satellite factory in Winnipeg and a Digital Manufacturing Hub in Winnipeg (in which Magellan Aerospace is a partner) are clear signs that MDA no longer occupies the privileged position it once did.
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| MDA CEO Friedmann. Photo c/o Wikipedia. |
As outlined in the May 5th, 2015 Space News article, "MDA Corp. Worries Canada Is Losing Its Robot Edge," Friedmann criticized the Federal Government for not providing the company additional space robotics contract opportunities in Canada, a situation which has essentially forced MDA to seek new business in the US, Europe and Asia.
Of course, Richmond, BC-based MDA's discontent, may have more to do with a loss of preferred status under the Harper government as compared to other parties.
Whatever the real reason for the comments, Friedmann was in fine form.
He stated that MDA and Canada would be sidelined for the next decade with respect to space-based robotics programs, a situation which would make securing more US government contract work all the more important for the company. According to Freindmann:
It’s very problematic...Canada has passed on every single international cooperation opportunity in robotics in the last year and a half. We’re out – until past 2024. Our role has been picked up by the Germans and the Japanese and so on.Although lacking in new contracts for MDA, the Canadian Government recently reaffirmed its commitment to supporting existing MDA robotics systems. Earlier this year, as outlined in the April 1st, 2015 press release, "MDA to continue support for Canadian robotics on the International Space Station," the Canadian Space Agency (CSA) signed a contract with MDA to continue maintenance and operations support of the Canadarm and Dextre robotic manipulators, which together form the Mobile Servicing System aboard the International Space Station (ISS) through July 2017. In addition, the Canadian Government reaffirmed its ISS partnership with NASA until 2024.
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| PCW is a proposed constellation of two satellites, operating in highly elliptical orbit (HEO) which could provide continuous 24/7 broadband communications services plus monitor weather and climate change in the Canadian arctic. As outlined on the CSA webpage on the Polar Communication and Weather (PCW) mission, the "definition" phase of the program was completed in 2011. Graphic c/o CSA. |
And then there's the planned Polar Communication and Weather (PCW) mission, an estimated $600Mln CDN chunk of Federal government funding for the winning contractors.
As outlined in the February 24th, 2014 post, "'Team Canada' Solution for PCW Mission Competing Against US Bid," the PCW program is expected to kick into high gear around 2016 and Freidmann's comments could certainly be part of the inevitable jockeying for a favorable position to bid on the project.
 |
| The game is on. Graphic c/o BBC. |
During the 1990's, the Liberal government of Jean Chretien embraced the concept and encouraged the CSA to provide Canadian firms a premium on large projects in order to build up their domestic capabilities and discourage moves to the US in search of larger contracts.
The Liberals based this policy on the known cases of the CF-105 Avro Arrow and SPAR Aerospace's STEM antennas, two projects that saw the bulk of their human resources and technology eventually end up in US hands.
This would certainly relate to MDA and it's current situation with so many of its assets focused around its US based Space Systems Loral (SSL) subsidiary. CEO Friedmann could also reasonably use capacity building arguments to lobby for Canadian government support to tide his company over until 2016, when the next round of PCW funding is expected to kick in.
 |
| Once MDA's largest client, the Canadian government is now only one of many in a far larger pie. The above chart, based on data supplied in a May MDA 4th filing to the Toronto Stock Exchange, illustrates MDA sales by region for the three months ending March 31st, 2015. Canadian business accounted for 13.5% of the total revenue, down from 18% for the previous year. As outlined in the April 17th, 2015 post, "Part 11: 100 Years of Aerospace History in Canada: From McCurdy to Hadfield," MDA received almost half the estimated $350Mln CDN Canadian Space Agency (CSA) annual budget for 2008 - 2009, an amount which compared quite well to total MDA reported revenues of $430Mln CDN for that year. In 2014, MDA annual revenue is listed on the MDA website as being in excess of $2Bln CDN. Graphic c/o Space News. |
But there is also perhaps also an element of sour grapes in Friedmann's disapproval of the Harper Government's space policy. The Harper Government's 2008 blocking of the sale of MDA to US-based Alliant Techsystems Inc, as well as its support of Magellan Aerospace's new satellite factory in Winnipeg and a Digital Manufacturing Hub in Winnipeg (in which Magellan Aerospace is a partner) are clear signs that MDA no longer occupies the privileged position it once did.
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| Brian Orlotti. |
To paraphrase Moriarty on the BBC's "Sherlock," the Canadian space industry no longer seems to be a "Daddy loves me the best!" contest.
For those interested in learning more, a full transcript of the May 4th, 2015 MDA earnings call is available as part of the May 4th, 2015 Seeking Alpha post, "MacDonald, Dettwiler & Associates' (MDDWF) CEO Daniel Friedmann on Q1 2015 Results - Earnings Call Transcript."
For those interested in learning more, a full transcript of the May 4th, 2015 MDA earnings call is available as part of the May 4th, 2015 Seeking Alpha post, "MacDonald, Dettwiler & Associates' (MDDWF) CEO Daniel Friedmann on Q1 2015 Results - Earnings Call Transcript."
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Brian Orlotti is a network operations centre analyst at Shomi, a Canadian provider of on-demand internet streaming media and a regular contributor to the Commercial Space blog.
Brian Orlotti is a network operations centre analyst at Shomi, a Canadian provider of on-demand internet streaming media and a regular contributor to the Commercial Space blog.
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