Monday, July 25, 2011

Metrics on The Canadian Commercial Space Sector
Part 2: The "Three Kings" of Canadian Space Activities

Canadian PM Stephen Harper.
The 140 companies and organizations listed in the Canadian Space Directory as being part of the Canadian commercial space sector generated $3.1 billion CDN in revenue in 2009 according to the 2009 State of the Canadian Space Sector Report.

Even better, as shown in part one of this post (titled: Basic Background Information), the firms in this sector are consistently growing faster than the economy as a whole.

And best of all, the three largest firms in this sector, the communications giant Telesat, robotics expert Macdonald Dettwiler (MDA) and micro-satellite upstart COMDEV International (COMDEV) have emerged as the "three kings" of Canadian space focused activities.

Any one of these three firms will likely have more effect on Canadian space activities than anything that could possibly happen at the Canadian Space Agency (CSA) over the next little while and much of the reason for this is the ongoing government policy to encourage research commercialization as the cornerstone of the Canadian science and technology strategy.

The latest Conservative government under Prime Minister Stephen Harper may have gone so far as to attempt to define and state this explicitly in policy documents such as the Mobilizing Science and Technology to Canada's Advantage (May 2007) and the Mobilizing Science and Technology to Canada's Advantage Progress Report (June 2009), but the core policy has been in place for generations and enjoys wide support across party lines.

It's also generally been a very, very successful policy.

For example, Ottawa based Telesat (created in 1969 as a Canadian government owned or "crown" corporation under the Pierre Trudeau liberal government) was originally mandated simply to develop communications services in the far north. It used technology developed through another government department, the Communications Research Centre (CRC), which was then responsible for coordinating research and development activities in communications.

The Alouette 1 satellite.
CRC activities then were much like CSA activities now and included most of Canada's early satellite launches such as Alouette 1, the first satellite designed and built by any country other than the United States or the Soviet Union.

The technology transfusion from CRC certainly helped Telesat to become an iconic representation of how Canadians use space focused solutions to solve terrestrial problems, tie together the country and then continue forward to make a bit of money on the side.

Telesat is directly credited with several space focused "firsts" of its own including the world's first domestic communications satellite in geostationary orbit operated by a commercial company (ANIK A1). It currently owns a fleet of 13 satellites plus operates 13 additional satellites for other entities and is building more. These assets are administered by 500 employees with a yearly budget twice that of the CSA, which makes Telesat the fourth-largest fixed satellite services provider in the world.

But whatever the bottom line might show, the 2010 awarding of the John H. Chapman Award of Excellence to the first president of Telesat, Dr. David Golden for his "outstanding contribution to the Canadian space program" reinforces the longstanding perception that Telesat has always been more than just a business. One day writers will create fascinating historical accounts of Telesat's early activities in much the same way Pierre Burton wrote about the railroads when he called them "The National Dream."

The same could also be said for Richmond, BC based MDA, although the genesis for this perception is more recent and grew out of the aborted sale of the space portions of the company to American-owned Alliant Techsystems (ATK) in April 2008.  The sale, eventually blocked by the Conservative government, served to highlight national security and economic infrastructure issues which have not yet been formally addressed or resolved although MDA has since moved on to become the prime benefactor of Canadian government contracts relating to Earth imaging and arctic sovereignty.

New Canadian polymer currency.
In fact, MDA has become such an iconic Canadian company that there is even the image of MDA Earth imaging satellite RADARSAT-2 (the follow on to the very successful RADARSAT-1) plus a second image of the MDA designed and manufactured DEXTRE robot (also known as the Special Purpose Dexterous Manipulator) on the back of the new, polymer Canadian $5 dollar bills, which are expected to flow into circulation by late 2013 as part of the 2011 Bank of Canada Frontier Series.

MDA is presently focused on the not-quite finalized $280 million USD contract with satellite operator Intelsat for on-orbit satellite servicing (as discussed in my March 15th, 2011 post "Macdonald Dettwiler gets "Anchor Customer" for Brampton Robotics Plant") and a second internal initiative to either buy a space company with US roots or else return to shareholders the $793 million CDN acquired through the January, 2011 sale of the MDA property-information business (as outlined in my May 9th, 2011 blog post "Fighting Words from Macdonald Dettwiler").

As our final member of the "three kings," Cambridge, Ontario based COMDEV is the newest on our list but is also the firm with perhaps the most potential and the greatest part of it's story still to come. With 1300 employees and FY2009 revenues of around $240 million, according to Bloomberg Businessweek, it has about 2/3rd the cash flow and just under twice the employees of the CSA.

Microsat overview, from exactEarth Ltd
Founded in 1974 to supply microwave equipment to the emerging space industry, the firm is currently moving into the miniaturized (or micro-satellite) market in a big way through the ongoing activities of COMDEV subsidiary, exactEarth Ltd. It is also moving forward with a micro-satellite based automatic identification system ( called exactAIS™), the maintenance of ongoing R&D relationships with Canadian universities including the University of Toronto Institute for Aerospace Studies (UTIAS) Space Flight Laboratory (SFL) and it's April 2010 purchase of Routes AstroEngineering.

According to the firm website, "over 80 percent of all commercial communications satellites ever launched have had COMDEV technology on board." Even better, the firm recently hired ex-CSA astronaut Dr. Roberta Bondar as a member of the firms board of directors to help fill the gaps created following the decision by the COMDEV board to replace then CEO John Keating in September 2010.

So now that we know where the Canadian space systems industry stands and the leading companies in the sector, it's instructive to take a look at where they sell products and where the sector as a whole is going.

Those discussions will be the subjects of the third and fourth parts of this post.

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