Part 2: A Short History of COM DEV International

O'Donovan Grows His Team (and his Company)

By Robert Godwin 

The COM DEV website on February 8th, 2016.

As outlined most recently in the January 24th,2016 post, "Did the Government Let COM DEV Go Because They Have Bigger Fish to Fry?" iconic Canadian space company COM DEV International has been purchased by US based Honeywell International.

But while we were happy enough to acquiesce to the COM DEV sale, there are limits to the types of sales we allow. 

For example, we don't allow foreign ownership of our chartered banks and in exchange for that quasi-monopoly our banks have acceded to some relatively stringent regulations which were certainly useful for cushioning our economy from the worst vicissitudes of the global meltdown of 2008.

And, in 2009, we also refused to allow BC based MacDonald Dettwiler (MDA) to be purchased by US based Alliant Techsystems (ATK).

In this new age of mega-data, information and incessant global security fears, it would simply seem prudent to establish safeguards to protect our high tech industry. After all, there has always been a danger of this happening...

Oddly enough, the current sale isn't the first time that COM DEV had gone down the path of nearly being purchased by a US firm. In 1976 our story very nearly came to an abrupt end when a Massachusetts based firm expressed interest in purchasing the company; but Val O'Donovan didn’t want to sell, at least according to an interview he gave at the time.

Val O'Donovan. Photo c/o Waterloo Region Museum.

However, his partner Samuel Singer did, so O’Donovan and Kenneth Flood bought him out. [i]

Over the next three years O’Donovan steadily worked away on building his team. By 1979 the anti-English sentiment growing in Quebec was starting to take its toll on the company. So he chose to move the entire operation, with all 44 of its employees and their families to Cambridge, Ontario, ostensibly because the housing market was depressed there, but also because it was near the University of Waterloo.

Just four months later COM DEV would win a $1.5Mln CDN contract from Hughes of California to supply microwave multiplexers. This was followed by a similar contract from RCA for $1Mln CDN. But even a superficial analysis of this big break shows that all roads lead back to RCA.

The only reason Hughes was buying anything from Canada was because of the 1969 Telesat Canada Act which, among other things, had also promised Canadian companies a fair shot at any Canadian government satellite business. Hughes had been publicly bullied by SPAR Aerospace and RCA in the early 70s into “buying Canadian” because of that government promise.

As outlined in part one of this post, it also didn’t hurt that COM DEV wouldn’t have existed at all if it wasn’t for RCA in Montreal. In one respect COM DEV's fortunes were writ large before the company even existed, when the cancellation of the CF-105 Avro Arrow pushed Canada into a world where it had to buy its defense hardware from the United States. That in turn led to the realization that sending such huge sums of money south required a quid pro quo, or Canada would soon become bankrupt.

A sample off-set agreement, with a supplier providing 300 tanks for $400 million dollars, plus a series of direct and indirect offsets which are then passed along to local companies for a variety of services. As outlined in the January 23rd, 2013 post "Buy Canada: New Firm Tracks IRB Offsets," Canadian government policies have traditionally been set-up to insure that foreign firms with Federal defence, aerospace (including space) and security contracts spend money in Canada comparable to the value of the contracts received. Graphic c/o Wikipedia.

The solution was the notion of off-sets, whereby if Canada bought millions of dollars in fighters from the United States, then the companies building those fighters would have to buy and invest in Canadian defense technology companies. That system was entrenched by the time COM DEV first started to find its feet. It wasn't invented by them, it was the world they had to live in.

In 1981 O’Donovan managed to tap into another well of Canadian government assistance, this time it was the research being done at the National Research Council on so-called “Surface Acoustic Wave” (SAW) technology. The essence of SAW was that specific materials can be used to convert acoustic waves to electrical signals and vice versa. The real value of this technology to COM DEV was its ability to create reliable and accurate pass bands in radio receivers. O’Donovan’s original strength had been in creating systems where many frequencies could be received and transmitted from a single “multiplexer.” SAW had the potential to make them even smaller and more reliable. Today SAW is used in everything from your touch-screen phone to your garage door opener.

O’Donovan managed to pry a $300,000 grant from the Department of National Defence (DND) to perform R&D with SAW. Within a year COM DEV was evidently big enough to compete for part of a $400Mln contract to install radar systems for Canadian Air Traffic Control.

Within another three years O’Donovan and his team, which now also included his RCA partner Kudsia, who was the company's chief scientist, had managed to place their multiplexers in 34 of the western world’s satellites. In May of 1985 they received another contract with DND for $448K CDN to supply radar systems. [ii] They won the Canada Award for Excellence in Innovation and won a piece of the coveted European Remote Sensing (ERS) satellite contract, as well as a further $5Mln CDN for an Italian satellite.

Graphic showing the major components of the first European Remote Sensing satellite (ERS-1), one of two satellites in the European Space Agency's (ESA) first Earth-observing satellite programme to use a polar orbit. The satellite was launched on 17 July 1991 into a Sun-synchronous polar orbit at an altitude of 782–785 km and provided Earth imaging and environmental monitoring, mostly in the microwave spectrum. Graphic c/o eoPortal.

Later in 1985 they submitted an official proposal to NASA to build a “space junk” detection radar for the proposed space station project. That July they received a grant from the Government of Canada for $800K to create jobs, but then promptly laid off 18% of their staff. This was the first in a series of curious periods when COM DEV would frequently follow good news with an almost immediate dose of bad news. The peaks and valleys of space work were to become only too apparent.

Things would get tougher in 1986. The loss of the space shuttle Challenger brought the US space program to an abrupt halt and contracts started to dry up. COM DEV almost didn’t survive. But O’Donovan had insisted that the company continue to pursue R&D on new products, and since the government of Canada was paying half the costs of that R&D it was a wise decision.

By 1989 they were on a hiring spree again, in large part due to a $3M DND contract. By the summer of 1990 COM DEV employed 400 people and was expanding. They had received more money from Ottawa in the form of a piece of the RADARSAT contract. They signed a $25M deal with Inmarsat in July of 1991, using the SAW technology they had acquired from the NRC, and the management promptly announced that they would be expanding into the UK when they bought 30% of Phase Devices Ltd.

Val O'Donovan wrote an October 7th, 1992 editorial in the Globe and Mail about how his childhood was inspired by the writings of Arthur C. Clarke and called on educational institutions to help train the next generation of  Canadian engineering expertise. He eventually went on to become chancellor of the the University of Waterloo. Screenshot c/o The Globe and Mail.

A month later they scored a $23Mln contract to work on Intelsat for Loral. This large deal with a major American defense contractor was, perhaps not entirely coincidentally, followed up a few weeks later with an announcement to buy equity in the newly formed SovCan telecom system proposed for the Soviet Union. One can only wonder how the timing of that move was received in Washington.

On the back of these large high profile international successes domestic interest seems to have been spurred into action when a few weeks later the Province of New Brunswick gave COM DEV a grant for $191,000, a loan for $550,000 and bought $1.5Mln in company shares in exchange for a new COM DEV plant in Moncton.

Robert Godwin.

The company now had 131 satellites with their technology on orbit. They won the Canada Export Award that year with 75% of their sales out of the country.
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Robert Godwin is the owner and founder of Apogee Space Books. He is also the former space curator at the Canadian Air & Space Museum and the curator of the The Space Library, an online repository of 30,000+ pages of space information and papers. 

Please consider subscribing to the library for only $5. Your contributions help to support new research and the maintenance of the existing repository.

Footnotes

[i] The November 28th 1997 Canadian Business Magazine article, "The Company of Millionaires," by Show Wei Chu. 
[ii] The July 9th, 1985 Globe and Mail article, "COM DEV Dismisses 36 Workers," by Garry Webb Proctor. 

Last Week: John Hansen, Samuel Singer and Michael Valentine O'Donovan as part 1 of "A Short History of COM DEV International" begins!

Next Week: From Strength to Strength. At Least for Awhile as part 3 of "A Short History of COM DEV International" continues!