Thursday, October 12, 2017

Osborne Steps Down at Canadian MDA as it Responds to Questions About its US Based "Maxar" Future

          By Chuck Black

This blog, along with quite a few of the internal staff at the Richmond, BC based MacDonald Dettwiler (MDA) office, has known for a week that Don Osborne, the president of MDA's Information Systems Group, was resigning his position. 

It's unusual to have a conference call during the blackout period leading up to the formal quarterly announcement of earnings, which in this case will be on November 2nd, 2017. But Maxar CEO Howard Lance held one anyway. He even included Osborne as part of his leadership team as recently as today, as can be seen from these power-points taken from the October 12th, 2017 Maxar Shareholder Luncheon and Webcast, which Lance hosted. During the presentation, Lance introduced the other MAXAR executives by name but forgot to mention Osborne, although he was prominently listed in the power-point presentation. For a complete audio recording of the presentation, check out the webcast  and presentation here. Graphic c/o MDA/Maxar.

But now it's official. According to an October 12th, 2017 e-mail from Wendy Keyser, the manager of marketing communications with the MDA Information Systems group:
Don Osborne has chosen to step down from his position as president of MDA effective October 31st. We’ve begun a search for the best internal or external candidate to lead MDA with a focus on Canadian nationals.

Don has been a valuable member of the team and we appreciate his many contributions to our success. We wish Don the best in all his future endeavours.
Osborne, at least until his resignation takes effect at the end of the month, is the senior Canadian based MDA employee of the new San Francisco, CA based Maxar Technologies Ltd. As outlined in the October 5th, 2017 post, "MDA Acquisition of DigitalGlobe Closes; New US Based Combined Company now called Maxar Technologies," the new Maxar technologies includes the old Space Systems Loral (SSL), MDA and DigitalGlobe, which have been combined into a single entity.

Earlier this month, Osborne sent out an e-mail to internal MDA staff stating that he would be leaving his role effective October 31st. The blog became aware of the e-mail last week and requested clarification from Osborne, Keyser and MDA director of public affairs Leslie Swartman.

In response, MDA released the resignation announcement from Keyser. 

As outlined in the October 12th, 2017 Maxar Shareholder Luncheon and Webcast: the revenues by market and by product line and the synergies expected from elimination of duplicate costs and increased size expected to be realized over the next two years. According to Lance, only Netherlands based Airbus Group can compete with Maxar synergies, "but they're not organized (for commercial operation) the way we are." According to Lance, "MDA and SSL never integrated. Even across Canada, MDA is not integrated. And so the opportunities, we put some of that on pause while we were waiting for the closing, the opportunity now to integrate the whole enterprise, is extremely attractive. That's what's going to deliver the synergies. Its going to deliver an operating cadence and a level of efficiency which we believe is going to be helpful to all four of the (Maxar operating) businesses." In essence, now that the sale has closed, Maxar can integrate, synergize and cut costs. Graphic c/o MDA/Maxar.

But Keyser also released answers to several questions this blog was originally hoping to discuss with Osborne. Here are both the original questions and their responses from Keyser:
  • The deal has closed and there's no doubt that the acquisition is a net positive for the company as a whole. But what's next for MDA in Canada?
MDA is – and will continue to be – one of Canada’s leading technology companies and an internationally recognized leader in space robotics, satellite antennas and subsystems, surveillance and intelligence systems, defense and maritime systems, and geospatial radar imagery. 
MDA has provided government and commercial customers with innovative space systems and solutions for decades. 
The acquisition of DigitalGlobe creates a company that has the scale, resources and technology to create even greater growth and innovation, enhancing our ability to invest, innovate and grow these businesses and our Canadian presence. 
The MDA brand associated with the company’s Canadian business will serve a vital role as part of the Maxar Technologies portfolio. 
MDA will continue to operate independently and be led by a Canadian leadership team, and will remain committed to our enduring and valued partnership with the Canadian government and our Canadian employees. 
  • The Federal government put the kibosh on US control of MDA and its sale to ATK in 2008, mostly because RADARSAT-2 was considered essential to Canadian security and needed to remain under Canadian control. How will the re-organization, acquisition and new corporate structure affect the launch and operation of the follow-on RADARSAT Constellation (RCM)?
This acquisition in no way affects the completion and launch of the RADARSAT Constellation Mission (RCM), which will be a Government of Canada-owned satellite mission. 
  • SpaceQ has indicated that MDA will continue under the MDA name and banner in Canada for the foreseeable future but others disagree. The October 5th 2017 Washington Technology post, "Inside MacDonald Dettwiler's new 'Maxar' era as DigitalGlobe buy closes," even quotes CEO Howard Lance as stating that, "each business unit within Maxar will operate under its current branding as the new name is rolled out through the remainder of this year." Will this re-branding include MDA in Canada?
While we will be phasing out use of the name MacDonald, Dettwiler and Associates, the ‘MDA’ brand name will continue to be used by all of our Canadian businesses and serve as a vital brand within the company portfolio. 
Being an instrumental part of Maxar Technologies will mean that the MDA brand, an icon of Canadian technology growth and innovation, will continue.
  • The same article mentions a second re-org in 2019, when the company becomes "fully American." How will this second re-org affect Canadian operations?
While we cannot discuss future, or forward-looking, plans for our business, rest assured that MDA’s Canadian operations will continue to be managed by an experienced Canadian management team, who will continue executing MDA’s Canadian business plans and investments for growth. 
We remain fully committed to our enduring and valued partnership with the Canadian Government and our Canadian employees.
Of course, any future experienced Canadian management team won't include Osborne. And the real concern at the Canadian MDA offices is over the "synergies" expected to be achieved by consolidating the  services of Space Systems Loral (SSL), MDA and DigitalGlobe into a single entity.

As outlined in the September 6th, 2017 SpaceQ post, "Cambridge Facility Sees Workforce Reduction of 49% Since Honeywell Acquired Com Dev International," the last time a US based space company attempted to develop synergies with a recently purchased Canadian subsidiary, the end result was a substantial loss of Canadian jobs.

Here's hoping that doesn't happen this time. 
Chuck Black.

Chuck Black is the editor of the Commercial Space blog.

1 comment:

  1. I think we all know that MDA's future is in line with the COMDEV story. Goodbye to another innovative and great Canadian company. We shouldn't worry though, Trudeau's plans for inspiring innovative companies is in the works! Don't hold your breath.


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