Quick Notes on Law Firms, Universities, the James Webb Space Telescope, Com Dev and the CSA

Here's a quick summary of recent Canadian space focused activities, stories, gossip, rumour and innuendo:

• Global Law Experts, the "premier guide to leading legal professionals throughout the world" according to their website, recently awarded Canadian based Blakes the 2010 Canadian intellectual property (IP) law firm of the year award, according to this October 10th, 2010 press release on the Blakes website. The Blakes IP Group is one of the largest intellectual property practices in Canada with thirty-five lawyers, patent agents, trademark agents and technical consultants in a combined practice. Among other things, the Toronto office hosts bimonthly Canadian Space Commerce Association public meetings so you just know that the firm is out actively encouraging new entrepreneurs and innovative business models.

• Speaking of new entrepreneurs and innovative business models, two more teams (from Carlton University in Ottawa and Dalhousie University in Halifax) have just joined the Canadian Satellite Design Challenge (CSDC) according to Larry Reeves, the president of Geocentrix Technologies, which organized and administers the program. Reeves says that the main activity for the challenge now is to finalise the technical requirements and judging criteria before the end of the year. The CSDC is a competition between Canadian university students to design, build, test and launch a low cost operational small satellite using existing, off the shelf technology. The winner is expected to be announced in October 2012.

• Speaking of satellites, the New York Times reported on November 10th, 2010 that the James Webb Space "Telescope Is Behind Schedule and Over Budget, Panel Says." The telescope is a joint project between NASA, the European Space Agency (ESA) and the Canadian Space Agency (CSA) but no Canadian subcontractors (which include Com Dev and BC based Macdonald Detwiller) nor anyone at the CSA has so far weighed in on what needs to be done to salvage the project. Don't expect that to change soon since the CSA is only making a small financial contribution ($39 million so far with an expected total of around $148 million over the life of the project) and wants to remain friends with the US prime contractors.

• Speaking of money, the November 12th, 2010 CBC News article "Canadian space flight dreams live on." quotes former Ansari X-Prize competitor Brian Feeney on his latest project to build a reusable, manned suborbital spacecraft to compete with Virgin Galactic. According to the article, Mr. Feeney is "extremely confident" that his latest project will fly just as soon as someone provides $15 million in venture funding to cover the initial prototype and two production craft. As outlined in my latest This Week in Space for Canada post on SpaceRef.ca, the CBC article doesn't reference any tests Mr. Feeney may or may not have done, provides no context for assessing his statements and generally does no service to either his latest claims or the profession of journalism as practiced by the CBC. 

 

• Still speaking of money, Calgary Herald writer Tim Giannuzzi wants the CSA to boldly go where no Canadian has gone before according to the November 14th, 2010 article "Giannuzzi: To boldly go where no Canadian has gone before" but feels that Canadian dreams are restricted by the CSA's budget. He forgets (or maybe just never knew) that the Space Flight Laboratory (SFL) at the University of Toronto Institute of Aerospace Studies (ITIAS) has launched more satellites into orbit over the last 10 years than the CSA and has done so with an annual budget in the range of millions of dollars rather than the hundreds of millions of dollars that the CSA can access.

• Two Com Dev International employees were among the five Canadians killed and six injured in the blast at a resort in the city of Playa del Carmen according to the November 15th, 2010 Canadian Press article "Hotel explosion in Mexico kills Guelph man." Com Dev employee Elgin Barron died in the same Sunday blast at the Grand Riviera Princess Hotel which injured his colleague, Larry Smith. Both are well known in the Canadian space community and Mr. Barron will certainly be missed. 

• Speaking of the Canadian space community, the CSA expects to release their 2009 State of the Canadian Space Sector Report within the next month. The 2008 report indicated strong growth among Canadian space focused companies with the top ten highest earning firms each showing double digit real growth ranging from 12% to 48%. It will be interesting to see if the new report is able to announce another solid year.

Sometimes it's hard to keep up with everything going on. Hopefully, this will serve as a useful summary and suggest further avenues of research.

CSA, MDA, Com Dev, Telesat, DND, Neptec, Bigelow, Academics and Others at Space Summit

Nobody goes to a conference without first knowing the topics being discussed and the speakers leading the discussions.

It's therefore timely that the Canadian Space Society has finally gotten around to releasing the list of speakers for the 2010 Canadian Space Summit,.being held at the Lord Elgin Hotel in Ottawa from November 19th - 21st.

Keynote and featured speakers include Dr. Iain Christie, the president of the Neptec Design Group; Colonel Andre Dupuis, the director of space development for the Department of National Defence (DND); Dr. Jim Fergusson, the director of the Centre for Defence and Security Studies and professor in the department of political studies at the University of Manitoba; Douglas Bancroft, the director general of the Canada Centre for Remote Sensing (CCRS); Jean-Claude Piedboeuf, the head of exploration planning at the Canadian Space Agency (CSA); Dr. Nadeem Ghafoor, the manager of planetary exploration at Macdonald Detwiller (MDA) and Mike Gold, the Director of DC operations for Bigelow Aerospace.

The conference is structured around a series of distinct sessions, each focused on a specific area of expertise. Session chairs include:

• Alfred Ng from the CSA who is chairing the Earth orbital sessions.
• Marie-Claude Williamson from Geological Survey of Canada who is chairing the planetary exploration session.
• Jaymie Matthews from the University of British Columbia (UBC) who is chairing the astronomy session.
• Minh On from the CSA who is chairing the law and policy sessions.
• Philomena Bonis from the Elementary Teachers Federation of Ontario who is chairing the education and outreach sessions.
• Alan Scott from ComDev International who is chairing the life sciences sessions.
• Marc Boucher from Spaceref.ca who is chairing the commerce and commercialization sessions.

Altogether 36+ speakers are expected to give short presentations. The full speaker list should now be available on the Space Summit website but if it's not, send me an e-mail at mr.chuck.black@gmail.com and I'll send you out the spreadsheet I received from Wayne Ellis of Appspace Solutions, who is one of the organizers.

As well, the Canadian Alumni of the International Space University (CAISU) are also setting up shop in the Lord Elgin on Friday, November, 19th where they will be holding their National Space Awareness Workshop.

It's focused on "ISS to Commercialization: Canada's Future Contributions" and the speaker topics revolve around media awareness issues, the public perception of space, commercialization of space focused activities and the potential to utilize the International Space Station (ISS) through 2030 (which seems to be a little later than it's officially scheduled to operate).

Speakers for these sessions include Paul Bush, the VP of North American Sales for Telesat and Dr. Elliott Coleshil, the software systems lead of the Com Dev mission development group (which has control over the Com Dev exactEarth Ltd. subsidiary).

Some tickets are still available at the door for those looking to attend both the CAISU and the CSS sessions but I'm told the Saturday night banquet is sold out (and I'm also told I'm having chicken).

I'll also be speaking in the Sunday afternoon commerce and commercialization session on the topic of "Two Billion for the Canadian Space Agency: Historical Antecedents, Available Options and a Realistic Appraisal." I'll be right after the guy from ComDev who is right after the guy from Bigelow Aerospace.

Hopefully, I'll be able to keep up with such illustrious company.

Updates from the International Space Frontier

For those of us who aren't following international stories and how (or if) they relate to Canadian space focused industry, here are a couple of interesting updates on what others are doing:

Antonio Tajani

• The European  Space Agency (ESA) is focused on 'a new space policy for Europe' at the European Parliament according to the October 29th, 2010 article of the same name posted on the ESA Portal site which focuses on the recent series of discussions on the Lisbon Treaty, and how the treaty affects Europe's "exploitation and exploration of space." The article quotes Antonio Tajani, Vice-President of the European Commission as stating “we must reinforce investments in space.” According to Tajani “space policy is not only about satellites and launchers, but is also about providing concrete answers to the needs of European citizens." Canada is an associate member of the ESA.

The US president

• Over in India, where US President Obama is currently visiting (and suggesting that he'd support an Indian bid for a permanent seat on the UN Security Council), the November 4th edition of the Wall Street Journal has thoughtfully provided "A To-Do List for Obama in India" which includes liberalizing the U.S. export controls impacting India. For example, the article suggests removing the Indian Space Research Organization (ISRO) from the U.S. "Entity List" of organizations and individuals subject to "supplemental" licensing requirements or export controls.

The ex-Indian President

• Speaking of India and the US, the November 8th, 2010 Times of India article "India, America join hands to harness solar power" states that "India and (the) USA (have) teamed up on a space-based energy initiative aimed at turning both countries into net energy exporters, 48 hours before US President Barack Obama landed in India." The project will be led by Dr. A P J Abdul Kalam, the former president of India and a respected scientist in his own right. Dr. Kalam once worked at ISRO, where he was known as the "missile man of India" for his work developing ballistic missile and space rocket technology.

• Speaking of just the US, according to the November 8th, 2010 post on the Network World Blog Layer 8 titled "NASA picks 13 companies to help build it's next big space rocket" the National Aeronautics and Space Agency (NASA) will spend $7.5 billion across thirteen companies to research heavy lift concepts and new technologies to send the next generation of Americans to the asteroids, the Lagrange points, the Moon and Mars.This program is part of the Obama administrations ongoing focus on new "breakthrough" technologies that the CSA is going to need to address if it wants to participate in future US space focused activities.

John Mankins

• Speaking of space based energy initiatives, the November 6th, 2010 Parabolic Arc article "An Overview of the Space Manufacturing Conference" provides useful commentary on the recently concluded Space Manufacturing Conference. Speakers included John Mankins, from Artemis Innovations who spoke about "Space Solar Power: Achievable within the Generation" and Canadian Eva-Jane Lark from BMO Nesbitt Burns who spoke on "Economic Incentive and Tax Credits for Space Resource Development." Mankins and Lark were also featured speakers at the 2009 Space Canada Symposium on Solar Energy from Space.

George Whitesides

• Speaking of export controls, there is still no word on whether space tourism provider Virgin Galactic will move ahead with the development of the Virgin Galactic Satellite Launcher I, a micro-sat rocket designed to be launched from the Virgin Galactic White Knight II. According to the February 18th, 2009 Flight Global article titled "UK government to back air-launched satellite launcher" the original plan had the support of the British National Space Center (which became the UK Space Agency in March, 2009) and was a partnership between Virgin Galactic and Surrey Satellite Technologies (SSTL). Abu Dhabi based Aabar Investments signed on with a $280 million equity investment according to the July 29th, 2009 NASA Spaceflight.com post "Virgin Galactic Makes Deal for Small Satellite Launch" but the deal started unraveling after SSTL was unable to raise money to fund feasibility studies and dropped out of the project, according to the October 2nd, 2010 BBC News article "Virgin Galactic slows satellite launcher plans." Virgin Galactic CEO George Whitesides rejects the idea that the US government's technology export controls contributed to the project's lack of progress but frankly, he has to say that or else the Americans (and maybe the Abu Dhabians) might get angry with him, no matter what the real situation happens to be.

Space Ship 2

• In other UK space news, according to the November 8th, 2010 SiloBreaker article "UK space companies have defied the recession, growing by an average of 10% a year from 2007," UK based, space companies have essentially defied the recession and are growing by an average of 10% a year from 2007. This makes them typical of space focused companies in pretty much any jurisdiction and there are even specific areas of comparison with Canada, given that both economies until recently been mostly small niche providers with one or two large telecoms that distort the market.

The Commercial Crew Initiative

• In insurance news, the November 8th, 2010 Insurance News.net article "Space Partnership Int'l to Develop Unique Insurance Products For Nasa's Commercial Crew Initiative" states that insurance company Space Partnership International (SPI) has announced that it is offering a suite of space insurance products to support NASA's Commercial Crew Development ("CCDev") initiative. As Pete Bahn, the founder of TGV Rockets said at the Space Access ‘07 conference, "Amateurs talk propellant. Professionals talk insurance."

As you can likely tell, some of these stories have a Canadian component and some don't. Of course, that doesn't mean that we shouldn't stick our little back bacon smelling noses into more projects and places outside of our traditional comfort zones.

Happy 15th, RADARSAT...

Without a long term space plan, the Canadian Space Agency (CSA) is forced into the position of reacting to the initiatives of others.

It therefore seems certain that CSA President Steve MacLean is watching closely for any public reaction to the Friday announcement that Canadian space focused icon MacDonald Dettwiler (MDA) has just gotten out of the property information business by selling the assets to TPG Capital, a private equity firm formerly known as Texas Pacific Group, for $850 million.

The sale does not affect the firm's position as prime benefactor of Canadian government contracts relating to Earth imaging and arctic sovereignty such as the RADARSAT Constellation program.

Earlier in the week, Federal Industry Minister Tony Clement even wished Canadian satellite RADARSAT 1 (a predecessor program to the RADARSAT Constellation) a happy 15th birthday, according to the November 4th, 2010 Industry Canada press release "Minister Clement Celebrates the 15th Anniversary of the Canadian RADARSAT-1 Satellite."

Now it looks like MDA has found an appropriate $850 million birthday present.

For those who prefer primary source material, the official November 5th, 2010 announcement is posted on the MDA website under the headline "MDA To Divest UK and North American Property Information Business." According to the press release:

MDA is currently reviewing its long-term business strategy and will retain the proceeds from the sale until this process is completed and future cash requirements have been fully evaluated.

The press release also states that the deal is subject to the "customary regulatory approvals and other approvals and consents typical for this type of transaction."

According to the November 5th, 2010 Dow Jones Newswire article "MacDonald Dettwiler: To Focus On Growth, Not Debt Paydown," MDA Chief Executive Dan Friedmann does not expect the deal to trigger a review by the Canadian government even though takeovers of Canadian companies by foreign-based firms are normally subject to a review if the asset value of the company being acquired exceeds C$299 million.

The Dow Jones article also states that:

Friedmann said the assets of MacDonald Dettwiler's property-information business are based primarily in the U.S. and U.K., not in Canada. "We have about 30 employees and some small assets in Canada related to this business. They amount to less than 10% of the Investment Canada threshold," he said. 

In direct contrast to the MDA press release, the Dow Jones article states that the company intends to use the proceeds from the sale to make "strategic acquisitions" to allow MDA to "bring its technology to new sectors" such as oil and gas and mining.

The November 5th, 2010 Globe and Mail article "MDA hopes to use cash for acquisitions" supports the Dow Jones assessment and indicates that the MDA geospatial services division will merge with the space operations division while new acquisitions will focus on businesses that could use existing MDA geospatial and space operations products:

...in a unique way such as those automating a part of their operating process with complex software. MDA is also trying to build bridges with companies in the resource sector because oil and gas firms are now the largest buyer of their remote imaging services, management said on the call.

The good news is that MDA just might be talking about building a sales distribution network for their Earth imaging systems (assuming, of course, that the mass media reports are more reliable than the materials on the MDA website).

The bad news is that this makes the firm far less dependent on Canadian government contracts for ongoing revenue. Then again, maybe that's also good news for people, except for perhaps those government employees at the CSA.

I wonder if Steve MacLean could tell us what he's thinking.

Robot Wars II: MDA Attacks!

Its audio track still hasn't been posted on the MDA website, but the Wednesday, October 27th,  Macdonald Dettwiler (MDA) third quarter conference call did occur as planned and certainly seemed full of surprises.

The biggest surprise on the call, according to the October 28th, 2010 Space News article "Robotics Business Clouds Otherwise Bright Outlook at MDA," is that the company shows strong growth right across all business units with the single exception of space robotics. According to the article:

With the coming retirement of the U.S. space shuttle and its Canadarm, MDA’s space-robotics business, one of the company’s signature product lines, will drop unless it lands a customer for its proposed satellite in-orbit servicing project...

Without a satellite-servicing contract or some other new work, MDA’s space robotics business will have to shrink in 2011 once Canadian economic-stimulus funds run out, despite the expected extension of the international space station’s operations to 2020, (MDA CEO Daniel E.) Friedmann said.

These statements seem to fly in the face of recent public comments by members of the Canadian Space Agency (CSA) indicating that commercial robotics sales derived from space activities are a highly profitable and growing business.

For example, the October 31st, 2010 Canadian Press article "Canadian astronauts reflect on 10th anniversary of human life aboard space station" quotes Pierre Jean, the CSA's space station program manager as saying that Canada's investment in space robotics has already resulted in a "$5 billion dollar export business."

The Space News article then goes on to further quote MDA CEO Friedmann as stating:

The mainstay of the division is to develop new technology for space and at the moment, Canada has not come up with anything there. Without the government taking some leadership in robotics, we’ve got a problem. We’re going to shrink there next year, and we’re going to have some layoffs.

The conference call also came only one day after Christian Sallaberger, VP and Director of Space Exploration at MDA was quoted in the Hill Times policy briefing on aerospace as stating that "it’s the time to make sure that we’re not missing the boat of the next phase of space exploration” and caps a week of speculation that MDA is considering selling "all or part of the company" as outlined in my October 22nd, 2010 post "Unattributed Statements, Denials, Counter Claims and the Upcoming Conference Call."

Of course, threatening to sell portions of MDA brings back memories of 2008, when the company announced that it was selling it's space focused business to US firm Alliant Techsystems (ATK).

That sale was eventually blocked by the federal government of a variety of national security and domestic reasons and no one seems to want to go through the process again. But the current rumors, coupled with the recent statements of MDA executives do seem designed to encourage "something" to happen.

Perhaps that something is related to the CSA budget which MDA uses to fund their robotics research. According to the Hill Times article, the CSA core budget remains stable at $300-million a year which funds existing programs.

However, new programs are either funded through an additional package with $397-million allocated over five years specifically for earth observation satellites (which already mostly goes to MDA for the Radarsat program) or through a second, $110 million economic stimulus package intended to support new space exploration technologies, the next generation Canadarm and pretty much everything else that isn't already funded.

This existing $110 million economic stimulus package will also end in March 2011 and it is not expected that the federal government will allocate additional funds to extend the program. This is also where future funding for an MDA derived satellite in-orbit servicing project would likely need to come from.

But it won't, unless new funding is allocated by the federal government. 

It's possible that MDA executives have begun a semi-public lobbying effort designed to encourage the federal government to allocate further funds for MDA's newest project.

If this is true, then I guess the robotics wars have begun.

Large R&D Spenders Not Whole Story: Garneau

Canada's largest corporate research and development spenders have cut back their R&D investment by almost two per cent in fiscal 2009 from the year earlier, according to the October 27th, 2010 CBC News article "Companies cut R&D spending."

The article references data from a report titled "Canada’s Top 100 Corporate R&D Spenders 2010" which was compiled by Research Infosource Inc, a unit of Toronto-based consult firm The Impact Group.

Aerospace companies on the list include Pratt & Whitney Canada (listed as 7th in total expenditures with 13.4% of total company revenue used for R&D), Bombardier (14th in total/ 0.7% of revenue R&D), CAE (18th in total/ 7.3% revenue R&D), Honeywell Canada (38th in total/ 5.4% revenue R&D) and Héroux-Devtek (98th in total/ 4.0% of revenue R&D).

Two of the "Three Kings of Canadian Commercial Space" are represented on the list with MacDonald, Dettwiler (45th in total/ 4.4% of revenue R&D) and Com Dev International (84th in total/ 7.3% of revenue R&D).

Also included on the list are quite a number of telecommunication equipment and service provides (which could reasonably be a legacy of the work started by Telesat Canada in the late 1960's) and a large number of pharma/biotech companies.

However, according to Liberal MP Marc Garneau (Westmount-Ville Marie), we shouldn't be only focusing on the big players. We should also be focusing:

... more on the R&D that is necessary in the small- and medium-sized enterprises. They're the ones that have less capital available to develop their products. They're the ones that are really trying to do serious research and development to develop a product that can be a winner.

Garneau is quoted as part of the October 25th, 2010 Hill Times article "Feds should boost R&D investment, tax incentives, to keep Canada's aerospace industry globally competitive." The article also quotes extensively from a variety of other sources, including industry and labor on the slowly declining Canadian capability to compete in the international aerospace market.

Of course, Garneau is right in his assessment that Canada concerned about innovation shouldn't be focusing only on R&D for big companies. He knows, based on his experience at the Canadian Space Agency (CSA) and Carleton University, that we also need to support universities where the basic research is done and smaller firms looking to commercialize truly revolutionary ideas plus make ongoing assessments of the tax code in order to provide incentives not just for foreign companies to locate here, but also to local firms so they don't end up moving somewhere else.

With all due respect to larger companies like MDA and Com Dev, most firms currently bidding for CSA contracts are far too small to show up on any list of top R&D spending but I'm betting that quite a few of them have the potential to contribute far more to Canada's future wealth than just about anyone on this years list of Canada's top corporate spenders.

Overnight Success Plus IP Rights

You might not know it by looking at the website, but Toronto based Engineering Services Inc. (ESI) has a Canadian space focused pedigree going back to the 1970's.

In fact, from 1975 until 1981, ESI founder Dr. Andrew Goldenberg was an employee of SPAR Aerospace Ltd. which built the first Space Shuttle Remote Manipulator System (or Canadarm). Goldenberg worked mainly on the control, analysis, and design of the Canadarm and on satellite controls according to his bio on the University of Toronto Department of Mechanical and Industrial Engineering website, where he is now a Professor and the Director of the Robotics and Automation Laboratory (RAL) and Mechatronics Laboratory (ML).

He also remains at ESI, where he serves as CEO.

Photo: NASA (19 July 2009)

Knowing this helps to provide a little context for the recent awarding of three Canadian Space Agency (CSA) contracts to the scrappy little firm. The most recent was the October 25th, 2010 CSA announcement "Canadian Space Agency awards contract for exploration technologies" which states:

The Canadian Space Agency has awarded a contract valued at $3 million (CAD) to Engineering Services Inc. (ESI) of Toronto, Ontario, to develop prototypes of a robotic arm, control stations and exploration tools. In the coming months, these technologies will be integrated into terrestrial prototypes of lunar or martian rovers. The contract also includes an option for a second arm worth $500 000. The investment is part of the Government of Canada's 2009 Economic Action Plan and aims to accelerate the research and development of new technologies for space exploration.

The company has also been awarded two other CSA contracts for the development of a micro-rover platform with tooling arm and a small manipulator arm as outlined in this December 14th, 2009 ESI press release.

It's interesting to note that the final paragraph of the ESI press release states specifically that:

...new technologies and intellectual property retained by ESI over the course of the work will be put to new and challenging uses both in space and on the ground, strengthening ESI's position as a leader in the transfer of robotic technology to the marketplace for the benefit of Canada.

Intellectual property (IP) developed as a result of CSA contracts has traditionally not remained with CSA contractors but is instead normally assigned to the CSA Commercialization Office which provides intellectual property management and supports technology transfer.

However, this policy has generally been a failure and very few CSA advances have ever ended up being repackaged and sold commercially.

But as originally outlined by Marc Boucher in his April 28th, 2010 article "Canadian Space Agency Gives Green Light to Build Prototype Mars Rover" the intellectual property developed through this specific series of contracts will remain with the contractor and therefore could end up being be of substantial benefit to ESI as the company moves forward.

Kudo's to the CSA for making this change. Canadian companies are best positioned to commercialize any intellectual property developed from Canadian space contracts and should be allowed to do so.


COMMENTS:

From: Daniel Faber

Hi Chuck,

I hope things are well in Canada? It's good to see the blog posts again :)

Regarding your story "Overnight Success Plus IP Rights", you mention that "Intellectual property (IP) developed as a result of CSA contracts has traditionally not remained with CSA contractors". It is my understanding that this policy changes back and forth on a 5-10 year cycle.

Kieran will have more experience in this but my understanding is that sometimes they let the contractor have it (and retain a right to use it and give it to others if they don't like the work of the first company), and sometimes they keep it all in CSA.

On another note, I was in Europe recently (unfortunately I didn't get to jump over to Canada on this trip) and did the rounds of the ESA Business Incubation Centers (BIC), the ESA Investmet Forum, the IAC Entrepreneurship & Investment Committee (which I am now a member of), and the Open Sky Technology Fund (http://www.esa.int/esaMI/TTP2/SEMTZNRMTWE_0.html). There is some very interesting stuff happening over there. The basic message is 2-fold:

1. If you want start-up money and don't mind moving to Europe & putting up with their bureaucracy, there is money attached to the BICs, and 
2. If you have revenues of >$500K and want to expand there appears to be a LOT of money available. Having seen pitches from several start-ups there, they are about the same quality as in Canada so Canadians are definitely not at a disadvantage.

CSA should set up an ESA BIC! Worth disucssion, and might get ministerial support given what appears to be a recent push to support innovation by the govt now that most Canadian VC firms have disappeared.

Regards,
Daniel

Editors Note: I'm still having trouble posting comments and I'm not sure how to go about fixing the problem. Anyone able to assist (especially someone who knows HTML) is more than welcome to give me a call and we'll see what can be done.

Otherwise, I'll be posting comments manually so don't be shy. Send your questions, queries, concerns and comments to mr.chuck.black@gmail.com.

Unattributed Statements, Denials, Counter Claims and the Upcoming Conference Call

According to the Wednesday, October 20th, 2010 Bloomberg BusinessWeek article "Canadian Stocks Rise as Metals Rebound; Teck Resources Gains" BC business icon and Canadarm builder MacDonald Dettwiler (MDA) gained 3.9 percent on the Standard & Poor’s/TSX Composite Index Wednesday after "two people with knowledge of the matter" said MDA is exploring the sale "of all or part" of the company.

By Thursday, the Vancouver Sun had taken up the story under the title "MDA stock soars on sale speculation." According to the article, MDA had issued a press release indicating that the company "is not evaluating a sale of its Systems division or any portion thereof."

The article then went on to state that "MDA also has a products group, which distributes legal, real estate, satellite and aerial data. The statement did not address the products group, nor did it address the notion of the company as a whole being sold."

But by Friday, the Vancouver Sun had announced that the iconic "Canadarm maker announces sale of service contracts:"

One day after denying rumours the company was on the block, Richmond based MacDonald Dettwiler announced the sale of 11 long-term managed-service contracts for $4.7 million. The contracts operate MDA-delivered solutions that deliver back office service for the provision of land and property data to United Kingdom Local Authorities, the company reported in a media release.

Oddly enough, very few people seem to have picked up on a second MDA story of the week. As outlined in the October 21st, 2010 Commercial Space Watch article "MDA expands RADARSAT-2 information solution with operational customer:"

MacDonald, Dettwiler and Associates Ltd. (TSX: MDA), a provider of essential information solutions, announced today that it has signed two contracts in excess of $3 million (CAD) with Collecte Localisation Satellites (CLS), France, to provide RADARSAT data and ground information solutions.

Even odder is the fact that there is not just one but multiple stories covering recent MDA Product division activities including "MDA to deliver land information to confidential customer" from CWN and "MDA to provide property claims information solution to a Top 5 Homeowners Insurance Underwriter" from the Digital Journal website that the traditional media sites seem not to have picked up on.

If I had to take a guess at what was going on (and could keep a straight face while typing "two people with knowledge of the matter") I might even suggest that MDA is dealing with under performing assets in their Products division (which distributes legal, real estate, satellite and aerial data) by selling them off and then focusing on new opportunities with a better potential return on investment.

This approach contrasts with ComDev International ex-CEO John Keating who responded to his firms revenue shortfalls earlier this year by doing nothing and getting fired.

While the federal government previously blocked the sale of the MDA Systems division (which sells satellite, robotics and defence technology) to Alliant TechSystems (ATK) in 2008, it seems to have no particular attachment to the MDA Products division as a whole or to any specific activities within the division.

It's also worth noting that the two contracts just announced with CLS will likely be booked as revenue for the MDA Products division as will the $4.7 million sale of 11 long-term managed-service contracts which should help shore up the divisional bottom line.

Whatever else we might think, it's reasonable to expect real information and some context for the events of the last few days to come out next week when MDA plans to release its third quarter 2010 financial results as part of their quarterly earnings conference call.

MDA president/ CEO Daniel Friedmann and Executive Vice President/ CFO Anil Wirasekara are both expected to be on the Wednesday, October 27, 2010 call which will be Webcast live and then archived at:
http://www.mdacorporation.com/corporate/investor/events.cfm.

Ideas on Canada's Future in Space

For those of us needing a quick reminder, the 2010 Canadian Space Summit is being held at the Lord Elgin hotel in downtown Ottawa, Ontario from November 19th - 21st and will focus on "2010: A New Canadian Space Odyssey."

Mark Boucher, my editor over at Space.ref.ca (where I write the "This Week in Space for Canada" column) is running the commercial space activities track and has promised me that a fascinating group of present and future space industry movers and shakers will be in attendance.

He's also convinced me to put together a presentation for the summit which I've tentatively titled "Two Billion Dollars for the Canadian Space Agency: Historical Antecedents, Available Options and a Realistic Appraisal of What Can be Done."

My starting point will be a comment Canadian Space Agency (CSA) president Steve MacLean made on May 12th, during a presentation to the House of Commons Standing Committee on Industry, Science and Technology (INDU) where he said:

“You know what? If you want to do a first rate (job) on some of the examples (of potential CSA projects) I gave you, you are looking at an additional budget of $2 billion over five years. That will put us at the table. That will drive innovation."

My intent is to put a little bit of context around just what that $2 billion could actually buy for Canada. I'll talk about where that money might come from, the chances of it being allocated by the Canadian government and how our current challenges compare with those surrounding previous Canadian long term space plans (after all, there have been several, starting with the original Chapman Report).

Of course, there are probably others with better qualifications to engage in this sort of dialogue and one of those experts is certainly Canadian astronaut Chris Hadfield, who is scheduled to to be a part of International Space Station (ISS) Expedition 34 crew and will be commanding Expedition 35 in 2012 and 2013.

Here's what he has to say about our space future.

The Perils of Being a Niche Player

No one in Canada knows the essential tools of crafting public policy better than the "aero" component of the Canadian aerospace industry. Just take a look at how they've defined the current big, sexy industry story which, oddly enough, has absolutely nothing to do with rockets, Radarsat's, Martian rovers or long term space plans.

Instead, it's all about sixty-five "first-strike shock-and-awe" Lockheed Martin F-35 Lightning II fighter jets the Stephen Harper government committed to buying back in July 2010 to replace Canada's aging fleet of McDonnell Douglas CF-18's.

The final decision over whether to move forward with this purchase will be almost entirely a political decision, heavily dependent on who wins the next election and fueled on all sides by financial arguments wrapped around tedious Canadian tax code provisions, various regional economic development programs and potential "hi-tech" employment opportunities.

From http://gizmodo.com/5021998/build-your-own-f+35-lightning-ii-fighter-jet

Absent from the debate will be any substantive discussion of the F-35 capabilities and whether the purchase is appropriate for Canadian requirements.

For example, the Aerospace Industries Association of Canada (AIAC) pointed out in their October 15th, 2010 press release subtly titled "Cancellation of F-35 purchase threatens Canadian jobs" that:

The AIAC disagrees strongly with the claims made today by critics to the effect that Canada has nothing to lose in cancelling the current deal. According to Dr. (Claude) Lajeunessse, President and CEO of AIAC: “The contracts signed by our companies for the F-35 make it clear that countries must buy the planes if they want to participate in supplying, building and sustaining the entire production of the F-35.”

The AIAC isn't stupid.

They care about our military having the right tools for their mission just as much as any of the rest of us but they also understand the simple fact that Canadian's are niche players in the F-35 project. Our role is to come on board for subcontract work after the project requirements have been set by the prime contractors and to buy the plane when it's ready.

So it doesn't really matter whether the F-35 fulfills our military needs just so long as AIAC members specifically (and Canadian in general) get the jobs and the economic advantages that act as selling incentives for project participation.

And these incentives are indeed, quite substantial.

According to the paper "Reinventing Canadian Defence Procurement: A View from the Inside" by Alan S. Williams, $490 million USD in contracts have been awarded to 144 Canadian companies, universities, and government facilities for the period 2002 to 2012, as a direct result of Canadian participation in the project. This total is expected to grow to $1.1 billion USD in the period between 2013 and 2023, with a total potential estimated value to Canada of between $4.8 billion to $6.8 billion USD as a direct result of Canadian participation in the project.

Of course, total Canadian government costs for the acquisition are expected to total in the area of $16 billion over the life of the F-35, which doesn't work out to a net financial positive for Canada, but the financial incentives are expected to come early in the program and should lead to new capabilities and opportunities which can be used later to develop new markets and perhaps offset some of the long term costs.

At least, that's what the advocates of the program are hoping.

Canada a small player in the much larger field of F-35 partners. The program has three levels of international participation with the United Kingdom participating as the lone level one partner, Italy and the Netherlands contributing as level two partners and Canada, Turkey, Australia, Norway and Denmark committed to level three partnership. Other participants in the project include Israel and Singapore who are formally committed as security cooperation participants.

Canada does have the advantage of participating in the program from the start and likely does have some small input into design and capabilities but the F-35 is built to US specs for a US mission using (mostly) US money. It's unlikely that the American's will make significant modifications in response to Canadian requirements.

For those of us who would like to focus, at least a little, on the reasonable questions regarding F-35 capabilities, it's worthwhile checking out the Airliners.net Military Aviation and Space forum under the topic "F-35 a possible CF-18 replacement for Canada" or the Air Power Australia article "F-35 JSF: Can It Meet Canada's Needs?"

But for those of us more interested in how the debate is framed by the decision to be a niche player, here's a second example from the October 14th, 2010 Canadian Press article "Purchase of F-35 fighter jets a bad idea, says policy centre" which states that:

"A report released by the left-leaning Canadian Centre for Policy Alternatives says the multibillion-dollar purchase isn’t based on the country’s real needs. Liberal MPs agreed, saying they will kill the deal if they get the opportunity."

According to the article, Industry Minister Tony Clement said the liberal promise to kill the deal threatens jobs and the well-being of the aerospace industry. “What aerospace workers in Canada need is a government committed to securing their jobs, not putting those jobs at risk with partisan antics” he said in a statement.

Notice again how the actual F-35 capabilities and Canadian military requirements are of only secondary importance to the industrial and job related needs in much the same way that the discussions around canceling the (still not quite dead yet) US Constellation human spaceflight program never really involved actual requirements for human spaceflight.

There's nothing essentially wrong with being a niche player or focusing on economic development. It builds good relationships with your neighbors, creates jobs and capabilities plus helps you learn things from others which you might not otherwise pick up. Sometimes, but not always, there are even tangible financial benefits.

But it doesn't always move forward Canadian interests and it might not be our role of choice in every instance.

Canadians on the "space" side of the aerospace industry know that, someday, someone, somewhere is going to begin moving forward again to define Canadian space interests either through a new long term space plan or through some other mechanism.

The present Canadian Space Agency (CSA) policy seems to want to position Canadian companies as niche players with narrow, specific expertise useful for larger, collaborative projects.

This role is not the only choice for Canada? It may not even be the best.

NASA Authorization Bill Signed

It's Columbus Day in the USA and Thanksgiving in Canada but neither one of those holidays seems to have deterred U.S. President Barack Obama from finally signing into law a three-year NASA authorization bill on October 11th.

The bill, formally known as the NASA Authorization Act of 2010 (S. 3729), is widely acknowledged as setting a new course for the American human spaceflight program according to the October 11th, 2010 Space News article, "President Obama Signs NASA Authorization Bill."

However,  according to the October 8th, 2010 article in the Bay Area Citizen titled "NASA bill almost didn’t pass," it took an intense 72-hour Texas based bipartisan drive to muster the 2/3rd vote necessary in the US Congress to pass the legislation so the US President could sign it into law. The article states that the focus of this last minute congressional drive was the need to avoid massive Texas aerospace industry layoffs.

But of course, everyone knows that the final financial battles are still to be played out.

Although the bill is considered to have passed overwhelmingly and received broad bipartisan support with the budget mandate covering the next three years, there are a great many gaps in the final document still to be dealt with. For example, according to this October 11th, 2010 post on the Space Politics blog:

... the fact that the president is signing the bill isn’t surprising, but what’s important in the near term is that it starts the clock on a number of studies due over the next several months, even as the agency waits for appropriators to act on funding the agency for FY11.

The Huntsville Times is a little more blunt with their October 11th, 2010 article titled "Obama signing NASA law today, but funding still isn't assured" which states that funding this new vision:

which includes a new heavy-lift rocket to be developed in Huntsville, is anything but assured, according to a press conference today. Funding still has to pass in what NASA supporter Sen. Bill Nelson, D-Fla., predicted will be a "tough" lame duck session of Congress after the November midterm elections.

Smart Canadian space focused companies are going to be watching the next session of congress very closely indeed in order to see the way the wind is blowing over our long term and (up until recently) quite reliable space traveling partner.

Funding "Rocket Science"

As outlined in my June 19th, 2009 post "Venture Capital and New Space Investments" the venture capitalists who provided seed funding for so many other industries have so far stayed away from commercial space activities (with the notable exception of Space-X).

Part of the reason for this, according to the July 26th post on the Space Busine$$ Blog titled "5 out of 100 - Deal with It!" is that for every 100 companies a venture capital firm invests in, only five or so ever make a profit and most of the rest will be total write offs (the VC's will still make money overall despite the fact that 95% were losers but need a minimum of 100 companies within the portfolio in order to mitigate risk).

With so few quality space firms in which to invest, the author suggests structuring companies less like defense contractors and more like Silicon Valley start-ups (or film and video production houses) by establishing separate companies for each product or service.

But in Canada, that strategy might not work because our venture capitalists are staying away from everything, not just the space focused firms.

No one really knows why but it's so bad here that venture capital firms are in danger of becoming an "irrelevant source of financing" according to the October 8th, 2010 post on the Canada.com website "Weakness in Canada's venture-capital system at `crisis levels.'" The article quotes John Ruffolo, with business consulting firm Deloitte as stating "This persistent weakness in the country's venture capital ecosystem has now reached crisis levels and it has serious implications for the future of our technology sector and the future of Canada."

According to the Deloitte website, the firm sponsors a variety of entrepreneur awards including the Deloitte Technology Fast 50 technology awards, Canada's 50 Best Managed Companies which focuses on Canadian-owned and managed private companies with revenues over $10 million and Canada’s Outstanding CEO of the Year so you'd think they know what they're talking about.

But it does sound grim for Canadian companies and innovation.

Even in the United States, the venture capital industry is in the midst of massive changes as outlined by entrepreneur Naval Ravikant in his recent keynote presentation at the Capital Factory’s demo day.



Ravikant's primary point is that venture capital industry is a business, open to pressure from clients and attack by start-ups with disruptive new business models and technologies just like any other business. Ravikant also suggests that traditional VC firms are likely to respond to these business pressures by splitting into service organizations (similar in size and function to the members of the Canadian Association of Business Incubators or the Alliance for Commercialization of Canadian Technologies) and smaller pocketed angel investors (which in Canada, are mostly members of the National Angel Capital Organization) who will combine into groups to fund new projects.

These service models also mimic software and media focused industries (where masses of separately incorporated individuals with specific expertise come together to create films under the banner of small firms often acting as agents for a other firms in order to multiple investors from losses). They are also in stark contrast to most of our aerospace industry where larger firms depend on one or two "anchor" clients to fund ongoing operations.

This might be the secret to future Canadian entrepreneurial success. We should follow in the footsteps of our fleet footed American cousins by breaking up both our start-ups and support and financing mechanisms into smaller and more nimble components.

And some of them can even be space focused.

DEXTRE Corner Cutting, Com Dev Deal Making and IAC Storytelling

Anyone who works in space focused industries has just got to know that more time, effort and money is spent proposing scientific experiments and making proposals about how things should be done than is ever spent on the actual doing of things.

That's why we have organizations like the International Astronautical Federation which just finished up their 61st International Astronautical Congress (IAS 2010) through the Czech Space Office of the Czech Republic.

IAC events provide a chance for people with ideas and airfare to peer review their projects and plans, which mostly means that they run their ideas up the flagpole to see if someone able to fund them will stand up and salute.

Here are a couple of quick Canadian focused commercial space news stories percolating about and among the IAC 2010 attendees:

• According to the September 30, 2010 Aviation Week article titled "Cost Cutting Cited In Dextre Commissioning Delay," the final checkout of Canada’s robotic special purpose dexterous manipulator (SPDM), also known as DEXTRE, has been delayed because of a July 2010 failure when DEXTRE simply didn't have the capability to remove a failed power controller on the International Space Station (ISS). The article quotes Sarmad Aziz, a robotics flight controller at the Canadian Space Agency (CSA) as stating that the initial engineering analysis was based on "low-fidelity" hardware in order to save money.

• According to the October 1st, 2010 Space News article "Hisdesat Takes Stake in Com Dev's AIS Venture" the Spanish company Hisdesat Servicios Estrategicos, which sells commercial X-band satellite capacity to military and civil government agencies, has taken a 27 percent equity stake in exactEarth Ltd., a division of Com Dev International developing a global space-based maritime vessel-tracking system. The article states that:

"the Hisdesat investment is the second trans-Atlantic tie-up on space-based Automatic Identification Systems (AIS) in less than a week. On Sept. 28, Orbcomm of Ft. Lee, N.J., announced it had contracted with OHB Technology of Germany and OHB’s LuxSpace subsidiary of Luxembourg to provide two small satellites for Orbcomm’s AIS service, which is expected to accelerate with the launch, set for 2011, of Orbcomm’s 18 AIS-equipped machine-to-machine messaging satellites."

• And finally, according to the September 30th, 2010 Space News article "Common Exploration Plan will be Slow in the Making" the worlds principal space-faring nations, which have spent the past three years talking about a common exploration strategy through their activities in the International Space Exploration Coordinating Group (ISECG), seem to have very few actual activities or accomplishments they can attribute to those conversations, except perhaps for one Canadian based bright spot in the form of Gilles Leclerc, director-general for space exploration at the CSA. Leclerc is quoted in the article as crediting the ISECG with helping to shape the Canadian government’s decision to invest $100 million over three years into robotic technologies. According to the article, Leclerc also said the ISECG work on lunar exploration has helped Canada to position itself as “a niche player” in future space exploration missions.

I'm not so sure that I totally agree with Monsieur Leclercs comments (and I'm actually rather hoping that he was misquoted by Space News).

My understanding has always been that the Canadian government decided to put extra money into space activities specifically to maintain Canadian access and control over the Radarsat I, Radarsat II and the follow-on Radarsat Constellation program when Canadian prime contractor Macdonald Dettwiler (MDA) attempted to sell the space components of it's business to US based Alliant Techsystems (ATK) in 2008.

Perhaps our traveling CSA director-general for space exploration will provide a little more context on his comments over the next little while.

Man Builds Spacecraft, Takes Pictures!

It's not difficult to build a spacecraft and if you don't believe me, just ask Luke Geissbuhler. He even took pictures.


Homemade Spacecraft from Luke Geissbuhler on Vimeo.

Geisbuhler is a photographer who used commercially available camera equipment, an I-phone and a hand-warmer to film what happens in space according to the press release "Go Pro Hero HD camera used to film outer space" on the Prokit video production website.

Luke Geissbuhler created a miniature spacecraft in order to view footage, using the Go Pro Hero HD camera placed in a Styrofoam box as his recording tool.

The photographer put an iPhone within the box in order to trace the device with its GPS facility and a hand-warmer to keep the equipment working in sub-zero temperatures when he launched it via a helium-filled balloon in August 2010.

Geissbuhler admits that he's not the first person to do this. He also concedes that there is quite a bit of terrestrial paperwork involved in the attempt. On his Vimeo hosted website, titled "Homemade Spacecraft" he states:

You do need FAA approval and notification. The craft was built within FAA regulations for weather balloon payload which I highly recommend adhering to. We also made sure to launch out of city air space.

Paperwork or not, Geissbuhler has given us a really good example of what can be done working from a small budget with off the shelf components. Larger organizations performing scientific research and complaining about the lack of funding might just want to take note of this little experiment.

Canadian Companies Sponsor Satellite Designers

Dr. Bruce Cordell, over at the 21st Century Waves blog, often writes about science education as being the major driver of economic competitiveness so it's no surprise that his latest post, titled "Californian's Reveal the Secret of the Future" focuses on the recently released National Academies of Sciences and Engineering report which concluded (again) that science education is a major economic driver.

It's also not uprising that a great many Canadian organizations feel the same way. These include the Science Technology and Innovation Council (STIC) in their May 5, 2009 document titled "Science, Technology and Innovation Council finds Canada a solid performer in science, technology and innovation — but needs to aim higher on the world stage" and the Conference Board of Canada in their document "How Canada Performs 2009" which was released in March 2010.

But what is uprising is that Canadian space focused organizations are finally beginning to take notice of this correlation. Chief among them are members of the Canadian Aeronautics and Space Institute (CASI) which is partnering with Richmond, BC based Geocentrix Technologies Ltd to launch the Canadian Satellite Design Challenge (CSDC).

According to the CSDC website:

The primary objective of the challenge is for teams of university students (undergraduate and graduate) to design and build an operational small-satellite, based on commercially-available, "off-the-shelf" components.

The satellites will undergo full launch and space environment qualification, and the ultimate goal of the CSDC is to launch the winning satellite into orbit in order to conduct science research.

The CSDC will begin at participating universities and colleges in September, 2010; the winning satellite(s) will be selected in October, 2012.

The contest was formally announced on September 22nd, 2010 but has been in the organizational and planning stages for some time according to the CSDC website. Corporate sponsors include MITACS, MacDonald Dettwiller (MDA,) Microsat Systems Canada, Neptec Design Group, ABB Canada, Magellan Aerospace, AppSpace Solutions, Analytical Graphics, Manitoba Aerospace, NEI Software, the Canadian Space Society and quite a few others.

It's likely coincidental that Geocentrix is located within driving distance of a gentleman named John Chapman. Last fall Chapman wrote a letter to Canadian Space Agency (CSA) President Steve MacLean seeking support to create a system of prizes for Canadian universities, businesses and individuals, similar to the NASA Centennial Challenges.

According to my November 17, 2009 post "Preparing for the Next Great Canadian Gold Rush," Chapman felt that “someone needs to be the Western Canadian champion” for this sort of activism to train the next generation of engineers, experts and space focused entrepreneurs.

Since Mr. MacLean never responded to Mr. Chapman's letter, it seems clear that things are moving ahead without CSA participation. The next Western Canadian space champion is likely going to be working for Geocentrix or maybe even someone else in CASI, but probably not for the CSA.