Last week's change of leadership at Thales Alenia Space was an opportunity for the Franco-Italian joint venture to reassert that its growth strategy remains based on winning European government contracts, supported by possible acquisitions in the UK and Germany. A widely reported expansion of operations to low-cost countries looks unlikely.
Speaking to Flight International at the company's Cannes facility, senior executives painted a rosy picture of a 67/33% joint venture between France's Thales Group and Finmeccanica of Italy that had averaged 10% revenue growth in recent years and plans to maintain that in the mid-term by targeting the European Union and European Space Agency navigation and Earth observation programmes.
Contracts Focus
Targeting those contracts is now the focus of Thales Group's former senior vice-president for operations, Reynald Seznec, who replaced Pascale Sourisse as head of the space business on 1 May when Sourisse moved to the group's largest division, land and joint systems.
Seznec joins the Thales space division after winning €500 million ($778 million) worth of contracts for ESA's Sentinel-1 and Sentinel-3 spacecraft for the Global Monitoring for Environment and Security (GMES) programme. This is a key part of the company's growth, and Thales Alenia Space's business development and institutional customers senior vice-president, Joel Chenet, is confident more GMES work will be won. "We have won two of the three contracts for Sentinels," he says. "The [institutional market] contracts often last over seven to eight years, commercial only two. And institutional programmes are good for new technology."
Although GMES is described as a three-satellite constellation, with specialist instruments called Sentinel four and Sentinel five on other spacecraft, ESA expects to need 12 Sentinels. It wants an in-orbit Sentinel spare and a ground-based spare that could need replacing if a vehicle fails in space.
The Galileo satellite navigation system is just as spacecraft-rich, representing an initial constellation of 30, including its first four, in-orbit, validation satellites. Development work has already been divided between Thales and EADS Astrium. Of the remaining 26 production spacecraft, Chenet is equally bullish, but the procurement equation the European Commission has settled on, after two years of delays for the project, is much more complex.
A competitive bidding process, Galileo has six contractual segments, but no one company can be a prime contractor on more than two or have over 40% of the subcontracting work for the rest.
Despite the agreed competitive bidding, industry expects ESA's geographical return principle to play a role as the agency manages the production contracts. Thales Alenia Space wants to expand its geographical footprint to help secure a larger share of future institutional projects, but it has already missed one opportunity with its failed bid to acquire Surrey, UK-based Surrey Satellite Technology, which built the Galileo test satellites. On future acquisitions, such as a possible bid for Germany's OHB System, Chenet will only say: "Anything is possible." Thales Alenia Space may simply set up new operations in these other ESA member states if acquisitions are unlikely.
Although Sourisse was quoted setting out a low-cost acquisition plan at the Satellite 2008 event in Washington DC in February, her now-former management team is less enthusiastic. Asked whether Thales Alenia Space would use components from Russia, the dollar zone or elsewhere to make its European institutional bids more competitive, Chenet says geographical return precludes that.
Despite the strong euro and longer-term relative-cost competitive problems with Russia, China and other emerging spaceflight economies, Chenet and his colleagues are not in a rush to buy from the east. "We could buy products from low-cost countries if they can meet our standards," says Chenet, indicating a very long-term plan for any outsourcing for cost reductions.
The agreements with Russia's NPO-PM for its Express spacecraft, the Koresat satellite sold to Korea and the other Asian sales using an ITAR free bus, launched on the much cheaper Chinese rockets, are in fact inroads into the domestic Russian and far-eastern markets and not a solution to Europe's cost problems.
Instead, the message to Seznec from his vice-presidents is that Thales Alenia's real competitive advantage remains the new-technology European institutional projects it can help to develop.
Source: Flight International
