OHB System’s achievement in winning the Galileo order cannot be underestimated. It is a relatively small company compared to the giant aerospace corporations that dominate the European and US manufacturing sectors, but it has steadily diversified its…
OHB System’s achievement in winning the Galileo order cannot be underestimated. It is a relatively small company compared to the giant aerospace corporations that dominate the European and US manufacturing sectors, but it has steadily diversified its expertise across the space sector and is now in a position to expand into new areas over the next decade.
OHB CEO Berry Smutny told SatelliteFinance how the Galileo contract preserves the development made through the company’s work on the German reconnaissance satellite constellation SAR-LUPE, which was completed in 2008.
He said: “I want to make it clear that the winning of Galileo is a major step towards safeguarding the extra capacity in terms of manpower and resources we built up through our work in manufacturing the SAR-LUPE system.”
The Galileo project ensures continued work for the 60 strong SAR-LUPE team, which built five satellites and the related ground segment for the German military. Galileo could require up to 100 workers at peak levels, depending on what phase the project is at. As with its partner SSTL, OHB will farm out much of the work to subcontractors in France, Germany and Spain. “It’s generating hundreds of jobs in high level, sustainable jobs across Europe,” said Smutny.
Smutny believes that the smaller, family-owned business structure of OHB means its work on Galileo cannot be compared to an equivalent project like GPS in the US, which is built by the aerospace giants Boeing and Lockheed and which has suffered delays to the introduction of new satellites.
The sheer size difference alone means that the decision making process is much easier, and there are fewer if any conflicts of interest within the company itself. The speed at which OHB can work is reflected in the fact that the contract for SAR-LUPE was awarded in December 2001, and the first satellite was in orbit by December 2006. The remaining four were launched within a further sixteen months.
Smutny is confident in OHB’s ability to deliver the Galileo order on time.
He said: “The challenge with SAR-LUPE was to build and launch a constellation according to a demanding set schedule and pricing. It was very technically challenging. The success of that project was one of the key factors in getting the Galileo contract.”
“The challenge on Galileo is to deliver the first two satellites on time. After we have made the first two, the rest should not be an issue. The second big challenge is to build up complimentary supply chain management organisations. We have changed our approach in that area to adapt to multiple program supply chain management.”
He reconfirmed that OHB will compete vigorously for all remaining satellite orders, and said that he was not surprised the constellation was split into smaller tenders.
“We had a very positive and constructive dialogue with ESA throughout the bidding process,” said Smutny. “I was surprised in the most positive way with how professional ESA and the EU were in handling everything. With that dialogue in mind, the splitting of the order was not really a surprise. We were open for all the solutions.”
“As a tax-payer I always supported the dual competition for the bid. Competition is always good to ensure higher quality.”
OHB aims to establish presence in geo market
While Galileo will ensure the mid-term financial security of OHB, it is in the field of geo-stationary satellites where it has highest hopes for expansion. “Our current growth is more determined by geo activities,” said Smutny.
In 2009, OHB agreed to manufacture a small- to mid-range geo satellite for HispaSat, which will be based on OHB’s new platform Luxor, currently being developed in conjunction with ESA’s ARTES 11 program.
OHB is also working with the German Aerospace Centre on a feasibility study on the Heinrich Hertz project, a national communications satellite that would explore and test new space technology.
Smutny said: “The fact that we have attracted a commercial satellite operator like Hispasat is good, but it is a big responsibility to deliver the spacecraft on time, by the end of 2012.”
“We have the possibility of being involved in three geo satellite projects that would enable us to be in the commercial market from 2012/2013 onwards. Our commitment is to have an 18 month delivery platform for geo satellites. This is one of our key differentiators compared to the competition in the US.”
At present, OHB will not compete for business in India and China. This still leaves a sizeable market through which it can generate substantial revenue growth.
Smutny said: “Our aim is to gain a share of the market in smaller geo satellites that is worth E250-270m per year. The major competition there is from Orbital Sciences Corporation in the US. For us, a market share of one satellite per year would be acceptable. That will realistically happen more from 2014 onwards.”
The market for small to medium sized satellites could be set to expand in the coming years, as more and more operators look to increase their orbital capacity in smaller increments for lower prices.
“I think there are good reasons why there is a need for this kind of spacecraft,” said Smutny. “Along with financial considerations, there is the need for companies to utilise available orbital slots before their rights to those slots expire.”
“The key to the growth of this market is to utilise cheaper, medium lift rockets. That is why we are very interested in the prospects for the SpaceX Falcon 9 rocket.”
Along with navigation, communications and earth observations satellites, space-based radar systems will remain an integral part of OHB’s business, with the operation and eventual replacement of SAR-LUPE an essential priority.
“SAR-LUPE is a ten year platform, so the next generation will be a part of our business plans in the future,” said Smutny.
“Radar technology is somewhere we can compete globally in terms of price and performance. If you compare E320m for five SAR-LUPE satellites, that is a factor 4x to 5x lower than US prices, so we’re optimistic of future success in this area.”
