Maxar’s satellite business seems to find a place in the defense market

Maxr Technologies, headquartered in Westminster, Colorado, has gained international attention for its high-resolution satellite imagery of the war in Ukraine.

The company operates a satellite factory in Palo Alto, California, and the business, which has supplied more than 100 large geostationary communications satellites over the past three decades, is now dealing with declining orders.

To compensate for the decline in commercial satellite sales, Maxar is preparing itself to compete in the national security arena, said Chris Johnson, head of Maxar’s satellite manufacturing operations. SpaceNews.

The company scored a major win this month when it won a $700 million contract from the Pentagon’s space agency to produce 14 satellites by 2025 as a subcontractor for L3Harris Technologies. Tracking for DoD satellites. Maxer announced on August 9 It has been selected by L3Harris to supply 14 satellite buses.

He says the geostationary satellite market is “still important, but not as big as it used to be.” “So we are working to transform this business and expand it to other areas.”

Johnson, whose official title is senior vice president and general manager of space, was a longtime Boeing satellite executive before joining Maxer a year ago to boost the company’s presence in the U.S. government market.

As recently as four years ago, Maxar was considering selling or even closing its commercial geostationary (GEO) satellite business, but instead restructured to emphasize small satellites and government sales. “We’re not going to hesitate at this point,” Johnson said. “We’re investing in our people and our processes and facilities and trying to keep a clear focus.”

For decades, the company has only worked with commercial customers, but in recent years it has won some civilian space contracts from NASA. Several years ago, it set a goal to split one-third of its sales between the commercial, civilian and national security space.

Key target customers are defense and intelligence agencies moving toward multi-orbital systems, Johnson said. He said the future architecture will be a mix of LEO, MEO (Medium Earth Orbit), GEO and beyond GEO satellites. “That’s definitely where we’re going.”

Maxor’s interest in working with the Space Development Agency became clear in October 2021 when Maxor submitted a bid objection to SDA’s request for Transport Layer Tranche 1, an August procurement of 126 small satellites. Maxer countered that the terms unfairly benefited some companies over others. SDA director Derek Turner said at the time: “It was a form of restricting competition.”

The Government Accountability Office dropped its objections to asking large defense contractors to partner with commercial players after the SDA agreed to drop the request and open another contracting algorithm called the Procurement Authority. Maxar ultimately did not win the Transport Layer Tranche 1 award and the contracts went to Lockheed Martin, Northrop Grumman and York Space Systems.

Johnson said Maxer had walked away from the protest. “We’ve had a lot of real conversations with our partners on the government side and with our future partners,” he said. “It was a unique moment in time, and I think we’ve moved forward and we feel like we have the right skills and value.”

Maintaining product lines

At Maxar’s 80,000-square-foot factory in the San Francisco Bay Area, about 2,000 workers are building 15 spacecraft, including six Worldview Legion imaging satellites for Maxar’s Earth observation constellation.

Johnson said completing the six Legion satellites and getting them into orbit quickly to meet the growing demand for 30-centimeter-resolution visual imagery is a top priority. After years of delays, the first two Legions are predicted to launch in the fourth quarter of 2022.

Other satellites currently in production are geostationary spacecraft for commercial customers, including four Intelsat communications satellites supported by C-band spectrum revenue. Fleet operators Intelsat and SSS have ordered 13 satellites in 2020 from Boeing, Maxxer, Northrop Grumman and Thales Alenia Space. These operators must clear C-band spectrum for cellular 5G networks to qualify for $9.7 billion in incentive payments from the Federal Communications Commission.

The C-band bid has created artificial disruption in the commercial satcom market, and these orders will help Maxar maintain product lines through at least 2024, said industry analyst Chris Culti of market research firm Quinti Analytics.

In addition to the six Legion and four Intelsat C-band satellites, Maxar is also producing the next-generation Intelsat 40E, two Sirius XM radio satellites, the Jupiter 3 Comsat for EchoStar Hughes Network Systems and the Legion-class geostationary satellite for Ovzone. Swedish broadband service provider.

Maxer has a relatively short window to line up new customers before its current backlog runs out, Kulliti said.

Amidst the collapse of the geosatellite market, Maxar has been trying to move into the LEO sector, but has also faced setbacks, including a bid to build the Lightspeed constellation of Canadian operator Telesat. The trend towards vertical integration among satellite operators has affected the business. Maxar, for example, used to build imaging satellites for the Planet Skysat constellation before Planet moved into in-house satellite manufacturing.

Culti said winning the SDA contracts could be a “game changer” for the company, as the agency aims to acquire several hundred satellites every two years, building a constellation of transport layer and tracking layer.

In the past few years, Maxar has secured a number of NASA contracts to help grow the company’s government portfolio, he said.

In the year In 2019, Maxar has been selected by NASA to design and operate the Lunar Gateway power and propulsion spacecraft, a key component of NASA’s plan to land astronauts on the Moon. Under a 2016 contract, Maxar developed NASA’s On-Orbit Servicing, Assembly and Manufacturing (OSAM-1) mission that will refuel a satellite in Leo.

Most recently, Maxar provided a solar-electric powered chassis for NASA’s Psychedelic mission to explore the orbits of asteroids between Mars and Jupiter. The mission was expected to launch this year, but was delayed due to software testing problems. Johnson said he could not discuss the specifics of the test’s problems, citing NASA’s recent comments that the agency is trying to come up with a new plan for Psyche.

Quilty said Maxer’s NASA programs are winding down and the company hasn’t signed any new major deals to replace them.

Hiring Johnson to run its space infrastructure business was a clear sign that Maxar is looking to up its game in the government market, Culti said. During Johnson’s tenure, Maxer won some smaller development programs for government space demonstrations that he hoped could turn into “larger contracts.”

Quilty said Maxar is better positioned for small orders of high-cost satellites than for mass production of low-cost hardware. Mass production at low cost requires restructuring their operations, which may not be a smart decision for them. “Maxar, for better or worse, is considered an old aerospace company. Their expertise lies in building robust, survivable hardware.

The Legion bus is flexible enough to serve any government or commercial customers, Kulliti said. “Any time you have a certified heritage bus, it becomes an attractive platform when you have a supply chain.”

Defense market more stable

Austin Moeller, aerospace and defense analyst at investment bank Canaccord Genuity, estimates that Maxar’s space infrastructure business is on track to generate $735 million of the company’s $1.9 billion in total revenue by 2022.

Given the uncertainty in the commercial GEO satellite market, Maxxer’s message on the recent earnings call was that once the C-band bids are over, the company will seek government orders.

The SDA contract is critical, Moller said. For the monitoring layer, Maxer uses a new modular satellite bus designed for the expanded low-Earth orbit constellation. “This is a big step for Maxar,” he said in a research note on August 9. There are profit margins on Tranche 1 production, Moller said. “It will be low due to the development work required, but the company plans to use this clean sheet design to sell to other government and commercial programs in the future.”

Defense and intelligence is “just a stable market and much smaller than the commercial commsat market,” Moeller said. “When you look at the defense budget, the space force has the fastest growing budget of any service branch.”

“Certainly the DoD has deep pockets right now with the conflict in Ukraine and wants to build a distributed satellite capability in orbit and the largest space force budget,” he said, so it would be wise for Maxar to start gaining a foothold in that market. .

Maxer’s ground surveillance work has been a huge success for the government, recently winning a $3.2 billion contract from the National Intelligence Service to provide satellite imagery over the next 10 years, Moller said. “So I’m sure they’re trying to reflect that through the satellite manufacturing.”

Investments are planned

Maxar’s satellite business changed in December 2019 when executives announced a deal to sell and lease back the Palo Alto facility to boost the company’s bottom line. Johnson said the company made a deliberate decision to manufacture satellites, but decided it needed to compete more aggressively in the defense and commercial Leo segments.

Johnson said the plan is to invest in manufacturing capabilities to support the commercial, civilian and national security space and push commonality across all three. “That’s how you get out really fast, and that’s how you bring down the price points.”

Maxer also said it is investing in marketing talent. Selling to defense agencies “takes different sales breaks” than it does for commercial sales. “What mission success means to a business customer may be different than what a US government customer or an international government customer might see.”

“It’s standing room only” at the Maxxer factory today, Johnson said. At the same time, the company recognizes that it needs to move quickly to secure orders going forward, he said.

Johnson pointed out that Maxar’s competition for defense and intelligence contracts has become more difficult since about two years ago, when the company spun off its Canadian subsidiary, MDA. “Those barriers are now gone,” he said.

Canadian firm MDA bought Palo Alto-based satellite maker Space Systems Loral in 2012, and in 2017 acquired Westminster-based Earth imaging firm Digital Globe. The combined companies were renamed Maxar Technologies in 2018 and MDA was sold in 2020.

The origin of the company dates back to 1957. Western Development Laboratories, a division of Philco, was the first building material for what would eventually become the Maxar.

Western Development Laboratories launched the first communications satellite in 1960. The following year, Philco was bought by Ford Motor Co. The merged Philco became Ford Space Systems in 1990.

“Our heritage goes back to the beginning of the space age,” Johnson said. All we have to do as Max is continue to tell that story.

This article appeared in the August 2022 issue of Space News magazine.