Space and Communications
"Space Industry -- The Rise of a Global Industry, Or Inter-Regional Competition?"
September 08, 1998
- Didier Lombard, Director General of Industrial Strategies
- French Ministry of Economy, Finance and Industry
- Jim Albaugh, President Boeing Space and Communications
- Robert Berry, President, Space Systems/Loral
- Claude Burgio, President, Lockheed Martin Telecommunications
- Armand Carlier, Chairman & CEO, Matra Marconi Space
- Donald Cromer, President, Hughes Space and Communications Co.
- Jean-Claude Husson, Chairman & CEO, Alcatel Space
It's quite an honor for me to be here with such a distinguished panel. They represent the heavyweights of the satellite industry. I need to make sure I take good notes on what my fellow panelists are saying since they represent both my customers and competitors.
As Didier [Moderator] has said, we've just undergone a major reorganization in Boeing. My group is now responsible for satellites, as well as launch services.
Since I was originally asked to provide the launch services perspective for this conference, I'll leave the satellite industry perspective to the rest of the panel.
The theme of this panel asks a very important question: Will we become a global industry Or, will we divide into competitive regions?
In the space transportation and satellite manufacturing industries, arguments can be made for both outcomes.
But, in the end, the customer will decide, and the decision will be based on best value. And, it's my view, along with many others, that the only way to get best value is by being a global competitor.
This means competing globally at every level - at the component, the subsystem, and launch vehicle level. If we don't, we can never provide our customers - the satellite builders, the service providers, and the ultimate users - a best value product.
In many ways, commercial space is already a global industry. The global span of our customers - and of their customers -- makes it so. I think this is reflected in the numerous global partnerships formed in the last several years.
Growth in the commercial satellite market is driving us. You - our customers - have been very busy:
There are more than a thousand companies worldwide that develop, manufacture and operate space systems.
There's a communications satellite launched every 12 days.
And, I won't bore you with the projections of the number of satellites to be launched in the next ten years or the revenues generated. You know those numbers better than I do.
Just as an aside, it's also interesting to look at the business plans of the launch service providers over the next ten years. All of us assume we will capture 50 percent of the worldwide market. This should provide a very interesting and value-oriented marketplace for satellite builders and users.
Aside from the fact that no single nation has the capacity to address the total launch market, there are three principal reasons why Boeing thinks doing business globally is in all our best interests:
First, only by working with global partners, can we give our customers access to all of the technologies available. This allows us to offer the best solution for the customer's requirements.
I think it's presumptuous for Boeing to think it has all the answers, right at our fingertips. We don't. No one does. Only by choosing the best ideas available from around the world can we provide the best solutions to our customer's requirements.
For example, on Sea Launch, we needed a rocket that could be stored and serviced horizontally. The Russians and Ukrainians are world leaders in that technology. That's where we went.
Second, a global approach means that we have access to markets we wouldn't otherwise have access to.
At Boeing, we're working hard on global alliances with both launch providers and satellite builders that will allow both Boeing and our partners to provide best value to their customers - and to increase market share. In many cases, these are markets we couldn't be in without these relationships.
Third, it allows us to have access to products that we wouldn't otherwise have.
Within these three reasons, two important words appear again and again. One of them is "partner." The other one is "customer."
First, I want to say that suppliers are easy to come by. Partners are more difficult to find. And, we're looking for partners.
We're seeking partners who are willing to take a long-term view of the marketplace. We're seeking partners interested in reciprocal arrangements. When we are asked by companies, "what can we build for Boeing," we ask in return, "what can we build for you."
I'd like to have Boeing hardware on all competitively sourced vehicles launched worldwide. It doesn't matter to me whether the vehicle says Boeing on the side or not.
All of this must happen under an umbrella of value to the customer. The customer always, the customer. Our customers are operating seamlessly worldwide, and so must we. Partnerships are extending across international boundaries.
For example: I recently read that TV set-top decoder technology from Comstream in San Diego is being manufactured in Wales by the UK arm of the Japanese electronic giant Matsushita for sale in The Netherlands under the Panasonic brand name. How would you like to be the contracts manager on that one?
What does this new worldwide orientation mean? It means that launch service companies must be flexible. They will offer integrated, one-stop shopping of launch services. They must also serve as merchant suppliers to other providers.
Boeing does this now. You can sign up with Boeing to build and launch satellite, end-to-end. Or, for example, you can come to our Rocketdyne business for engines only. Companies will be trying to do this on both a global and regional basis.
As we heard in the last panel, European satellite manufacturing is consolidating before our eyes. Regardless of how European satellite consolidation turns out, I believe that, over the long haul, launch service decisions will be based on value - not regionalism.
In the United States -- Ariane, Atlas, Delta, H-2A and others compete for the launch market. I believe that will happen also in Europe and Asia.
Even for highly integrated products built by a single company, there'll be higher and higher global content. For instance, on Delta III, it includes both European and Asian hardware. Saab Ericsson, Mitsubishi, and SEP - to name just a few - are all part of our Delta III team.
The trend toward global content in launch vehicles will continue with our Delta IV product. On Delta IV, Boeing has a goal of a 50 percent reduction in the cost of placing a pound in orbit. I know our friends at Lockheed Martin have a similar goal. I think we can do it - but only if we utilize all the capabilities and technology available to us worldwide.
Let me close by summarizing with three points:
- First, only through competing in the global launch marketplace can we drive costs down and provide best value.
- Second, companies, or countries, which don't embrace the global marketplace will quickly find that they are not competitive.
- And third, if those of us in this room today don't embrace the second point on the global marketplace, a different set of leading companies will be sitting here five years from now.
Our business is not about countries or regions; it's about a world changing changing towards a deregulated, market-based economy.
I look forward to the panel discussion. Thank you.