Technology industry

Canadian space sector stalls

Weary of government delays, our largest space technology companies look to the U.S.

Ottawa’s veto of MDA’s Alliant deal had unintended consequences. (NASA)

When governments cast about for ways to save money, the effects can reverberate in space. In early October, Com Dev International, a space-hardware manufacturer based in Cambridge, Ont., laid off 31 employees at its Ottawa office and transferred 10 to other divisions. Months earlier, the country’s largest space company, MacDonald, Dettwiler and Associates (MDA), declared it would terminate an entire team by the end of October.

The ill-fated workers had been assigned to contracts involving Radarsat Constellation, a project that would see the Canadian Space Agency (CSA) launch three new satellites beginning in 2016. Design work is nearly complete, and the companies grew weary of waiting for the federal government to award contracts to actually build them. Ottawa’s waning enthusiasm for Constellation is understandable: recent estimates suggest it might cost $1 billion, double early predictions. But the government also appears to be losing interest in space itself.

The CSA used to plot the space industry’s course through frequently issued long-term plans and by contracting out well over half its annual budget to Canada’s 200-odd private space companies. But it’s been years since the CSA floated any plan the feds endorsed, and its budgets dwindled over the past five years. “Canada retains a skilled space workforce,” observed Futron Corp., a consultancy, in its latest report on global space competitiveness. But delays in updating space policy “are significantly offsetting these competitive advantages,” it observed.

The same is happening across most traditional spacefaring nations. With the possible exception of China, governments appear to have turned their backs on the cosmos. “Governments are no longer going to be the primary end users of satellites and rocket ships,” says Chuck Black, a blogger and treasurer of the Canadian Space Commerce Association. Canada’s space sector evidently got the memo. “We are continuing to reduce our reliance on the Canadian government space businesses in this period of uncertainty,” Com Dev CEO Mike Pley said on a conference call in September.

This wasn’t Ottawa’s intent. In 2008, MDA proposed to sell its Information Systems and Geospatial Services division to Alliant Techsystems Inc., an American company. This would have addressed one of MDA’s biggest problems: it had difficulty winning U.S. government contracts. CEO Dan Friedmann told a House of Commons standing committee that MDA needed a partner possessing necessary American contacts and security clearances. But policy-makers fretted Canada would lose control over celebrated technologies bankrolled in large part by taxpayers, notably MDA’s robotic space arms CanadArm2 and Dextre, and satellite services like Radarsat-2. Ottawa blocked the sale. Months later, seemingly as a consolation prize, MDA got the nod to build Constellation.

Four years later, little has worked out as Ottawa envisioned. MDA largely dismantled its robotics division and this summer bought Space Systems/Loral, a California satellite manufacturer, for US$875 million. This bore immediate fruit; MDA promptly won a robot-related contract by the U.S. Defense Advanced Research Projects Agency. But the acquisition may further erode Ottawa’s ability to influence Canada’s largest space company. For one thing, it doubles the portion of MDA’s revenues derived from the commercial market (from one-third to two-thirds). And much of MDA’s future work could migrate to Loral’s 1.3-million-square-foot facility in Palo Alto, Calif. “They’re slowly moving their intellectual property and assets to northern California. So the job losses in Canada, most of them are going to the States,” says Black.

Ottawa is once again rethinking its course through the Review of Aerospace and Space Programs and Policies, which is to report to Industry Minister Christian Paradis by year’s end. Meanwhile, just how grim things are depends on whom you ask. “The Canadian industry is stalled,” says Marc Fricker, vice-president of the Canadian Space Society. “Is this a blip? I don’t know the answer, because I don’t know what the government’s plans are.” The capacity of a nation’s space sector is largely determined by the expertise of its workers. Fricker worries Canada’s will be unable to attract new talent to replace its aging workforce.

The CSA’s own data support a more optimistic interpretation. Between 2000 and 2010, industry revenues grew roughly 140%. And despite recent Constellation-related layoffs, employment grew nearly 40% during the past decade, to more than 8,200, even as the government sector retreated. The message to tomorrow’s would-be spacefarers is clear: apply to SpaceX or Virgin Galactic.