Boeing gets $1.1-billion Air Force satellite contract
In a major boost to its sprawling satellite-making operation in El Segundo, Boeing Co. announced that it won a $1.1-billion U.S. Air Force award that will preserve high-paying engineering jobs in Southern California and bolster smaller firms that supply parts for the massive satellites.
The deal was the fourth big-money satellite contract for Boeing in two years — a reversal of fortunes from the dog days of the late 1990s — and it keeps the production line humming at a time when the state is facing a 12% unemployment rate.
Boeing has about 5,500 employees at its million-square-foot facility near Los Angeles International Airport. Whenever a major contract is signed, the company makes an announcement over the public address system.
“Our floor erupted in cheers,” said Mark Spiwak, Boeing’s director for the Wideband Global Satcom program. “There’s a tremendous amount of pride associated with this program.”
The Wideband Global Satcom satellites form the Pentagon’s highest-capacity communications system. The massive satellites are about the size of a school bus, take more than four years to make and provide the military with high-definition video, radio communications and data services.
Each 13,000-pound spacecraft is built on the same design as the satellites used by DirecTV and XM Radio.
The Air Force initially contracted with Boeing in 2001 to build three of the high-powered satellites with an option for more. The first three are now circling the globe. Boeing is building three more of the satellites in El Segundo.
The satellites are typically launched from Cape Canaveral, Fla., aboard an Atlas V rocket.
The contract award, announced by Boeing on Tuesday, is to build the seventh and part of the eighth satellite.
The deal puts the company’s total backlog of pending satellite orders at 27. This is a long way from the 50 or so that were typical during the plant’s peak in the 1990s, but it is about double the backlog of five years ago.
“It’s a big turnaround from a down period,” said Jay Gullish, a space and telecommunications analyst at Futron Corp., a Bethesda, Md., firm that tracks the industry. “Boeing is making high-end deals to build satellites that are more sophisticated than many of their competitors.”
Tuesday’s announcement is the latest in a string of high-profile deals signed by Boeing in recent years.
In July 2009, the Chicago-based company announced a deal worth nearly $1 billion to build four communication satellites for telecommunications giant Intelsat Ltd.
In August 2010, it signed a $600-million contract to build three satellites for British telecommunications company Inmarsat.
And in December, Boeing said it would build three satellites for the Mexican government for $1 billion.
The orders secure work for the El Segundo plant, and also bolsters prospects for about 175 Southland companies that supply parts.
“It’s a boon for Boeing; it’s a boon for the plant and for the region,” said Tim Farrar, president of the consulting and research firm Telecom, Media & Finance Associates in Menlo Park, Calif. “The fear was the [Wideband Global Satcom] was going to end.”
With the proliferation of high technology in war zones, such as drone aircraft taking live video and capturing data through various sensors, the military needs a bigger pipeline to relay information.
Farrar describes the Wideband Global Satcom system as the communications backbone for U.S. forces.
“This will be at the core of the military’s high-bandwidth satellite communications system for the next 20 years,” he said. “This announcement is a sign that work on these satellites will continue.”
