Boeing Shakes Up Satellite Group
Boeing Co., reshuffling top management of its ailing satellite business for the second time in three years, named one of its defense executives Friday to be president of the El Segundo-based Satellite Systems group.
David Ryan, formerly deputy general manager of Boeing’s Space and Intelligence Systems unit, replaced Randy Brinkley effective immediately, Boeing said.
The shake-up comes as the commercial side of Boeing’s satellite division, which it acquired in 2000 from Hughes Electronics Corp., is reeling from the deep slump in the telecommunications industry.
Though it’s still the industry leader in commercial satellites, Boeing already has announced two major job cuts at its Satellite Systems group in response to the downturn.
Current plans call for employment in the satellite group to drop to 4,500 by midyear, down from 7,500 at the end of 2002 and a decline of nearly 50% from the 8,800 employees Boeing inherited from Hughes.
Most of the cuts are occurring in El Segundo. Boeing’s Satellite Systems unit also has employees in Torrance and Sylmar.
Brinkley, a former NASA manager, held the president’s job for less than two years. He will leave Boeing on June 1 after helping Ryan with the transition, the company said.
Ryan also has had commercial satellite experience since joining Boeing in 1990. His task is to keep lowering the satellite group’s costs to match the reduced demand, while finding ways to stimulate new orders for commercial satellites.
It won’t be easy, because there already are more telecommunications satellites in space than needed, analysts said.
The satellites, which can take up to 18 months to build, sell for $100 million to $250 million each. Customers also must pay multimillion-dollar launch and insurance costs.
“There’s clearly a focus toward making sure we’re cost-competitive as we go forward in this lean market,” Ryan, 48, said in an interview Friday. “We are seeing some indications that the market is starting to improve. But we think it’s going to take until 2004 or 2005 for the market to show some significant improvement.”
Boeing Chairman Phil Condit said last month that the company expected only a handful of satellite launches this year, compared with five last year, six in 2001 and 11 in 2000.
“There’s not much you can do to affect change in the demand for [new] satellites,” said Marco Caceres, an analyst with the Teal Group, an industry research firm in Fairfax, Va. “In telecommunications, there’s simply overcapacity.”
Boeing’s rivals also are hurting in the commercial sector, he said. They include Lockheed Martin Corp., Loral Space & Communications Ltd. and Alcatel of France.
But “the reason Boeing feels it worse is because they’ve had farther to fall than the other companies,” Caceres said, noting that Boeing at one time had a backlog of 40 or more commercial satellites.
Its backlog now stands at 27 satellites, and it also has six unclassified military and government satellites on order, Boeing said.
Boeing, based in Chicago, doesn’t break out financial results for its satellite group, which is part of its space and communications division. That division had sales last year of $11 billion, or 20% of Boeing’s overall sales of $54.1 billion.
