Boeing satellite unit may get a lift
At Boeing Co.'s sprawling satellite-making complex in El Segundo, engineers for decades pioneered space systems that helped vastly alter the way we communicate by telephone and watch television today.
But in recent years, the workload has sputtered under a cloud of slow orders, and the aerospace giant is now hoping for a lifeline from an upcoming Pentagon contract potentially worth more than $15 billion.
“Boeing has its back to the wall,” said Loren Thompson, a defense policy analyst with the Lexington Institute in Arlington, Va. “If it doesn’t win the contract, it will have real difficulty sustaining the workforce.”
Boeing is vying to build a new generation of military communication satellites known as TSAT, for new “transformational” satellites, that could have as big an effect on communications as global positioning satellites have had on navigation. The company is going up against two archrivals that have teamed in what has become one of the more intense battles waged for a Pentagon contract in recent memory.
The Pentagon plans to award the contract after Dec. 15 to either Boeing or a team of Lockheed Martin Co. and Century City-based Northrop Grumman Corp. The contract is tied to hundreds of jobs in the region.
With an initial value of $6.6 billion, the contract is a “must win” for Boeing, which has been hurt by sagging sales of commercial satellites and production problems, analysts said. A decade ago, it was the world’s largest satellite maker with nearly 10,000 employees, but the workforce at its sprawling complex near Los Angeles International Airport has dwindled to about half that number.
In its heyday in the late 1990s, Boeing had a backlog of more than 50 satellites and was producing one satellite a month. Some sophisticated satellites can take as long as 18 months to build. It now has a backlog of 28 satellites.
This year, Boeing lost a $3.5-billion U.S. Air Force contract to build a new generation of global positioning satellites to Lockheed. A year earlier, the Pentagon, citing technical problems, took away a portion of a secret, multibillion-dollar spy satellite program from Boeing and gave it to Lockheed. This week, a Los Angeles jury is expected to reach a verdict on a $2-billion lawsuit filed by a former commercial satellite customer.
With little demand for commercial satellites adding to its woes, Boeing “really needs to win TSAT to keep its design and engineering staff intact,” Thompson said.
A Boeing loss could also affect the nation’s future military space programs because the loss could weaken Boeing’s ability to compete and leave Lockheed as the dominate developer of military satellites for the next decade or more, analysts and industry officials said.
“I can’t think of anything bigger” in terms of a satellite competition, said Craig Cooning, general manager of Boeing’s Space and Intelligence Systems unit, which oversees the satellite-making business in El Segundo. “If we don’t win, it will be a tougher situation for us.”
No layoffs are planned if Boeing loses the competition since many of the few hundred engineers working on the bid now would either return to their prior jobs or be placed on other projects. Some engineers are also likely to be recruited away by Lockheed or Northrop.
But winning the contract could help Boeing create or sustain about 1,000 jobs in El Segundo and maintain its engineering know-how, Boeing officials said.
For their part, Lockheed and Northrop said the contract was also crucial for Northrop’s satellite operations in Redondo Beach -- a few miles south of Boeing’s El Segundo plant -- where the communications payload for the satellites would be developed and built. The final assembly of the satellites would take place at Lockheed’s plant in Sunnyvale, Calif., where it has about 7,000 workers.
Northrop said winning the contract could mean creating or sustaining 1,100 jobs at its facilities in Redondo Beach and elsewhere in Southern California.
“We’re the only team that has successfully developed protected satellite communication systems” for the U.S. military, including the Milstar communication satellites operating today, Lockheed spokesman Steve Tatum said.
The new TSAT is expected to alter military communications.
After the first of five satellites is launched in 2018, TSAT would enable a soldier on a battlefield to view, for the first time, video images of the enemy being taken and transmitted by an unmanned spy plane.
The same video would be viewable by commanders nearby or by strategists at the Pentagon.
It would essentially be a high-speed Internet in the sky -- albeit with sophisticated anti-jamming and security technology. It would have 100 times the bandwidth of Milstar, the current military satellite communication system.
Existing military satellite communications is like having a “dial-up modem,” said Lorraine Johannes, a Boeing TSAT manager. But with the new satellites, “the military will have access to data much like what people have with their high-speed Internet connection,” she said.
Currently, transmitting an 8-by-10 digital photo takes about two minutes, she said. With TSAT, it will take less than a second. Also, soldiers in vehicles moving at speeds of up to 45 mph would be able to send and receive data. Right now they would need to stop and erect a satellite dish.
Winning the contract would go a long way to reviving Boeing’s glory days as a satellite maker, Cooning said. “It is a great opportunity for us.”