Boeing, SpaceX satellite deals provide boost to Southland
In an estimated $1-billion boost to the Southland aerospace industry, satellite maker Boeing Co. and rocket firm Space Exploration Technologies Corp., better known as SpaceX, announced plans to build and launch four satellites for telecommunications firms in Mexico and Hong Kong.
The companies’ joint satellite order will help preserve high-paying engineering jobs in the South Bay and throws a lifeline to hundreds of smaller aerospace suppliers feeling an economic pinch with Pentagon and NASA budget cuts on the horizon.
In El Segundo, Boeing will build four minivan-size communication satellites in its million-square-foot complex near Los Angeles International Airport. In nearby Hawthorne, SpaceX makes its 18-story Falcon 9 rockets at a sprawling facility that once housed construction on 747 jumbo jet fuselage sections.
The rocket and satellites will be shipped to SpaceX’s launch pad in Cape Canaveral, Fla., for launch in late 2014 or early 2015, the companies said.
The deals, announced Tuesday, were made in a joint procurement by regional satellite operators Asia Broadcast Satellite of Hong Kong and Satélites Mexicanos of Mexico City.
“Winning an international contract like this really speaks to the competitiveness and innovation of Southern California,” said Elon Musk, SpaceX’s chief executive and chief technology officer. “It means about $1 billion in revenue will come to L.A.”
Craig R. Cooning, general manager of Boeing’s space and intelligence systems, also recognized the contracts’ importance to the region.
“We’re two companies that have been adaptive to the changing marketplace,” he said.
For Boeing, the deal represents the first sale of its new 702SP satellite. The spacecraft is a smaller version of the 702HP satellite that the company has sold to the Pentagon and communications giants such as DirecTV.
At launch time, the 702SP will weigh just under 4,000 pounds, as opposed to 13,000 pounds for the larger satellite.
In an industry where companies are charged for rocket fuel and lifting power based on the weight of a spacecraft, the weight savings means a lot, Cooning said.
“The 702SP satellite design underscores Boeing’s promise to make our customer’s mission our mission,” he said.
The new satellites will provide high-definition video, communications and data services for Asia Broadcast Satellite and Satélites Mexicanos to serve the Atlantic, Pacific and Indian ocean regions.
The first satellite will take Boeing about three years to make at the company’s complex in El Segundo, where about 5,200 employees work. Boeing did not disclose the price of the contract.
Jay Gullish, a space and telecommunications analyst at Futron Corp., a Bethesda, Md., firm that tracks the industry, estimates that the deals should result in about $1 billion in new work.
“In recent years, Boeing has been aggressive with working with customers and making deals,” he said. “This deal for four satellites is really nice for them. It keeps production lines running and enables Boeing to establish multi-year agreements with their suppliers.”
Boeing has more than 200 suppliers — most of them in Southern California — that are expected to be involved in the satellite program. The company’s backlog of satellites is now 32, excluding classified work for the government.
The deal with Asia Broadcast Satellite and Satélites Mexicanos is also beneficial for Boeing and SpaceX because it is with international customers, Gullish said. If successful, the deal could lead to future contracts as demand grows for Internet connections and satellite television in regions such as Asia and Latin America.
“Asia and Latin America represent two of the world’s hottest markets for commercial satellite operators,” SpaceX’s Musk said.
The current contract calls for the four telecommunications satellites to be launched more than 22,000 miles from Earth into orbit in two launches from Cape Canaveral.
In a unique arrangement, two satellites will be launched together on the Falcon 9. It provides savings for the customer, Musk said.
“It’s the latest launch to join our manifest,” he said. “We’re going up against much larger, highly subsidized companies overseas and still bringing the contracts home.”
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