Interview: Lockheed chief sees flat sales in space programs
Reuters English News Service 12/16/02
author: Andrea Shalal-Esa
(C) Reuters Limited 2001.
BETHESDA, Maryland, Dec 16 (Reuters) - Lockheed Martin Corp. (LMT) on Monday said it expects sales in its
commercial and military space division to remain flat in 2002 at the $6.8 billion it reported for 2001, with no near-term
recovery seen in the difficult commercial satellite market.
Lockheed President and Chief Operating Officer Robert Stevens told Reuters the company was nearing completion of a
year-long review of its commercial satellite business, which it began with an eye to a possible sale of the assets, given
market overcapacity and weakening demand.
But Stevens said there were only five big players in the commercial satellite market, and a sale of the operation -- or a
decision to shut it down entirely -- seemed unlikely at this point since all companies were facing similar problems.[my bold]
Instead, he said Lockheed officials had focused on cutting costs and reducing the break-even point down to manufacture
of two to three satellites a year, instead of the six initially envisioned.
A major downturn in global telecommunications industry had dramatically changed the outlook for an industry many
companies had hoped would provide strong growth in this decade.
The Virginia-based Teal Group said it expected a total of 1,547 payloads proposed for launch to Earth orbit in the next 10
years, down significantly from an earlier expected level of 2,160 payloads.
But Stevens said his space operations team was seeing some good results.
"There is some reason to continue to explore how to get good value out of the business, rather than just turn the lights out
and tell everybody to go home," Stevens said. "That continues to be an alternative, but I don't think it's a very promising
alternative based on pure value."
MARKET SEEN CHALLENGING
He noted that Lockheed saw some potential for using its A-2100 commercial satellite technology to help meet demand for
some U.S. government contracts.
He said the market would remain challenging in the near-term, and there was no evidence of any short-term upturn.
"In the long term, there may show some promise in the intersection of the commercial business with some government
content," he said.
The commercial market for launch vehicles to deliver satellites to space has dried up along with the market for satellites,
and Lockheed had been lobbying the U.S. government to increase funding for military launches, Stevens said.
He noted that Lockheed and Boeing Co (BA) had developed their next-generation Atlas 5 and Delta 4 rockets for the
Air Force's Evolved Expandable Launch Vehicle (EELV) program with just $1 billion in funding from the U.S. military.
Given the U.S. government's interest in ensuring access to space at any time, it was not unreasonable to look for additional
funding of the project, especially since there was scant demand for commercial launches that could help defray the cost of
military launches.
He said his firm was in discussions with the Air Force about securing an additional $1 billion in funding for the fixed costs
of the EELV program over a span of some time due to the unanticipated weakness in the commercial launch market.
"We think there is a good case to be made, and we think the government frankly is listening and responding to that good
case," Stevens said.
He said it was imperative to maintain the quality of the launch program, noting the failure last week of an Ariane-5 rocket
built by the Arianespace consortium of European aerospace companies.
That failure could lead to some Ariane customers re-examining their options, and possibly choosing Lockheed's Atlas 5
launcher, Stevens said.
He said demand for military satellites was expected to remain strong, especially given a commitment to improve national
security and homeland defense after the Sept. 11 terror attacks. |
