NY Times. A Blast Heard Across an Aerospace Industry
nytimes.com
August 31, 1998
By SETH SCHIESEL
hen a Delta 3 rocket made by Boeing Co. exploded shortly
after takeoff last Wednesday night from Cape Canaveral, Fla.,
it was a setback not only for Boeing, but also for Hughes Electronics,
which made the advanced communications satellite on board, and for
Panamsat Corp., which intended to use the satellite.
The accident also appeared to slow the pace of the U.S. aerospace
industry in its race to become the dominant global player in the
fast-growing market for commercial satellite launchings.
The cause of the explosion, which occurred less than 90 seconds after
liftoff, remained undetermined over the weekend as investigators from
Boeing and Hughes arrived at Cape Canaveral from California, where
both companies' space operations are based. Boeing executives said
it could take months for the investigation to yield definitive
conclusions.
The launching was to begin the maiden voyage for the Delta 3, the
latest member of a family of rockets that have been in use since the
1960s. It is unclear whether the Delta 3's novelty will compound the
difficulty of finding the cause of the accident. But it is clear that the
accident comes at a particularly unfortunate moment for Boeing and
for the U.S. aerospace business.
That is because U.S. companies are still adapting to a commercial
space market that was changed radically by the Challenger space
shuttle disaster in 1986, the downsizing of the American military after
the Cold War and the burgeoning demand for satellite-based
electronic entertainment and communications services around the
world.
"The Americans are just beginning to come back now," said
Frederick Landman, chief executive of Panamsat, one of the world's
leading private satellite operators, referring to the U.S. launching
business. "They will eventually get there."
"There" is in a position to seriously challenge Arianespace, the
European space agency, for leadership in commercial satellite
launching.
The commercial satellite business has three main types of companies:
builders, launchers and operators. Hughes, a unit of General Motors
Corp., is the world's biggest builder of geostationary commercial
satellites -- the type of spacecraft that orbit above a fixed point on the
earth's surface and are the primary form of communications satellite in
use today.
Hughes' biggest domestic competitor is Space Systems/Loral, while
Europe's largest makers of commercial satellites include Aerospatiale
and Matra Marconi. Among other American builders, TRW and
Lockheed Martin are best known for military satellites, although
Lockheed Martin in particular is making a push into the commercial
market.
While U.S. companies dominate the making of commercial satellites,
with as much as 70 percent of the market, they have not fared as well
in the market for putting satellites into orbit.
U.S. commercial launching sales grew from $295 million in 1993 to
$940 million in 1997, according to the Aerospace Industries
Association, a trade group in Washington. But that is less than half of
the worldwide market of $2.6 billion, where Arianespace is the
biggest force. In fact, Panamsat, which is based in Greenwich, Conn.,
and is controlled by Hughes, plans to use Arianespace for a launching
in French Guiana next month.
Lockheed Martin is also one of the two main U.S. satellite launching
companies, along with Boeing. The Delta 3 was intended to compete
against Lockheed Martin's Atlas rocket in carrying bigger commercial
payloads into geostationary orbit.
The U.S. launchers must also compete against commercial launching
companies in China, Japan, Russia and Ukraine, though many of the
main Russian launching operations have formed joint ventures with
American companies.
At the end of the commercial satellite food chain are private
companies that actually operate satellites and sell and use their
services, such as Panamsat, and government satellite agencies like
Intelsat.
According to Landman of Panamsat, who spends much of his time
shopping and negotiating for deals with satellite builders and
launchers, the relative weakness of American companies in launching
commercial satellites has its roots in the early 1980s, when NASA's
space shuttle was touted as the new way to get commercial payloads
off the earth.
As the space shuttle proved itself, American launching companies
focused almost exclusively on the military market. But after the
Challenger explosion, the Reagan administration severely cut back on
the shuttle's use for commercial purposes, arguing that it was not
worth risking lives for tasks that could be performed by expendable
rockets. The American companies, as a result, were not as prepared
as European companies, 36 of which had founded Arianespace in
1980 with the idea of primarily serving the commercial market.
Changing focus from military to commercial applications, of course,
has become imperative for American aerospace companies of all
sorts. Last year, for the first time, the commercial space business in
the United States was larger than the market for military aircraft --
$30.6 billion versus $30.5 billion -- according to the trade group.
The new sense of competitive urgency extends to satellite operators
as well as satellite makers. Some companies test a new rocket with a
dummy payload to make sure that it works correctly. But Boeing
opted to use a live payload, the Galaxy X satellite made by Hughes, in
the launching of the Delta 3 last week. And Panamsat was ready to
be the extraterrestrial guinea pig, because it wants to encourage the
development of new rockets.
Last week's entire $225 million mission was insured. Last fall,
Panamsat opened a policy worth more than $3 billion with an
insurance group led by Space Machine Advisors, based in
Greenwich, Conn. Referring to a Space Machine Advisors executive
who was at the attempted launching last week, a Panamsat
spokesman said, "He was the one with the real pale look on his face."
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