After a ground-up restructuring, EADS Space is targeting new opportunities in European missile defence systems
Until two years ago, EADS's Space division looked like a doomed spacecraft, lacking control or direction and heading for oblivion as worldwide demand for commercial satellite launches plummeted. Now the business has been turned around and is on course to break even for the first time in 2004, after losing a combined €890 million ($1.08 billion) over three years, including €484 million in restructuring charges.
The business inherited by EADS in 2000 comprised the national space assets of France, Germany and Spain, along with those of the UK, where Matra had jointly owned Astrium (formerly Matra Marconi Space) with BAE Systems. Work was duplicated at all four sites and none were making money. "They were all being supported by their governments as jewels in the crown," says EADS Space chief executive Francois Auque. "It didn't make any sense."
Auque's radical surgery involved creating centres of excellence for eight main activities, from composites to antennas, based on what he calls the "Airbus model". Work was pulled from some centres and concentrated in others. This meant, for example, that Astrium in the UK lost its launchers business as well as its composites work. But it was given total responsibility for antennas, which had been split between the UK and Germany, as well as for telecommunications payloads and military satellites.
At the same time, three new companies were created:
* EADS Space Transportation for launchers and space infrastructure, based in France and Germany. It is prime contractor on Ariane 5, French ballistic missiles and for the Columbus laboratory and other elements of the International Space Station.
* EADS Astrium for satellites, based in France, Germany and the UK, after EADS bought out BAE's 25% stake.
* EADS Space Services to manage telecommunications contracts, including running the UK defence ministry's Skynet 5 satellite communications system.
EADS Casa Espacio continues as a standalone entity while EADS Space has 90% and 63% stakes, respectively, in two French companies: Sodern, a specialist in optronics; and Cilas, a major player in the lasers sector.
Efficiency increase
The rationalisation saw staff numbers fall by a quarter over two years to around 12,000 while sales rose slightly to €2.4 billion in 2003 (including 100% of Astrium), "it gave us a huge increase in efficiency," says Auque. Transferring activities out of one country altogether has had its drawbacks, Auque admits, particularly on military projects. For example, Skynet 5 satellites for the UK are now being assembled at Toulouse (the French factory being the centre of competence).
But, "the UK customer accepts this solution as it is less expensive," he says. The French customers are a different proposition. Auque admits a UK-designed satellite will never win a contract from Paris against a bid from national champion Alcatel.
EADS Space has notched up a number of recent contract successes. In May, Arianespace - which operates the Ariane and in which EADS Space has a 28.6% stake - signed a €3 billion deal for 30 Ariane 5 launch vehicles. The programme was under threat after the failed launch in 2002 of the Ariane 5 ECA variant, but was secured after European Space Agency states agreed in May 2003 to provide €500 million to sustain launcher development.
But it is the military field that offers some of the most interesting opportunities. Auque says one of EADS's key aims is to boost the development of a European missile defence capacity. EADS Space Transportation is prime contractor for the ballistic missiles in France's nuclear deterrent force, including its submarine-launched M45 and M51.
"We are the only company in Europe that knows what a ballistic missile is and has the whole spread of technologies necessary for missile defence," he says.
MURDO MORRISON & ROB COPPINGER / LONDON
Source: Flight International
