May 21, 2014

UK’s Space Growth Plan Ripe with Opportunities for Thales Alenia Space

Estimated Article Reading Time: 3 min.

[Via Satellite 05-21-2014, By Caleb Henry] Thales Alenia Space is confident that there is room to grow its business in the United Kingdom. News of the company’s decision to establish a subsidiary in the U.K. came directly after the British government outlined its Space Growth Action Plan, which aims to more than quadruple space industry revenue between now and 2030. Martin Gee, the recently appointed CEO of Thales Alenia Space U.K. explained to Via Satellite why he has high hopes for business in the country.

“It comes from an overall government ambition to have space related revenue of 40 billion euros by 2030; currently it is at about 9 billion. That ambition to make space such a key part of industry here in the U.K. is obviously creating a good environment for [the] space industry, and that goes across the board,” he said.

Gee added that Thales Alenia Space is looking to partner with smaller U.K-based companies and has already reached out to many of them both to leverage their strengths and build the company’s new presence in the country.

“There are big players here in the U.K. and also there is a push for the Small and Medium Enterprises (SME), so what we see is that there is a good scope for a second prime,” he said.

Though not specific to the satellite industry, UKspace, a trade association, reported that space industry sales grew from roughly $1 billion to about $1.7 billion between 2000 and 2008. Since then, however, growth has been relatively flat. The U.K. government plans to invest approximately $2 billion from 2013 to 2018 in the European Space Agency (ESA) as part of its plan to reinvigorate growth. A new European Center for Space Applications and Telecommunications (ECSAT) is planned at the Harwell Science, Innovation and Business Campus in Oxfordshire, which is the same location Thales Alenia Space chose to set up its subsidiary. Rutherford Appleton Laboratories, a national scientific research laboratory, is also expanding.

“ECSAT will support activities related to telecommunications, integrated applications, climate change, technology and science,” said Rachel Villain, principal advisor at Euroconsult. “These fields of investment fit well with Thales Alenia Space’s portfolio of capabilities. With a U.K. subsidiary, it will compete with Astrium Satellites (now part of Airbus Defence and Space) to get a share of the geographic return of U.K. investment in ESA.”

Gee acknowledged that his company will compete with Airbus, which has been in the U.K. for several years, but also highlighted opportunities for them to work together.

“We [Thales Alenia Space and Airbus Defence and Space] have always been competitors, however we have also been complimentary and have worked together on many programs,” said Gee. “On some programs, for example institutional programs, we work together, and on others, for example commercial communications satellites, we have been direct competitors, but even in this area there are examples where we have worked together.”

ESA’s Neosat program is an example of prime-collaboration. Thales Alenia Space and Airbus Defence and Space are working together to build the space agency’s next generation satellite platform with the goal of reducing the cost of a satellite in orbit 30 percent by the end of the decade. ESA wants European satellite manufacturers to gain half of the world’s satellite communications market from 2018 to 2030. This presents a good opportunity for Thales Alenia Space, but Gee expects much of the growth for the industry at large to come from the application side.

“It’s not all as a result of ESA funding and U.K. space agency funding; it’s both exports, and expanding the business,” he said. “A major part of everybody’s lives now is related to space, whether it be linked to GPS systems, telecom systems, [or] Earth observation systems; in the future there will be more inter-relationships between these and applications associated with them. More will come and this is where there will be a big growth.”

Gee said it is “too early to tell” if there are acquisition opportunities in the U.K., despite how keen the company is on fostering partnerships with SMEs. In addition to new partnerships, the subsidiary will also pull from the larger Thales Group. For now Thales Alenia Space is focusing on its core business, but he added that in the future, acquisitions are something that cannot be excluded.