Patrick DeWitt has ridden the ups and downs of the satellite manufacturing industry throughout his nearly 35 years at Space Systems/Loral (SS/L). Now he has led SS/L to the top of the manufacturing world after navigating the company through the downturn in the early part of this decade.

DeWitt, CEO of SS/L, has held management positions with the company and its predecessor organizations since joining Western Development Labs of Ford Aerospace in 1973 as a financial analyst. While keeping a close eye on the bottom line through the latest industry slump and the concurrent bankruptcy of parent company Loral Space & Communications, he retained key staff that were critical to SS/L’s resurgence in the ensuing market recovery. His efforts were rewarded in 2006, when SS/L captured seven manufacturing contracts, the most for the company since the industry heyday in the mid-1990s.
“We all went through an unprecedented downturn because of lack of business opportunities,” DeWitt says. “My focus was to keep the personnel necessary to execute the satellite contracts we already had and to retain the skills needed to rebuild our capacity once the upside of the business cycle occurred.
“SS/L is an engineering company and will always be an engineering company,” he says. “I’m not an engineer, but I’m a believer in this company. My foundation is the knowledge that I have top-flight engineers who counsel me from the standpoint of performance and reliability. My job is to look out for the business.”
SS/L has carved out its prominent role in the manufacturing sector by focusing on high-power spacecraft and by helping startup companies maneuver the difficult world of procurement and launch. Among the seven contracts won by SS/L in 2007 were the Sirius FM-5 satellite for Sirius Satellite Radio. SS/L manufactured Sirius’ four previous spacecraft, and returning to SS/L for a more advanced satellite was a demonstration of the close relationship SS/L’s staff had built with Sirius.
SS/L also received the contract to build the TerreStar-2 satellite for TerreStar Networks Inc. The satellite, along with TerreStar-1 already under construction at SS/L, will work with an ancillary terrestrial component (ATC) system to form the network for TerreStar’s mobile satellite services (MSS) business.
Under DeWitt’s leadership, SS/L also expanded its staff by nearly 730 people in 2006 to help meet growing demand, and he expects to add another 300 to 400 in 2007. DeWitt discussed his recovery efforts and his vision of SS/L’s future in the satellite manufacturing sector with Via Satellite Editor Jason Bates.

Via Satellite: What do you consider to be SS/L’s biggest achievements in 2006?

DeWitt: The numbers speak for themselves. We won seven awards for a broad range of communications satellites, including satellites for direct broadcast, FSS (Fixed Satellite Services) and new applications like MSS. Five of the satellites we built were successfully launched in 2006. These included one of the world’s first all Ka-band satellites specifically for broadband Internet and spacecraft designed to expand HDTV and IPTV distribution. It was a strong year.

Via Satellite: What factors contributed to this success?

DeWitt: It is the people that make Space Systems/Loral a great company. We have a stable and cohesive culture and everyone at the company is passionate about what they do. We have an extraordinary team that puts out an extraordinary effort. That is what kept the company going during the downturn when we had to continue to deliver high-quality satellites with fewer people. Now the efficiencies put in place during the lean years make us more competitive than ever. We don’t sell satellites. We sell people with the skills to design and build satellites and the passion to make sure that our customers are satisfied every step of the way.

Via Satellite: What steps did you take to manage SS/L through the bankruptcy and industry downturn to have  the company positioned for the recovery?

DeWitt: SS/L has the most experienced management team in the industry. We have a very deep understanding of what is required to be successful in this marketplace. In 2002 it was apparent there was going to be a major slowdown in the satellite operators’ business plans. We put together a plan to match our capacity to the market reality and we set two objectives. We had to be able to execute on our existing satellite contracts and we had to be able to quickly rebuild our capacity. We followed through and put in place mechanisms to retain those personnel who would allow us to achieve these objectives.
An example that comes to mind is a group of very gifted individuals who have the skills to develop solutions for end-to-end communications systems. While we could not see the immediate need for that, we maintained 12 people within the company who had low existing workloads but who we knew would be critical when we came out of the downturn. These people were key in creating the solutions for ICO and TerreStar that allowed us to be successful in winning those programs.
Likewise, when planning to manage through Loral’s Chapter 11 process, we instituted a retention program covering one-third of all employees that allowed them to maintain their focus and dedication to the company.
I remember when we had to go to court to get the retention program approved, the judge and attorney said they had never seen a company our size ask for so many people to be retained. We explained this was a unique company, and there was no point in keeping a propulsion engineer on a program if we didn’t also keep a structural engineer. We convinced the judge, and it was clearly our people who allowed this company to stay successful through the tough times.

Via Satellite: How satisfying has the recovery of SS/L been for you?

DeWitt: I continue to marvel at the success SS/L has had given that it came through such difficult times. Our success is a result of two things. One is the loyalty of our customers, who continue to support us. The other is the dedication and commitment of our staff. It is very rewarding to see how the company has grown to be the leading satellite manufacturing company in the world.

Via Satellite: What is driving the satellite manufacturing industry today?

DeWitt: The replacement market is very strong right now and I expect that will continue. Also, there are a number of new FSS and DBS (direct broadcast satellite) opportunities. Right now the demand for high-definition television is a driving factor for DBS operators. There will also be more demand for MSS satellites with ancillary terrestrial components, and we’re seeing mobile television taking off in Asia and other regions. Satellite broadband and other [Internet protocol] services are also on the uptake.

Via Satellite: How is SS/L capitalizing on the resurgence in the commercial satellite manufacturing sector?

DeWitt: We are packaging existing technologies to meet the needs of new business models. For example, we brought highly efficient ground-based beam forming to the MSS application for ICO and TerreStar.
We also work with startup companies that have to raise money. They need to be able to show investors that their business objectives will be met through solutions based on space-proven, highly reliable technology. I think that our commitment to work with them early on is an important part of our business. Sometimes it takes as much as a year or two before a startup company actually puts us under contract, but we still commit the resources during this process to help them design to performance requirements in order to meet their business objectives.

Via Satellite: Do you consider it riskier for SS/L to work with these startup companies rather than focus on established operators?

DeWitt: We have an unfailing commitment to our existing customer base and we are always anticipating their future needs. Our marketing and advanced systems people are committed to understanding what our customers’ future challenges will be, whether that is two, five or 10 years from now. The ongoing dialogue with existing customers in terms of their future procurement plans doesn’t prevent us from also supporting new customers and new business models.

Via Satellite: How long does the relationship with your customers last?

DeWitt: We view the relationship as lasting for the life of the customer’s business. We are in a constant dialogue with our customers throughout the life of their spacecraft. Whether answering questions or addressing anomalies that may occur, when we sell a satellite, we commit to a lifetime relationship. Every two years we bring in all of our customers for a status update on SS/L and all of our fleet. We always keep our customers informed.

Via Satellite: What are your customers demanding in terms of the size and power of their satellites?

DeWitt: SS/L has always been a leader in high-power satellites. If you look back at the 50-year history of the company, you’ll see that we created a niche in response to market needs. We already build the largest and most powerful spacecraft in the industry, and I expect the need for higher power and more capacity to continue. However, it’s important to realize that our approach is evolutionary, not revolutionary. We always grow our capabilities in ways that minimize risk. I think there will always be market demand for larger more powerful spacecraft, especially for DBS and [digital audio radio service] applications. Mobile ATC operators, such as TerreStar and ICO, also require very large spacecraft primarily for the amount of communications payload carried.

Via Satellite: Will SS/L make any efforts to expand its product line into other areas of the commercial market?

DeWitt: Our primary focus is on spacecraft of about 7 kilowatts and above. We are not all things to all satellite operators. While we carefully assess all opportunities, unless they require something unique that SS/L possesses, we generally do not pursue the lower power segment of the market.

Via Satellite: What makes a satellite operator’s requirements unique?

DeWitt:  It’s typically in the payload. We have some unique capabilities that can provide better performance and/or lower cost. We have expended considerable effort in optimizing spacecraft for mid-class launch services, which can be a lower-cost solution for customers. We have the capability to provide high performance satellites for mid-class launch vehicles, and we also can provide the performance needed for broadcasting, spot beam and broadband

Via Satellite: What impact will the reshaping of the FSS industry and the emergence of new satellite manufacturers have on the industry?

DeWitt: Consolidation is having an impact, but not on the scale predicted. Clearly the merger of Intelsat and PanAmSat has caused the company to readdress its fleet needs because of the efficiencies derived from the consolidation. We saw that with SES Americom, but it was not as severe as some thought it might be. These companies have largely moved through that period already and are looking out another two to three years, where they will continue to grow their markets and require replacement satellites.

Via Satellite: Will SS/L continue to focus mainly on the commercial satellite market or will you try to diversify your customer base to bring in more government work?

DeWitt: SS/L is comfortable in the commercial business. We like our customer base and we like supporting them in their business needs. Our focus on government is primarily in bringing commercial solutions and efficiencies to certain government programs. We feel schedules and cost are very important to governments, and our solutions will meet the needs of some of these programs. That doesn’t mean we have solutions for all programs, but there are some programs where we think our solutions are very adaptable.

Via Satellite: What kind of threat do you see from new satellite manufacturers entering the commercial manufacturing market?

DeWitt: The entry of new players is inevitable and ongoing. However, they are not coming into the areas where we specialize but rather at the lower end of the market. It remains to be seen how long it will take a new entrant to achieve the levels of performance and reliability required in the highly competitive commercial marketplace.

Via Satellite: How difficult has it become to help startups find launch providers as the number of available slots has shrunk?

DeWitt: Clearly in today’s environment, and for a variety of reasons, launch availability is becoming a critical aspect of getting into orbit. Partly this is driven by the reluctance of Atlas and Delta, now under the [United Launch Alliance], to service the commercial sector. Today, you must select a launch provider about two-and-a-half years before your desired launch.

Via Satellite: What are your expectations for the satellite manufacturing market going forward in terms of number of contracts per year?

DeWitt: 2006 was not better than expected; it was what we had anticipated. We thought there would be between 22 and 25 spacecraft in 2006. We booked seven at SS/L and our competitors have comparable bookings. We think 2007 will be similar with between 20 and 25 spacecraft orders. There will obviously be deviations around those numbers, but I think 20 to 25 spacecraft will be the norm going forward.

Via Satellite: What are the plans for SS/L in 2007, especially in light of the Loral Skynet-Telesat merger?

DeWitt: Loral knew that Skynet did not have the scale needed for the kind of marketplace success expected. The company was looking for ways to achieve scale, and with the acquisition of Telesat, it will now be the fourth largest FSS operator in the world.
Skynet now has the wherewithal to be a more successful competitor in the marketplace. Loral’s expectations for SS/L have not changed. We are considered to be a dominant provider of satellites in the market, and we expect continued growth and profitability.