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May 13, 2003
Another casualty of the Internet Bubble is the space satellite manufacturing business. Several large, well funded firms (Lockheed Martin, Alcatel Space, Astrium, Boeing Satellite Systems Inc., and Loral Space & Communications Ltd.) geared up in the late 1990s for a future that would see 50-60 new satellites ordered a year. But the collapse of the Internet and communications markets produced the current reduced demand for only 15-20 satellites a year. Each bird takes 24-30 months to design and build and costs about $100 million each. Launching costs $25-60 million (depending on which launch operator you use and insurance costs.) It was thought that there would be some consolidation, because layoffs and other cutbacks can only go so far to deal with the surplus capacity. But the satellite building industry is seeing growth in the next few years, particularly from the Department of Defense, which is suffering a severe shortage of satellite communications capacity. But there is still some surplus commercial capacity and that may be used for several years rather than build more military communications birds.
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