Canada in danger of losing space tech secrets to U.S.

By April 2007, MacDonald Dettwiler and Associates had started, quietly, to shop around its space and defence assets, approaching seven potential purchasers.


David Pugliese , Canwest News Service
Published: Monday, March 10, 2008

On the market was the cream of Canada's space industry. Not only was the Richmond, B.C. firm offering the Radarsat-2 satellite, the most advanced spacecraft of its kind in the world, but also a host of other technologies, including the Canadarm, robot systems that could refuel satellites in orbit, and new-generation radar and optical-imaging research.
When the Wall Street Journal broke the story in early June, MDA denied it had put its space assets on the market. In fact it had done just that, attracting interest from defence and aerospace firms including Alliant Techsystems Inc., of Edina, Minn., America's largest manufacturer of ammunition. Alliant also produces cluster bombs and the Spider ``anti-personnel system,'' a weapon critics say should be banned under the 1997 Canadian-led treaty outlawing landmines.
Alliant, with 17,000 employees, is also a leader in space. Its solid fuel rocket motors account for 75 per cent of all such systems sold to the U.S. and it has also played a key role in a Pentagon plan that envisions using satellites and other spacecraft to attack targets anywhere in the world.
Alliant's sources of revenue, about $4 billion U.S. a year, have been solid, but since it has a virtual monopoly in its specific defence and space markets, it was considered to have limited growth potential.
Alliant executives, including CEO Dan Murphy, concluded that spy satellites were the way to go.
MDA is one of the leading companies in the world when it comes to designing and building small satellites, also known as `smallsats.'
The U.S. military already has been using Radarsat-1 data. Radarsat-2, which can take images from 800 kilometres above the earth that show details as fine as hydro lines, would provide even more capability for military users.
So far the U.S. military has set aside at least $300 million for smallsat research, but the market in the future could be worth billions.
Equally important to Alliant is the new-generation optical and radar- satellite technology that MDA has developed. Though still top-secret, they are said to rival sensors on board America's multibillion-dollar spy satellites and come at a much cheaper price.
An Alliant executive has said being able to export that technology and use it to win a major spy satellite contract within the next two to three years is the key to the MDA deal.
In late April MDA rebuffed Alliant's first expression of interest, believed to be for about $1 billion. Last fall, Alliant and two other firms were back courting MDA, with the Minnesota company convincing MacDonald Dettwiler on Dec. 17 that its offer of $1.325 billion in cash was the best deal.
For MDA's management, under pressure from shareholders for bigger dividends, the move made sense. In addition, company officials said it was too difficult to break into the U.S. space military market.
Richard Stoneman, a market analyst who watches MDA for Dundee Securities in Toronto, says he is puzzled by that claim. He notes that other Canadian aerospace and defence firms, such as CAE of Montreal, have successfully established themselves in the American military market. In addition, MDA's U.S.- based companies have already been awarded work on classified Pentagon programs.

Von:, 10.03.2008

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