PARIS — The American “low-cost” approach to space investment, which relies on commercial space firms driving tech investment, has gained favor among some defense procurement officials in Europe. That, in turn, sparked industry concern, particularly in France.
Space and defense are growth areas with “heavy interactivity,” said Philippe Bensussan, chairman and chief executive of Sofradir, a French specialist in military and civil infrared (IR) technology. He noted his company‘s own investment: Sofradir’s U.S. subsidiary launched a sales drive into the space market and hired an executive with contacts in the space sector, Bensussan told Defense News.
But innovation is essential, requiring sustained funding at a time when governments look to the private commercial sector to finance the equipment makers.
Dynamism in the satellite market is in part due to private launch companies such as Elon Musk’s Space Exploration Technologies Corp., known as SpaceX.
The U.S. market is growing, but relies on a model that Bensussan likens to commercial space firms buying equipment off the shelf. They buy equipment from suppliers, which also supply the government, so the latter are already qualified in government programs. Revenue from the government also helps to finance the equipment suppliers, he said. Contracts from NASA, a government space agency, help fund commercial launch companies, for example.
Bensussan fears the model may gain traction in Europe.
But the Direction Générale de l’Armement, French CNES national space agency, and the European Space Agency “must understand they cannot just leverage on the commercial market and not fund technology any more, assuming it would be funded from the commercial market,” he said. “This would be 100 percent wrong.”
“Equipment makers are concerned space primes may expect from them low-price commercial space offers while being unable to take risks and give up long, tedious and expensive qualifications,” Bensussan added.
“It is important European agencies understand that. No one is going to fund technology that will take 10 years to develop, with return on investment 15 years away.”
In his words, the concern is that European governments will “back off and expect the private sector to back us,” he said. A budgetary crunch in Europe lies behind that reluctance to fund research and development.
Overall in the U.S., Sofradir has “won a few nice programs” in the defense sector but sales are slow.
In Europe, Sofradir has asked the DGA to write into the next multi-year military budget law key projects which would help the company develop IR technology. It remains to be seen if the procurement office will include those systems in the six-year budget law starting in 2020.
Bensussan declined to specify the wished-for programs, but it was clear those would rely heavily on technology for large-format space observation. A clue came from the importance he attached to the need for government funding for deep space telescopes in the European Southern Observatory, or ESO, based in Chile.
Those extra large telescopes call for a large number of IR detectors, but there is also difficulty to raise funds for astronomy, he said.
Another project of interest is a European Union €4 billion (US $4.7 billion) fund for microelectronics under the EU’s rules for Important Project of Common European Interest, he said. The rules govern EU funding for research and development, and capital expenditure. Germany is keen to commit funding for the EU microelectronics program, but France suffers from budgetary problems and is exploring creative ways of raising funding, while observing — in principle at least — a drive to slash the national deficit, he said.
On a French next-generation military spy satellite to replace the Helios program, Sofradir is working on feasibility studies, but a program is needed to start R&D and that has yet to be launched, he said. It is unclear whether it will be a large or small satellite and whether there will be IR sensors on board.
France spends an annual €700 million on military R&D, of which €200 million is tied to the nuclear deterrent, leaving only €500 for conventional weapons systems, he said.
Sofradir expects 2017 net profit to be stable in the double digits on forecast sales of €230 million-€240 million, up from 2016 sales of €220 million. The company is investing in new equipment to boost production. The U.S. accounts for some €10 million of sales, with the company looking to increase that.
Defense accounts for a little less than 70 percent of sales, with the rest from the civil sector, supplied by its Ulis subsidiary.
Sofradir designs and builds chips for short-, medium- and long-wave IR sensors, which are fitted to equipment such as night vision goggles, IR cameras and targeting systems. The company is a joint venture of Safran and Thales.
