The troubling shrinking of Canada’s space industry
The shrink, Canadianwith potentiallyspace industry seriousis about conse-to quences for national security and the economy. Later today, shareholders in Com Dev International will decide whether to sell the Canadian satellite- parts manufacturersis. to Honey well, a U.S based aerospace and electronics conglomerate.
Com Dev is the second largest space company in Canada, but only because the largest — Macdonald Dettwiler, which built the iconic Canadarm — was kept here by the Harper government.
Macdonald Dettwiler is based in Richmond, B.C. Its principal product is Radarsat-2, a satellite that produces detailed images of the Earth’s surface even at night and through clouds. The images are used for a wide variety of purposes, including military reconnaissance, agriculture, forest-fire fighting and disaster relief. RadarSat-2 images are used by many government departments and agencies and also generate large commercial sales.
In 2008, U.S.-based Alliant Techsystems had arranged to buy Macdonald Dettwiler. It was doing so because, as a U.S. company, it would have access to the large and lucrative U.S. military market for satellite images — in ways that a Canadian company could not. The Harper government blocked the proposed sale under the Investment Canada Act, on the basis that it was not of “net benefit” to the country. In doing so, it cited RadarSat-2’s importance to Cana-da’s security and sovereignty The Harper government then contributed $706 million to the construction of three new satellites that are together called RadarSat Constellation. The investment has enabled Macdonald Dettwiler to continue to thrive as a Canadian company. Com Dev, which is based in Cambridge, Ont., makes specialized hardware that is currently found on nearly a thousand satellites. Its customers include the Canadian Space Agency and the Department of National Defence, and it played an important role in the development and construction of this country’s newest military satellite — Sapphire — which is used to track other satellites, space debris, rockets and missiles. Honeywell announced its plans to purchase Com Dev in November 2015. The proposed purchase is driven, again, by the improved access to the U.S. military market that would result from the company becoming American. Unfortunately, the proposed price of $455 million falls below the current $600-million threshold for review under the “net benefit” test in the Investment Canada Act. As a result, the new Liberal government is not required to subject the Com Dev sale to that analy-sis However, the Harper government, after blocking the Macdonald Dettwiler sale, added a more precise section to the Investment Canada Act that allows Ottawa to scrutinize any foreign takeover that might injure national security. The need for such a review should have been obvious, since Com Dev is just as important to Canadian national security as Macdonald Dettwiler. In the 21st century, keeping track of the thousands of satellites above us is just as crucial as monitoring shipping along our coasts. To become reliant on foreign parts for our military satellites seems unwise at best.
After Honeywell announced its proposed acquisition, the Liberal government had 45 days to decide whether to conduct a national security review. Surprisingly, it did nothing. As a result, Canada will almost certainly lose a world-leading satellite company.
In addition to the national security risk, the economic consequences of the sale could be significant. For globally, the space industry is in a period of rapid technological change and truly massive opportunity.
For example, last month Los Angelesbased SpaceX landed the first stage of a Falcon-9 rocket — upright, undamaged and reusable — within minutes of using it to launch 11 satellites. Last week, NASA contracted three U.S. companies — SpaceX, Orbital ATK and Sierra Nevada Corporation — to make at least six cargo flights each to the International Space Station.
And then there is this: Last year, the global satellite industry generated revenues of $200 billion annually.
Yet Canada is about to lose a world-class satellite company, without even a murmur from our new federal government.