Northern Sky Research

Clouds above Two Launch Pads

Sep 6th, 2011

In NSR’s recently released Global Satellite Manufacturing and Launch Markets (GSMLM) report, a possible GEO Launcher over-supply, and thus the return to strong competition, was mentioned as a possibility in the launch market. However, recent developments from ILS/Krunichev and SpaceX may end up limiting the supply and the corresponding competition.

Krunichev, the Proton manufacturer, recently invested heavily into its Proton manufacturing chain. It acquired several companies in the value-chain and now controls 70% of the manufacturing. Plus, they created a "unified quality management system", invested in the production line, and increased and retooled the production facilities.

However, in December 2010, a Proton failed and destroyed 3 Glonass-M satellites; and in February 2011 its Rockot failed to orbit a Russian EO military satellite. To explain those failures, the increased pace of manufacturing and launching was said to affect the work quality. Several managers were "laid-off", including Roscosmos’ head. This obviously did not solve the problem.

In August 18, a Proton Breeze-M placed a communications satellite into a bad orbit. This was followed in August 24 by a very surprising failure of a Soyuz-U. These failures are now said to be the consequences of human error and are explained by a lack of quality control and of the general quality and remuneration of the Russian space workforce. Several measures have been announced, such as the creation of a special committee dedicated to quality control and the dismissal of the responsible individuals (penal punishments are even being considered)...but none of these measures addresses the systemic problem of workforce quality.

Until we know more about the real state of the Russian Space Industry and its capacity to provide the quality expected in the space sector, the picture is bleak for ILS/Krunichev, and the supply of a reliable GEO launcher is not certain for several years. For now, Proton reliability is decreasing and besides the lack of confidence from some consumers, insurers may also increase their rates.

Concerning SpaceX, NSR noted the company’s impressive achievements and equally impressive backlog in the GSMLM report. However, NSR clearly pointed out the strong launch rhythm that SpaceX will have to sustain starting in 2012 amidst the rocket’s youth. SpaceX, facing many commitments, decided to gather several payloads into one launch in November 2011, increasing both the risk likelihood and impact. Together with the Dragon capsule, which will be tested, SpaceX will launch 2 ORBCOMM satellites (if NASA agrees).  Beside the risk related to this single launch, this behavior could be seen as a sign of stress for SpaceX, which translates into a lack of time. This is generally an ingredient for failure.

Bottom Line

Bad developments aren’t certain, and NSR believes SpaceX and ILS may succeed. Supply of GEO-launchers may then become more than sufficient as explained in GSMLM, and the strong competition may finally happen, lowering prices. The next months will be critical for both companies and for the launch market as a whole.
Arianespace, whose product strength is its reliability, could take advantage of a scenario where ILS and SpaceX have difficulties. However, it has to be noted that the Russian workforce plays a major role in the day-to-day operations of the European Soyuz and may thus share the same “quality” issues that could lead to launch failures.

Information for this article was extracted from NSR's report Global Satellite Manufacturing and Launch Markets