Sener eyes larger stake in satellite component market

WASHINGTON — Spanish space hardware supplier Sener hopes to provide more equipment to satellite manufacturers thanks to its $93 million acquisition of Tryo Aerospace, but faces challenging market conditions as satellite operators continue to order fewer telecom spacecraft.

Pressure from the White House on U.S. satellite manufacturers to “buy American” is also making it difficult, but not impossible, to contend as a European company, according to José Julián Echevarría, Sener’s aerospace managing director.

Sener is supplying the docking system for Sierra Nevada Corp.’s Dream Chaser spaceplane, a release mechanism for the European Space Agency’s ExoMars rover, and hardware for the agency’s Euclid telescope.

Around 90 to 95 percent of Sener’s space revenue comes from civil space missions, mainly with ESA, and to a lesser extent other agencies like NASA and Roscosmos, Echevarría said.

Sener purchased Tryo Aerospace in June from private equity fund Alantra and minority investors for 80 million euros, acting on a goal set five to six years ago to play a larger role in the commercial space market.

In an interview, Echevarría said Sener bought Tryo to make an expansion from civil space into commercial satellites that had thus far proven difficult.

“There are some entry barriers to the commercial space market. Basically, you need to have heritage in that market, and we considered the approach of developing our own product as not fast enough to grow at the speed we were targeting,” he said.

Echevarría said Tryo was already a frequent subcontractor to Sener as the company built spacecraft antennas and pointing mechanisms.

“One year ago we were more on the outside of the satellite; we were not able to complete the communication chain,” he said. “We were subcontracting to Tryo for inside the satellite with all the equipment, amplifiers, filters, and so on. That is what Tryo brings to Sener.”

Sener also wants to leverage Tryo to mature technology from government space missions into commercially viable products, he said.  

Tryo Aerospace Sener
Try Aerospace was a frequent subcontractor to Sener, and has experience in building commercial satellite hardware that Sener hopes to leverage. Credit: Sener.

Echevarría acknowledged that weak demand for geostationary communications satellites could present a challenge to Sener’s ambitions. Satellite operators ordered just seven such satellites last year (eight if you include the un-competed Skynet-6A satellite Britain’s Ministry of Defense procured from Airbus), and are hovering at 10 so far in 2018. Up until a few years ago, a typical year had 20 or more orders.

Echevarría said Sener could have near-term satellite work from Spanish military satellite operator Hisdesat, which is soon to order two next-generation replacement satellites.

“We have 5 percent of Hisdesat and we are on the board, so as you can imagine we are following very actively this program because they have to replace these satellites,” he said. “And they are Spanish satellites, so in that sense, it’s a push for the Spanish companies.”

Of the six companies that build most of the world’s commercial communications satellites, four — Boeing, Maxar Technologies, Lockheed Martin and Northrop Grumman — are based in the United States. The other two, Thales Alenia Space and Airbus Defence and Space, are in Europe.

Echevarría said Sener faces the double-edged sword of U.S. policy. On one side, U.S. International Traffic in Arms Regulations (ITAR) drove non-U.S. manufacturers to choose non-U.S. suppliers for spacecraft parts in order to avoid export-control headaches. On the other side, pressure from U.S. President Donald Trump to buy American “is something that is more on the customers’ minds” when they are U.S.-based, he said.

“Trump’s policy is not helping, while ITAR policy is helping foreign companies,” he said.

Through Tryo, Sener gained a 20 percent stake in the U.S. microwave component company Mega Industries LLC. Echevarría said he recently visited the company in Maine to assess ways to work together and penetrate the U.S. market, but that those efforts will take time.

“It’s not that it is becoming impossible [to sell into the U.S.], but we are moving from having a huge capability to having actual products. If you have products that are state of the art and there is a win-win situation with a customer — in the U.S. or Europe or Japan — that is the leverage we try to use.”

Echevarría said Sener is open to more acquisitions to further grow its aerospace business.

In 2017 Sener generated 767 million euros and an operating profit of 22 million euros. Its aerospace division, which is 60 percent space, 30 percent defense and 10 percent aero, generated 75 million euros of that revenue.