Satellite Companies Confront Supply Chain Challenges in the COVID Era

Over the course of this year, members of Via Satellite and CyberSat’s advisory boards have brought up the topic of supply chains numerous times while talking about some of the challenges facing the satellite industry. We are living in unprecedented times thanks to COVID-19. The satellite industry is a global one, given its technology connects people across the globe. In this feature, we talk to a variety of satellite companies across many parts of the ecosystem about how they have been coping with the new set of challenges, and how their supply chains are holding up.

The Challenges to Mitigating Disruption

A supply chain is like a string of pearls, says Jean-Marc Nasr, head of Space Systems for Airbus, in that it must be kept together at all times in order to function. As one of Europe’s largest satellite manufacturers, Nasr says many of Airbus’ suppliers in defense and space are highly specialized in what they produce, and there is a critical interdependency for both sides. Airbus depends on them, and they depend on Airbus, a typical supply chain relationship in many ways.

“We have focused on making sure our supply chain is not interrupted for a prolonged period of time, to make sure that critical suppliers don’t lose expertise and competency. In this industry, where suppliers often provide unique, complex and high-tech systems, keeping critical know-how is paramount,” Nasr says. “Across the business we have focused on keeping production going, making sure our spacecraft production areas are COVID-secure. While some delays have been unavoidable, our focus is to keep production running and work closely with our suppliers so they can also keep things moving.”

Nasr says that Airbus has been closely monitoring the health of its suppliers, since a prime contractor has to be supported by a solid supply chain. Airbus has put in place a "Watchtower" program to ensure the smooth flow of goods and mitigate any potential disruption. The company is keeping tabs on small companies that may experience problems but lack the tools to address them, so that Airbus and its partners can look together at how they can be helped. “Our crisis management teams are being briefed on any issues so they can be escalated wherever necessary. Naturally a close dialogue is also important and we have provided additional briefings to suppliers throughout the pandemic,” adds Nasr.

Hughes is another player that works with companies across the globe. David Rehbehn, vice president of International Marketing for Hughes said that throughout the pandemic Hughes has been in regular contact with its suppliers around the world, evaluating and, when necessary, mitigating any potential impact on its manufacturing timelines and supply chains. With these proactive, ongoing conversations, the company says it has been able to avoid any meaningful impact to its customers. Its main manufacturing facility in Maryland has remained operational throughout the pandemic, with increased health and safety measures in place.

“One example is our work with Eutelsat on the ground system for their KONNECT satellite, which we delivered as scheduled, despite the pandemic. This project included the remote installation of six gateways, enabling Eutelsat to launch service in Africa, on time,” says Rehbehn.

Rehbehn is proud of the fact that not only has Hughes met commitments with customers for its ground systems, it has also achieved milestones on the ground system for its JUPITER 3 satellite. “The biggest supply chain challenge has been ensuring the safety and health of our employees – especially those in our factory who have been working in our facility throughout the entire pandemic. Their health and safety have been, and remain, our priority as we balanced social distancing requirements with factory staffing and customer commitments,” Rehbehn says.

Spending $1 Billion to Help Small Suppliers

Northrop Grumman (NGC) is one of the world’s biggest technology companies and has key customers all over the world. Pat McMahon, vice president of Corporate Supply Chain for NGC told Via Satellite the company’s supply chain challenges have evolved over the course of the pandemic. These go from managing short-term delivery risks to mitigating long-term vulnerability risks, and NGC’s supply chain teams have had to navigate through many complex issues. When a supply chain is as diverse and large as it is in the case for NGC, obtaining and maintaining situational awareness of the key risks within the supply chain is a big endeavor, according to McMahon.

NGC chose to spend $1 billion to help some of its key suppliers, a striking response to supply chain issues. McMahon says, “We’ve been able to address this challenge through strong communications with both our suppliers and our customers, and through the use of data analytics that integrate external and internal data. We also recognize that we have critical suppliers that are struggling in today’s financial environment. Understanding the financial hardships of many of our vulnerable suppliers, most of which are small, we have accelerated over $1 billion in payments Year-to-Date thus far to targeted suppliers.”

McMahon says performing audits and/or inspections at supplier facilities is also an ongoing challenge, especially given the different levels of state and local regulations for out of state visitors. As such, NGC has had to enable a broad and flexible network to support these auditing needs and use remote visual aids to conduct audits or augment its own receiving inspection departments’ inspections when an in-person site visit wasn’t an option, she adds.

In terms of the overall impact on NGC’s supply chain, McMahon says NGC has taken steps to identify those suppliers in its supply chain that are critical and may be vulnerable in the current environment. “We’ve maintained communication with those suppliers to understand their risks and collaborate on mitigation plans to burn down those risks. We also continue to assess ways to improve our ability to predict risks in the supply chain whether they be financial, operational, or otherwise,” she adds.

The Effect on Software and Systems Companies

Other types of companies have been adapting to this new normal. Integrasys is a software company with more than 30 years in the industry. Alvaro Sanchez, the CEO of Integrasys, who himself had a very serious experience with coronavirus, talks about how the company has adapted to this new environment. He says, “A great challenge for us is maintaining high customer satisfaction, which is part of our philosophy while adapting fast to new ways of doing things. Due to this COVID situation, our customers are demanding a lower CapEx and more OpEx software, so we are making attractive packages, adapting our business to Software-as-a-Service. This is something new for us. Another challenge for Integrasys is to create a new marketing and a new sales strategy which is based on how our tools can contribute to increasing customer’s revenue.”

Sanchez admits the COVID pandemic has changed the way the company is interacting with customers. The company has had to develop its online store in response to the current situation. “The greatest change in our supply chain has been the way we sell, nobody has personal contact with their customers anymore, therefore we need to do calls, online meetings, and use new tools. Hence, we have changed some of our tools, so installations and support can be done remotely, and systems can be virtualized in order to avoid shipping anything. We have also made online training free of charge so that we can help our customers without going there in person or adding expenses,” Sanchez says.

Martin Ryan, managing director of ViaLite Communications, a company that designs and manufactures Radio Frequency (RF) over fiber links and systems, said a major challenge was having to adapt how ViaLite finds new suppliers for components used in product development. He said that not being able to visit businesses face-to-face has required different approaches to supplier evaluation. “We have overcome this using various video technologies. There have been no major issues with our production supply chains, they have been very resilient and robust,” he added.

Obstacles for Installations and Global Projects

When global travel came to rapid and sudden stop, companies had to find other ways to get projects done and keep their work moving forward. Ryan admits that during the first part of the year, ViaLite’s installation work stopped for a few months. There was enough capacity in most customer plans to allow a pause on new installations, he says. The good news is things are now starting to pick up again.

“In the last few months this has really come back, with most projects back on track. The ViaLite range has always been plug and play by design, so the installation support needed is minimal and typically just for larger systems. On these more complex long distance systems we have provided remote, real time installation support, using equipment set up in our labs that mimics the customer’s set up, and then worked through any install issues with them,” Ryan says.

For a company like Airbus that builds satellite for companies all over the world, it looked at ways it could still deliver satellite tech to its customers in this environment. Early on in the pandemic, the company identified a priority to ensure it maintained its development programs for new technology.

“For example, our recent contract win for the Arabsat BADR 8 satellite includes the TELEO optical comms demonstrator. Fortunately, Airbus’ foresight in investing – prior to the COVID-crisis – in the new Pléiades Neo Earth observation system, as well as the OneSat flexible telecoms satellite and constellations, has been a clear strength in navigating this period,” Nasr says. “Of course, our focus on digital transformation of the satellite design and manufacturing cycle, a journey Airbus started many years ago, remains unwavering. This far-reaching transformation is vital for us to deliver the products our customers need, and we have ensured that COVID has not delayed this in any way.”

The Road Ahead

Stories around the resiliency of the satellite industry are no surprise. But, even the way the industry is bouncing back is perhaps surprising some. Sanchez admits that when COVID started to really impact the world, he thought that investments would take a hit for a long time, but he was pleasantly surprised to see that investments in satellite tech have still taken place.

“Our year so far this year has been promising. Revenues from the first three quarters this year are higher than what we saw in 2019. We need to continue adapting to the new dynamics and customer needs to keep relevant and continue our growth path,” Sanchez says.

Ryan says ViaLite is very optimistic about 2021. He admits that the company has seen some slowing of its business in 2020, but this has really reversed now and the pipeline of customer projects is better than it has ever been. “Our customers are equally very optimistic about their growth next year too. We have some important new products in development targeted at filling some technology gaps for customers, and we believe that will drive growth for ViaLite in 2021,” he adds.

Nasr saysAirbus has been very grateful for all state and European-level support which has taken the form of accelerated milestone payments and funding for future innovations. In terms of the future, it sees that telecoms operators that had pushed back procurement are starting to see an urgent need to procure technology. “At Airbus we have innovated to propose solutions to our customers, to stimulate the market, be it with generic flexible satellites or big customizable platforms, both designed to reduce in orbit capacity cost. We have four flexible satellite orders, with more in the pipeline, and see the market for GEO reaching about 15 satellites per year,” Nasr says.

Supply Chain Case Study: Arianespace

It has had a challenging year for launch giant Arianespace as the company looks to maintain an ambitious launch schedule in light of COVID-19. Arianespace CEO Stephane Israel said there are no doubts that COVID has had an impact on the launcher’s business. While Arianespace completed a launch during the initial lockdown period from Baikonur, launch operations were suspended in French Guiana for nearly three months. In consequence, the company’s launch tempo for the year has decreased significantly. It now hopes to have 10 launches by year-end instead of up to 20, which Israel admits was a “challenging” figure to start with. Its customers OneWeb and Intelsat entered Chapter 11, and other customers that aren’t on a strong financial footing, mainly in Asia, have slowed down launch schedules. It has been an eventful year for the company, Israel says — perhaps a bit of an understatement.

Arianespace has seen from its close relationship with its prime contractors that the COVID-19 outbreak has affected the European space industry since March 2020 and has caused economic damage to the companies involved in Ariane and Vega programs. Capacity and productivity losses have materialized in all fields of activity, ranging from design and engineering, to production and support functions. Efficiency has dropped in both onsite work and distant collaboration, with lasting consequences much beyond the peak crisis period between March and June 2020.

“Today, the three main challenges are to achieve a far-reaching and comprehensive view of the consequences of COVID-19, embracing both development and production; to swiftly provide the European launch sector with the public support necessary to overcome such hardships; and to keep managing the long-term risks caused by COVID-19, in order to avoid any disruption of our supply chains,” Israel says.

Israel admits that COVID in Europe in general and lockdowns in France and Italy in particular have slowed the operations throughout the industrial supply chain, and that this has had an impact on introduction of the Ariane 6 program. The European Space Agency (ESA), which is in charge of the architecture of the overall launch system, recently announced the schedule for the maiden flight has moved forward to the second quarter of 2022. The Vega-C, has also moved to June 2021.

“The satellite manufacturers were also impacted, namely in France, Italy, and Spain. While we will be able to better gauge the pandemic’s effect in the weeks and months to come, we are quite sure there will be an impact on our launch schedule next year, obviously,” adds Israel.

Changing the way customers see the launch experience has been another factor. Israel says one of the “crown jewels” in Arianespace’s interaction with customers is the launch experience. Bringing VIPs to its operations center to witness in person the delivery of the satellite is an experience that creates memories for a lifetime. (I should know. I have been on three myself!) They are incredible to behold. However, due to the pandemic, Arianespace can no longer provide this experience and has had to adapt.

“We quickly generated a new way of experiencing a launch, our ‘Launch XP’ and rolled out this virtual product to our customers last summer for our Ariane 5 launch VA253. This portal lets customers tour our launch facility, meet with experts, get access to a real mission briefing, and otherwise capture some of the extraordinary feeling that comes with a trip to the Guiana Space Center for a launch,” says Israel. VS