At Boeing Co.'s sprawling satellite-making complex in El Segundo, engineers for decades pioneered space systems that helped vastly alter the way we communicate by telephone and watch television today.
But in recent years, the workload has sputtered under a cloud of slow orders, and the aerospace giant is now hoping for a lifeline from an upcoming Pentagon contract potentially worth more than $15 billion.
"Boeing has its back to the wall," said Loren Thompson, a defense policy analyst with the Lexington Institute in Arlington, Va. "If it doesn't win the contract, it will have real difficulty sustaining the workforce."
Boeing is vying to build a new generation of military communication satellites known as TSAT, for new "transformational" satellites, that could have as big an effect on communications as global positioning satellites have had on navigation. The company is going up against two archrivals that have teamed in what has become one of the more intense battles waged for a Pentagon contract in recent memory.
The Pentagon plans to award the contract after Dec. 15 to either Boeing or a team of Lockheed Martin Co. and Century City-based Northrop Grumman Corp. The contract is tied to hundreds of jobs in the region.
With an initial value of $6.6 billion, the contract is a "must win" for Boeing, which has been hurt by sagging sales of commercial satellites and production problems, analysts said. A decade ago, it was the world's largest satellite maker with nearly 10,000 employees, but the workforce at its sprawling complex near Los Angeles International Airport has dwindled to about half that number.
In its heyday in the late 1990s, Boeing had a backlog of more than 50 satellites and was producing one satellite a month. Some sophisticated satellites can take as long as 18 months to build. It now has a backlog of 28 satellites.
This year, Boeing lost a $3.5-billion U.S. Air Force contract to build a new generation of global positioning satellites to Lockheed. A year earlier, the Pentagon, citing technical problems, took away a portion of a secret, multibillion-dollar spy satellite program from Boeing and gave it to Lockheed. This week, a Los Angeles jury is expected to reach a verdict on a $2-billion lawsuit filed by a former commercial satellite customer.
With little demand for commercial satellites adding to its woes, Boeing "really needs to win TSAT to keep its design and engineering staff intact," Thompson said.
