BUSINESS WATCH

Spar’s soaring success in space

Peter C. Newman August 22 1983
BUSINESS WATCH

Spar’s soaring success in space

Peter C. Newman August 22 1983

Spar’s soaring success in space

BUSINESS WATCH

Peter C. Newman

Most Canadians think that buying a ticket to The Return of the Jedi may be their only admission to the space age. In fact, 18 Canadian companies, eight universities and five government departments maintain world-class space research facilities, and the Maple Leaf is about to go into even more impressive orbit.

The organization leading the way to the stars is Spar Aerospace Ltd., which won world attention for constructing the 50-foot-long artificial arm that lifted out of the U.S. space shuttle in November, 1981. The astronauts reported that it was accurate to within half an inch while manoeuvring at two feet per second from the spacecraft —even though the instrument’s mechanism is so fragile that it could not be fully tested on Earth. “Like the story about the mule skinner who trained his animals by first whacking them on the noggin to get their attention,” says Spar’s Senior Vice-President John MacNaughton, “the success of the space arm was just a means of establishing our presence in space.”

At the moment, Spar is building a third space arm for the Americans as well as the revolutionary solar panels, stretching to half the length of a football field, that will drive Olympus, the powerful communications satellite to be launched by the European Space Agency in 1986. Spar has also completed a National Research Council contract to determine Canada’s participation in NASA’s planned space station.

Those and other activities have turned Spar into a profitable growth stock, with a 1982 net income of $8.6 million—up nearly 300 per cent from the year before. (The company managed to retire more than a third of its longterm debt at the same time.) The brainchild of Larry Denman Clarke, a naval electronics veteran who became a lawyer and spent 15 years as an executive at de Havilland before forming his own company in 1967, Spar now spends $4 million a year on research and employs 2,000. Among other innovations, the company is adapting the space arm to make a robot that could repair leaking CANDU reactors.

Spar evolved from appropriating space research segments of de Havilland, RCA, Northern Telecom and Astro Research Corp. of California. The company’s more prosaic activities—and steady money-makers—include over-

haul and repair contracts for commercial and military air fleets in Canada, Brazil, Nigeria and half a dozen other countries, as well as building helicopter parts for Sikorsky, Boeing Vertol and Westland. Spar has contributed to every Anik in Canada’s own satellite program and recently won a contract from Hughes Aircraft as a major subcontractor for the new generation Intelsat space systems, due to be launched in 1986.

Spar’s most daring international coup was winning the $165-million con-

tract to build two satellites for Brazil. The Canadian proposal, which combined Spar’s know-how with Telesat Canada, SED Systems Inc. of Saskatoon, Fleet Industries of Fort Erie, Comdev of Cambridge, Ont., and Hughes Aircraft of California, came in cheaper than the bid from the government-backed French syndicate, Aerospatiale. But France had the political clout. “They lost because of their arrogance,” says MacNaughton of Spar. “They did their marketing at the top political levels without selling the system from the bottom up.”

Not only was the head of the competing French company a brother of France’s president, François Mitterrand, but the Parisians offered Brazil much higher industrial offsets and lobbied mercilessly with local politicians. When the French PR man managed to get an article published in the Jornal do Brasil with the headline “Spar knows nothing about satellites,” the Canadians countered by ensuring that a reporter for the competing O Globo received a detailed account of the Frenchbuilt satellite’s failure in India. The contract was finally awarded on May 5, 1982. At the time of the announcement the French ambassador was so agitated that Don Mayson, Spar’s vice-president for business development, had to leave the Brazilian officials’ office by a separate exit.

Spar Chairman Clarke estimates that between now and the end of the century the free world will launch about 250 communications satellites and that during the next decade $23 billion will be spent in space. He intends to grab at least five per cent of this market and is counting on continued support from Ottawa to make it happen. “The government,” he says, “has an extremely powerful and positive role to play—not in business but in support of business. That’s a small but critical distinction. Just as highways provided the means for the greatest freedom ever known to people through the automobile, so government programs designed to help private entrepreneurs exploit new markets will revitalize the economy—which must be market driven, for only then will it be truly productive.”

It was the initiative (and $110 million) from the National Research Council that first got Spar into the shuttle program. The Brazilian sale could not have been achieved without the aggressive support of Francis Fox, the minister of communications who is also setting up an Informatics and Space Research Development Institute for the federal government. Spar has received $25 million in government grants since its inception, but Clarke maintains that it has returned the investment 30-fold. “The final link that we have been seeking for more than 20 years,” he says, “is a single government department with a clear mandate for the definition, development and direction of a national space program.”

Spar’s record proves that, for once, Ottawa and business can co-operate— even if it is extraterrestrially.