The boss of Airbus has told Andy Burnham that choosing its US rival Lockheed Martin to manufacture military satellites could cost the UK a key role in the European space industry, intensifying a last-minute lobbying effort for the £2.4bn contract.
It is understood that Guillaume Faury, the chief executive of France-headquartered Airbus, has written to the prime minister suggesting that the choice of provider of the Skynet system could have effects for decades to come on the UK’s strength in military satellites in Europe, in an effort to tip the contract away from its US rival.
Yet politicians in north-east England have lobbied in favour of the Lockheed Martin bid, which would include a new factory in Durham.
The military satellites under the Skynet 6 contract will carry the British armed forces’ most sensitive communications up to 2042, replacing the Skynet 5 system operated by Airbus.
The delayed decision on which company will manufacture the UK’s sovereign satellites comes at a sensitive moment, after Ukraine complained that its access to Elon Musk’s Starlink satellite network was restricted, apparently at the behest of the US government.
Several sources said they believed no final decision on the contract had been made. However, some said they believed that Lockheed Martin’s bid was preferred by the Ministry of Defence. The final decision will rest with Burnham and the chancellor, John Healey.
It is thought that Faury’s letter warned of longer-term consequences for the UK’s role in the European space sector if Airbus were to lose out. Senior industry figures have previously claimed that Airbus’s UK satellite operations would not be viable without the next Skynet contract, meaning the company might close its sites at Stevenage and Portsmouth, which employ 3,000 people, including 600 working on Skynet.
The manufacturers Airbus, Thales and Leonardo are working on a long-awaited merger between their space subsidiaries, known as Project Bromo, in an effort to build a single European champion with the scale to rival the leading US companies.
Faury is understood to have warned that if its British operation were no longer viable it could mean the UK missing out on the chance to be the European hub for military satellite communications once the merger was complete.
Lockheed Martin is one of the US’s largest defence “prime” contractors, but it says its UK subsidiary will have full control over the satellites eventually built in the UK. People close to Lockheed Martin have strongly denied that the US government would have control over the satellites.
A Lockheed Martin spokesperson said the company was “unable to comment on the ongoing procurement process”, but added: “Lockheed Martin UK, a British company, will establish facilities to develop an ecosystem alongside our regional partners in the north-east of England to provide the UK with a sovereign space capability. It will create jobs, supply chain opportunities and the potential for exports. It will have a UK design authority and a UK chief engineer.”
Luke Akehurst, the Labour MP for North Durham, said Lockheed’s bid would mean a “state-of-the-art new manufacturing facility” in the region. “This represents a massive investment in the reindustrialisation of the north-east of England, building on our region’s proud heritage of advanced manufacturing.”
The personal intervention from Faury, one of the most powerful executives in Europe, is a sign of the importance of the contract to Airbus, which is headquartered in Toulouse.
A decision had been expected in the summer but it has been delayed in part by the arrival of Burnham in office.
Unite, one of the Labour party’s biggest union backers, had warned against “handing the British space industry over to the Americans” at a time when there are increased questions over whether the UK can rely on the US government.
Burnham will also have to consider the two bids on their financial terms and the capabilities the two companies can offer.
A government document for a related system said satellites had to deal with the “proliferation of counterspace capabilities to disrupt, deny, degrade or destroy space-based enablers”. It highlighted radio jamming, hacking and direct physical attacks on the satellites as possible concerns.
The first Skynet satellite was launched in 1969, well before the use of the name for a hostile artificial intelligence in the 1984 film The Terminator.
Kim McGuinness, the mayor for north-east England, said: “Bringing satellite manufacturing to the north-east is a huge opportunity to build on what we have already achieved, including the close ties we have forged between our world-class universities and industry. If secured, this investment would be a gamechanger for the space and security sector, bringing £100m of investment and creating 500 high-skilled jobs as well as a much greater impact through the supply chain.”
An MoD spokesperson said: “This is an ongoing procurement process, and no final decisions have been made. Both of the UK-based bidders are subject to full evaluation of their proposals and must offer satellites that are assembled, integrated and tested in the UK.”
Airbus declined to comment.
