For the past 20 years, Doug Sinclair worked hard in the space business. He began in his basement, selling his work by the hour. His first products came online in 2006 and 2007, in satellite components such as magnetic torque rods and digital sun sensors.
Through decades of hard work and customer relations, Sinclair Interplanetary today employs 10 people in a downtown Toronto office, focusing on building attitude determination and control equipment such as reaction wheels and star trackers. That work has not gone unnoticed, as the Canadian company was recently acquired by the rapidly growing Rocket Lab – a private American-New Zealand aerospace company already working on its 12th launch from New Zealand.
From time to time, Canadian space company mergers and acquisitions hit the news. In some cases, it’s a Canadian company coming back to Canada. For example, in December, MDA – which transferred to the American Maxar Technologies a few years ago – is awaiting regulatory approval to come back under Canadian ownership when a consortium of Canadian investors acquired the business. But sometimes, Canadian firms end up migrating their headquarters down south. The U.S. company Comtech, for example, acquired Quebec-based UHP Technologies, a provider of satellite ground station solutions, in late 2019.
As for what it means for the Canadian space industry, the people interviewed for this story seem to look to individual indicators for companies as measures of success, or items that could be of concern, as the case may be. Fortunately, the early indicators for Sinclair Interplanetary appear positive.
Before this merger, the company was fully bootstrapped and undiluted by ownership in a venture capital company or other investor. Around 85 percent of business came from commercial companies, with some smaller deals from the Canadian Space Agency and other international space agencies. Yet Sinclair Interplanetary’s founder made the decision to sell the business almost a year ago, out of the belief that nothing can last forever and that it would be a good idea to explore options while his company continues to grow.
“We had to turn away a number of customers [before] that just want more volume than we could produce,” Sinclair explained in a phone interview. “A lot of that is because we just don’t have the processes and infrastructure to be a big company. We were looking at how can we bring those sorts of things in. Ultimately, the way we’re going to do is by merging with a company that already knows how to be at a couple hundred people.”
Rocket Lab noted in a press release that “Sinclair products will be key features of Rocket Lab’s in-house designed and built Photon satellite platforms, and Rocket Lab will bring additional resources to grow Sinclair’s already strong merchant spacecraft components business.”
The Aerospace Industries Association of Canada (AIAC) noted that in general, it supports actions for Canadian businesses that allows them to stay competitive in a global environment. “We have been leaders, and have been able to compete with the best the world has to offer,” said Jim Quick, president and CEO, in an e-mail interview.
In 2018, AIAC launched an initiative known as Vision 2025 that was meant to spark a discussion between industry, government, the public and other stakeholders to discuss the future of Canada’s aerospace sector, Quick said. The vision’s components now include calling for a fully costed national strategy for space, using international programs to build Canadian industry, and using multiple perspectives for Canadian space initiatives (such as innovation, economics and sovereignty.)
AIAC, which does not comment on individual business transactions in Canada, said its short term focus (like every other industry in the world) is providing support for the novel coronavirus/COVID-19 pandemic. For example, AIAC is assisting with keeping lines of communication open between partners or suppliers grappling with border restrictions and isolation procedures. (Sinclair Interplanetary’s work is proceeding for the time being, as employees work far away from each other in a 5,000-square-foot facility.)
“On a broader scale, because the competition is intensifying, it’s more important than ever that strategic investments are made to protect Canadian jobs and grow the industry,” AIAC’s Quick said.
“That said, given the current situation with COVID-19, it is understandable that attention and resources will be directed towards reducing the spread of the virus in the immediate term, and in rebuilding Canada’s overall economy, in the longer term. From an AIAC perspective, we will continue to advocate on behalf of our member companies, as our industry will have a vital role to play in the rebuilding of Canada’s economy.”
Sinclair acknowledged some sadness in moving ownership of his company outside of the country, but “the reality was, for me, there were no Canadian strategic partners that were appropriate” – even after talking with “all the obvious players.”
He also pointed to positives in the acquisition, setting aside the uncertainties associated with COVID-19. More hiring may come in the Canadian office in the coming months, and Sinclair himself will see his role expand to vice-president of engineering for Rocket Lab. He will move away from day-to-day operations to get involved in launch vehicle development for the first time, a change that he is looking forward to, he said.
Rocket Lab expressed happiness with Sinclair Interplanetary’s well-established Canadian supply line, which will continue after the merger. The Canadian expertise in satellites will help Rocket Lab in its efforts to democratize space, officials said, and will be used in future Rocket Lab offerings.
“Sinclair [Interplanetary] is keeping its name, Doug will still remain at the helm and the Sinclair team will remain in Toronto,” said Peter Beck, Rocket Lab CEO, in an e-mail to SpaceQ.
“Small satellite operators can still expect reliable, on-time orders as they always have. Perhaps the biggest change is that Sinclair Interplanetary’s order book will stay open longer so the team can be even more aggressive in chasing and supporting bold small satellite initiatives as we grow Sinclair sustainably, to meet the needs of more spacecraft operators. What this means locally in Canada is likely more roles at Sinclair, and more local manufacturing as we grow the business.”