Toronto-based telecommunications startup Kepler Communications surprised many recently when it revealed plans to establish its own satellite assembly and base the operation in its own hometown instead of contracting the work to an existing manufacturer.
It might seem a perplexing and unnecessarily costly choice at first, but I spoke to Kepler CEO and co-founder Mina Mitry about what his startup stands to gain by being based in Canada while the small-satellite industry heats up in the U.S.
“We’ve been running a global survey of available supply chain for this particular type of small satellite for the past two years or so and conducting some pretty extensive experiments, like buying parts, seeing where they end up, etc.,” Mitry told me. “The output of that global survey is really that the supply chain is immature, that it doesn’t exist in a way that’s robust enough to meet our price, performance and timeline expectations. Historically, the type of business that is now delivering on small satellites has been built on selling one-off government contracts or a small component of the satellite, and now they’re transitioning upmarket to try and sell complete satellites and try to do that at scale, which is a totally different problem that they haven’t yet addressed.”
After figuring this out through multiple years of investigation and inquiry, Mitry says it eventually resulted in the realization that meeting the startup’s goals of getting its 440 satellites in orbit in a timely manner would be best served by building them in-house. That’s not unlike the conclusion reached by Elon Musk and SpaceX for many of the components used in developing their own launch vehicles.
“We started to evaluate what countries and where and how that would all get done,” Mitry said. “It ended up that Toronto would make a lot of sense because of the surrounding technical talents we get from the key universities in the area, and then above and beyond that, we’re not doing a whole lot of manual labor in this process. Most of that is outsourced labor to a variety of different locations where they’re building circuit boards, or they’re building like metal machine parts, etc. And then in-house, we’re doing mostly assembly integration and testing, and a lot of that kind of stuff gets automated. So there was no material overhead costs that gets incurred because we’re in Toronto as opposed to any other location.”