Boeing and Lockheed Martin have invested many millions of dollars into new rocket boosters, intending that some of their costs would be offset by a strong commercial satellite business. Less of that business will make it tough for both companies to compete with subsidized foreign launchers.

Setbacks in both the satellite-building and launch industries could translate into lost jobs in Brevard.

"I don't think it's good news for the Space Coast," said Ed Gormel, acting executive director of Spaceport Florida Authority. But while export controls may be causing some problems, industry officials acknowledge tougher competition and a weak Euro, the currency of the European Union, also may be contributing to the U.S. satellite-building industry's declining market share.

As a result, federal help may be slow in coming. U.S. Rep. Dave Weldon (R-Florida), said Congress must continue to weigh national security against commercial gains that weaker controls might reap. Weldon is vice chairman of the House Science Subcommittee on Space and Aeronautics.

In March 1999, Congress shifted oversight of export licensing from the U.S. Commerce Department to the State Department. The move was prompted by fears that U.S. companies were transferring technology to China.

"If [the downturn] continues to be a problem, Congress will need to evaluate the situation," Weldon said. "Of course, [the decline] troubles me, but what I would want to do is look at all the things that may be affecting the market."

Industry officials say the more arduous State Department licensing system is strangling trade and even forcing some companies to look to European competitors to build their communication satellites. Companies such as Boeing and Lockheed are finding it tougher to sell satellites abroad.

The crux of the industry's argument is that the U.S. share of the global market shrunk from 75 to 45 percent since the move from Commerce to State, according to the Satellite Industry Association.

"It is more difficult to do business under the State Department licensing regime," said Clay Mowry, executive director for the association.

To be sure, the news is not all-bad. Boeing Satellite Systems, the world's largest satellite manufacturer, delivered 15 satellites by the end of 2000, and seven commercial satellites are on order.

But a decision last year by Singapore-based Asian Pacific Mobile Telecommunications to cancel a $450 million contract with Boeing Satellite Systems seems to have been a harbinger of problems with the State Department licensing system.

Asian Pacific Mobile Telecommunications backed out when the State Department became alarmed that the satellite would be launched atop a Chinese rocket.

In another case, a Loral Space Systems contract to build a satellite for China Telecommunications Broadcast Satellite Corp. has been held up by the State Department for about two years.

Mowry said things have gotten so bad that three major American communications companies -- Intelsat, Inmarsat and GE American Communications -- have gone to European companies for new satellites.

Component builders, such as Harris Government Communications Systems of Melbourne, also have found it much harder to sell their parts abroad, said Sleighton Meyer, Harris' market communications manager.

As for the launch industry, Boeing and Lockheed Martin have invested millions of dollars in medium- and heavy-lift boosters designed to carry satellites into orbit. The companies are building the rockets to meet government standards, but hoped to use commercial launches to help offset costs, Gormel said.

He said the export restrictions will make it tough for launch businesses to stay competitive with subsidized launchers in places such as China. The only way to recoup the costs of developing boosters is to launch more satellites, he said.

"It's tough for Boeing and Lockheed Martin to compete with the Chinese," Gormel said.

Mowry said there are three problems with the State Department's export rules:

It requires the U.S. satellite industry to get between 2,500 to 3,000 licenses more each year than under the Commerce Department.

It requires that almost every commercial satellite be reviewed by Congress. Mowry argues that there are periods during the year when Congress is in recess, which slows the process.

Because of export rules that classify satellites as military hardware, arms sanctions affect the sale of communication satellites. The new classifications for satellites have halted exports to nations such as India and Pakistan.

"With commerce, you're much less a target," Mowry said. Sanctions "wouldn't stop a fiber-optic switching network, but it would stop a satellite."

John Logsdon, director of George Washington University's Space Policy Institute, noted the State Department is processing licenses faster now than in the past.

Logsdon also said, however, that the State Department has had a "chilling effect" on satellite buyers. That perception may be why they are looking elsewhere.

"There has been a recognition that the policy [change] went too far," Logsdon said.

Published under license from FLORIDA TODAY. Copyright 2000 FLORIDA TODAY. No portion of this material may be reproduced in any way without the written consent of FLORIDA TODAY.