Los Angeles emerging as center of satellite industry.

Los Angeles may have lost its place as the country's biggest airplane factory, but it is merging as the country's biggest satellite factory.

The satellite industry, while relatively small compared to the aircraft industry, is booming and much of that boom is taking place in Los Angeles.

"All but one major domestic satellite maker is in California and most of those are in the Los Angeles area," said Bob Paulson, an analyst and CEO of Aerostar Capital, which buys and consolidates small and medium-sized aerospace companies.

This means major local satellite-makers such as Hughes Electronics Corp. and TRW Inc., and hundreds of smaller component makers, are positioned to reap a sizable chunk of an industry. that is growing at 15 to 20 percent a year.

"With all the new applications for satellites, it's one aerospace sector that is set for a great deal of growth," Paulson said.

At El Segundo-based Hughes Space and Communications Co., a division of Hughes Electronics and the world's top maker of satellites, growth has indeed been rapid. Its $4.1 billion in 1996 revenues represented a 33 percent increase over the previous year.

While the commercial side is the fastest growing, military demand is rising as well.

The Pentagon is increasing its budget for high-tech communications and surveillance systems, which is bringing new growth to TRW's Space Park in Redondo Beach, the county's second-biggest satellite maker.

Space Park comprises the bulk of the Cleveland-based company's Space and Electronics Group, whose space and defense sales went from $2.8 billion in 1994 to $3.4 billion last year.

Boeing North America Inc. is another company whose L.A. operations have been getting lots of military satellite work lately.

Until it bought Rockwell International Corp.'s space and defense division last year, Boeing didn't even have any satellite operations.

But that division, which is based in Downey, has since won a $1.3 billion Department of Defense contract to build up to 33 satellites through the year 2012. The satellites are to be deployed for an updated global positioning system called Navstar GPS 2-F.

The job Boeing is most excited about, according to a spokesman, is its role as lead participant in Sea Launch, a joint venture with companies in Russia, Ukraine and Norway. It is converting an oil platform into a launch pad which, beginning late next year, will be towed to South Pacific equatorial areas for satellite launches.

Surrounding L.A.'s major satellite companies is a patchwork of various-sized related operations that are enjoying similar growth.

One example is Schaeffer Magnetics in Chatsworth, which has long been a supplier of specialized motors and motion-control systems for such projects as the Hubble telescope.

"Have we experienced growth like the big satellite makers? The answer is yes," said Ernest Schaeffer, the company's founder and president.

In 1996, Schaeffer's sales grew 40 percent over the previous year, he said, hitting about $20 million.

The industry's growth has also spawned new companies, such as Kistler Aerospace Corp., which may become a competitor to Boeing's Sea Launch.

The company, whose main offices are in Los Angeles, is building a system of "reusable" satellite launchers which would significantly reduce the price of lifting satellites into space.

"Right now it costs between $30 million and $100 million to launch a satellite," said Robert Wang, the company's chairman. "With our system, it will cost $17 million. This will make the price of using a satellite much more accessible for some companies."

But as dominant as L.A. has become in the satellite industry, it faces the same competitive pressures that caused the area to lose its dominance in the aircraft industry.

"Los Angeles has a higher degree of technical capability than many other cities, but this is a global industry," said Wang. "That's why our business offices are here, our production facilities are in Washington state and our launch sites are being readied in Nevada and Australia."