H-II Rocket to Showcase Japanese Expertise

Developing its own technology is more the country's driving force than commercial success in the launch business, analysts say

THE much-delayed launch of Japan's H-II rocket has been preceded by a lot of pre-takeoff speculation about the likelihood of the project's commercial success.

The prospects are not good, analysts say. But they observe that regardless of the rocket's eventual profitability, the H-II is a technologically sophisticated rocket that further seals the country's membership in the top tier of nations.

Japan has spent a decade and $2.5 billion developing the H-II, the first Japanese rocket that does not incorporate major components developed in the United States. The launch, set for Thursday, is two years off schedule after repeated failures in the design of the rocket's LE-7 engine. One explosion during development killed an engineer.

The H-II is big enough to lift a 2-ton payload into geostationary orbit, the lofty zone where communications and other satellites park, putting Japan in a position to compete in the $2 billion-a-year satellite-launch business.

Shooting a satellite into space, however, is an event that requires a lot of bang and a lot of buck, and the price competition is increasing. The market is dominated by Arianespace S.A., a European consortium that holds about 60 percent of the launch business. US-based McDonnell Douglas Corporation and Martin Marietta Corporation both build rockets for commercial payloads, as do China and Russia.

The cost to launch a major satellite into high orbit usually runs around $100 million, says Douglas Heydon, president of Arianespace's US marketing subsidiary. China and Russia have entered the market and charge less, in part because their programs are state subsidized.

``The space launch business is not necessarily profitable right now, partly because of various national competitors not motivated by strictly economic considerations,'' observes aerospace analyst Wolfgang Demisch of New York-based BT Securities Corporation, a unit of Bankers Trust New York Corporation.

Many observers wonder how Rocket Systems Corporation, the Japanese consortium created to market the H-II's launch capabilities, will be able to charge a competitive price once the rocket starts carrying commercial payloads in 1997. The rocket's first two launches are estimated to cost $150 million each, and several factors will work against efforts to lower the price:

* The number of satellites being launched into geostationary orbit is expected to shrink over the next decade. Experts say large communications satellites are lasting longer and doing more. The satellite-launch business is increasingly a buyer's market.

* Because of agreements between Japan's National Space Development Agency (NASDA) and fishermen who live near the NASDA launch facility at Tanegashima, an island in southern Japan, H-II launches will be limited to two 45-day ``windows'' a year. The fishermen say the rockets disrupt their livelihood because they scare fish and because boats are forced to leave the fishing grounds during launches. ``It's really, really difficult to make ends meet if you have to make the whole organization fit into two launch periods,'' Mr. Demisch says.

* The Tanegashima site is located north of the equator. Since the equator is the most energy-efficient place from which to launch satellites into space, the H-II will have to carry and consume proportionately more fuel than some competing rockets.

But analysts also suggest that profit may not be the motive behind the H-II. The project ``should be seen as a precompetitive, technology-acquisition effort,'' Demisch says. ``The ultimate outgrowth of this will be seen somewhere down the road.''

Japan is ``probably taking a very long-term view,'' Mr. Heydon says. Both these observers suggest that the H-II's main purpose is to provide a proving ground for Japanese scientists and to demonstrate that Japan is technologically beholden to no one.

The country has launched rockets since 1975, but these vehicles have been developed with US help. The H-II's predecessor, the H-I, had a first stage based on a McDonnell Douglas Delta rocket. But US technology has come with restrictions against military uses and US veto power over the provision of launches to third countries.

``The Japanese basically are very interested in developing a full range of capabilities in space. Without a moderately sized launcher [such as the H-II] you really are dependent on other countries,'' adds Ray Williamson, an analyst in the US Congress' Office of Technology Assessment.

Mr. Williamson concurs that the Japanese primarily wanted to develop their own rocket technology; analysts agree that the H-II is the product of state-of-the-art technology. ``If the H-II works,'' he says, ``they've proved [their self-reliance].''

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