EADS suborbital space plane.
By Joe Pappalardo
Of all the tons of fuel that drives modern space flight, cash is the most critical. That was the stark reality brought front and center on Wednesday at the first-ever Space Business Forum in New York, where leading rocket scientists, military officers and even hedge-fund managers crunched the numbers to illuminate the future of the space industry. From the European influence on suborbital tourism to why the Air Force doesn't trust private rockets, and from the increasingly outsourced business model at NASA to a place for that other "green" movement, here's a news analysis of where the power lies.
The largest sources of space-based business are satellites, which generated $138.8 billion products and services, or 55 percent of the global market overall. Direct-to-home-television beams and global positioning systems drove the numbers, with those two industries generating a combined $20 billion in the global economy. "Space has never been as central to our daily lives as it is now," said Joanne Maguire, executive vice president of Lockheed Martin's Space Systems.
The second largest source of space funding is the U.S. government, which in 2007 spent $62.5 billion, or 25 percent of the space global market. That is dominated by Defense Department spending, followed by the National Reconnaissance Office and National Geospatial Intelligence Agency. At the lowest rungs are the National Science Foundation ($0.33 billion) and the Federal Aviation Administration ($0.01 billion.)
Despite the hype, commercial space transportation services (i.e., space tourism) hardly registered on last year's money list, bringing in a relatively small $0.04 billion, or less than 1 percent of the global market.
It's been this way since the 1970s, but the new wave of satellites will implement delicate infrared detectors that NASA currently uses for astronomy. Soon, these focal plane arrays will be adapted for missile detection. "We are negotiating to fly an example of this new technology on a ride share with commercial geosynchronous spacecraft," Payton said. The sats themselves will be designed over the next two years.
Payton noted that other sectors of the military are seeing renewed attention as well. "If there's a growth market, it's space situational awareness and space protection," he said. So you can expect new ground and space sensors that monitor threats to sats—and the hardware to crunch the information they generate—to be money-making endeavors.
Keeping global positioning systems secure is also a priority. Payton admitted that about half of the 30 satellites used in the Pentagon's current GPS system have components that have already failed. While they still function, money will be made in the maintenance and restocking of the system.
As for private companies offering cheaper launches for the U.S. military, here's a realistic summation of the Air Force's mind-set: "I would love to save $15 to $20 million on any given launch," Payton said, "but I need reliability above everything else. We're willing to spend more for that reliability."
"We are forced to go to the commercial market for satellite launches due to the low institutional funding," said Francois Auque, the CEO of Astrium, which is owned by the powerhouse European Aeronautic Defence and Space Company (EADS). Auque pointed out that when it comes to switching from solely space-based business to services, having little government money makes his company consider business models that bring space to customers: "Commercial services are the engine of Astrium in terms of growth."
Virgin Galactic has already been watching its back with the EADS suborbital space plane (pictured above), set to make its first flight by 2012. But now there's cash across the pond. "We have invested substantial money into this project," Auque said without citing exact figures. "The problem is that we need to create this market."
Satellite makers already involved in Earth monitoring from space see another big market for climate-change monitoring. The idea, generally, is to set up a system that resembles the weather modeling, bringing global climate trends—and predictions—to local decision makers.
"We have underpinnings to go ahead using good solid architecture to model, understand and ultimately forecast the environment," said David Ryan, VP and division GM for civil systems in Northrop Grumman's Space Technology sector.
For any carbon cap-and-trade system to work, a database or clearing house that monitors it must be put in place. That, many industry insiders say, creates a market that can only be filled by more robust space-based systems.
Likewise, Ryan said, any green-energy projects that depend on sun, wind, water or any other natural resource must be supported by monitoring and prediction hardware in space. For investments in wind farms to start rolling in, he insisted, venture capitalists will want to know if wind patterns are going to change and render infrastructure useless. "It's not just a matter of data anymore," said Nancy Colleton, president of the Institute for Global Environmental Strategies. "It's a matter of getting actionable information."
But professional investors aren't seeking out plasma spaceships or other long-shot game changers. Since the cost of doing business in space is often so high, investors have gravitated to safer, niche-oriented ventures. "Small bets, we're very comfortable with," says C.J. Brucato, a partner with ABRY Partners.
Smaller, private companies can act more quickly to acquire tech startups or other companies that elude public companies. "A lot of opportunities don't wait around for long," says Hugh Evans, a partner at Veritas Capital. "One of the big advantages is the ability to react quickly."
So selling bandwith to cruise liners or the gas industry will be more attractive than an innovative rocket launch company. Likewise, components like radiation-hardened satellite parts are a safer investment.
But space specialist Robert Stallard, a director at the investment firm Macquarie Capital, cast some doubt at the forum on how smoothly the privatization of NASA could proceed, because of the involvement of Congress and the agency's structure. "In theory it's a great idea, but in practice it might be a struggle," Stallard lamented.
Still, some interesting NASA contracts are on the way that could help rocket companies pursue their private ventures. NASA officials see opportunities in a pending International Space Station commercial resupply services contract, soon to be awarded to leading launch operators SpaceX or Orbital Sciences (pictured above). Another launch opportunity: a competition to fire sounding rockets at NASA's facility at Wallops Island in Virginia.
Here are the top five 2007 recipients of NASA loot: United Space Alliance (Lockheed Martin and Boeing's shared space shuttle launch operation); Lockheed by itself; Jacobs Technology; ATK; and Boeing flying solo.
A large number of contracts have been released in the last year, most of them setting the table for the 2015 launch of the shuttle's replacement, Ares I. The moonshot model, Ares V, will come next, followed by contracts supporting the lunar lander, Altair. Then we'll see how the presidential election affects all those priorities come next year.
Original here
Of all the tons of fuel that drives modern space flight, cash is the most critical. That was the stark reality brought front and center on Wednesday at the first-ever Space Business Forum in New York, where leading rocket scientists, military officers and even hedge-fund managers crunched the numbers to illuminate the future of the space industry. From the European influence on suborbital tourism to why the Air Force doesn't trust private rockets, and from the increasingly outsourced business model at NASA to a place for that other "green" movement, here's a news analysis of where the power lies.
1. Who's making money in space now?
The numbers from 2007 show who's paying and who's collecting the loot.The largest sources of space-based business are satellites, which generated $138.8 billion products and services, or 55 percent of the global market overall. Direct-to-home-television beams and global positioning systems drove the numbers, with those two industries generating a combined $20 billion in the global economy. "Space has never been as central to our daily lives as it is now," said Joanne Maguire, executive vice president of Lockheed Martin's Space Systems.
The second largest source of space funding is the U.S. government, which in 2007 spent $62.5 billion, or 25 percent of the space global market. That is dominated by Defense Department spending, followed by the National Reconnaissance Office and National Geospatial Intelligence Agency. At the lowest rungs are the National Science Foundation ($0.33 billion) and the Federal Aviation Administration ($0.01 billion.)
Despite the hype, commercial space transportation services (i.e., space tourism) hardly registered on last year's money list, bringing in a relatively small $0.04 billion, or less than 1 percent of the global market.
2. What's the next generation of military space hardware?
The U.S. Air Force spends the most money on space ventures, and accordingly has billions worth of new hardware heading up there. At the top of the list is a program to detect missile launches, insisted deputy undersecretary of the Air Force Gary Payton. "No rocket takes off in the world without the Air Force knowing about it," he said.It's been this way since the 1970s, but the new wave of satellites will implement delicate infrared detectors that NASA currently uses for astronomy. Soon, these focal plane arrays will be adapted for missile detection. "We are negotiating to fly an example of this new technology on a ride share with commercial geosynchronous spacecraft," Payton said. The sats themselves will be designed over the next two years.
Payton noted that other sectors of the military are seeing renewed attention as well. "If there's a growth market, it's space situational awareness and space protection," he said. So you can expect new ground and space sensors that monitor threats to sats—and the hardware to crunch the information they generate—to be money-making endeavors.
Keeping global positioning systems secure is also a priority. Payton admitted that about half of the 30 satellites used in the Pentagon's current GPS system have components that have already failed. While they still function, money will be made in the maintenance and restocking of the system.
As for private companies offering cheaper launches for the U.S. military, here's a realistic summation of the Air Force's mind-set: "I would love to save $15 to $20 million on any given launch," Payton said, "but I need reliability above everything else. We're willing to spend more for that reliability."
3. Can't the U.S. learn from the Europeans on private space flight?
Europe is not generally known for encouraging its private sector. When it comes to space efforts, however, private companies there are ballooning far beyond their sparse federal investors."We are forced to go to the commercial market for satellite launches due to the low institutional funding," said Francois Auque, the CEO of Astrium, which is owned by the powerhouse European Aeronautic Defence and Space Company (EADS). Auque pointed out that when it comes to switching from solely space-based business to services, having little government money makes his company consider business models that bring space to customers: "Commercial services are the engine of Astrium in terms of growth."
Virgin Galactic has already been watching its back with the EADS suborbital space plane (pictured above), set to make its first flight by 2012. But now there's cash across the pond. "We have invested substantial money into this project," Auque said without citing exact figures. "The problem is that we need to create this market."
SpaceX Falcon 1 (left) and Orbital Sciences Taurus (right).
4. Will space businesses try to make a buck by prioritizing environmental protection?
You can bet they're going to try.Satellite makers already involved in Earth monitoring from space see another big market for climate-change monitoring. The idea, generally, is to set up a system that resembles the weather modeling, bringing global climate trends—and predictions—to local decision makers.
"We have underpinnings to go ahead using good solid architecture to model, understand and ultimately forecast the environment," said David Ryan, VP and division GM for civil systems in Northrop Grumman's Space Technology sector.
For any carbon cap-and-trade system to work, a database or clearing house that monitors it must be put in place. That, many industry insiders say, creates a market that can only be filled by more robust space-based systems.
Likewise, Ryan said, any green-energy projects that depend on sun, wind, water or any other natural resource must be supported by monitoring and prediction hardware in space. For investments in wind farms to start rolling in, he insisted, venture capitalists will want to know if wind patterns are going to change and render infrastructure useless. "It's not just a matter of data anymore," said Nancy Colleton, president of the Institute for Global Environmental Strategies. "It's a matter of getting actionable information."
5. What are big-ticket investors looking for from space companies?
It should come as no surprise that investors—hedge-fund operators and private equity managers alike—are on the lookout for money makers in the space industry. And the cash is out there: Anita Antenucci, managing director of Houlihan Lokey, said that private equity firms are raising money twice as fast as they are deploying it. And a lot of that cash is suddenly looking for a home in outer space.But professional investors aren't seeking out plasma spaceships or other long-shot game changers. Since the cost of doing business in space is often so high, investors have gravitated to safer, niche-oriented ventures. "Small bets, we're very comfortable with," says C.J. Brucato, a partner with ABRY Partners.
Smaller, private companies can act more quickly to acquire tech startups or other companies that elude public companies. "A lot of opportunities don't wait around for long," says Hugh Evans, a partner at Veritas Capital. "One of the big advantages is the ability to react quickly."
So selling bandwith to cruise liners or the gas industry will be more attractive than an innovative rocket launch company. Likewise, components like radiation-hardened satellite parts are a safer investment.
6. Can't NASA loosen its grip on space missions?
This answer is elusive, but many people—NASA administrator Michael Griffin included—think it's a good idea. "I hope the answer is yes," said Mark Oderman, managing director of aerospace and defense consulting firm CSP Associates. "Whenever the private sector gets involved, the costs are 20 percent of federal costs."But space specialist Robert Stallard, a director at the investment firm Macquarie Capital, cast some doubt at the forum on how smoothly the privatization of NASA could proceed, because of the involvement of Congress and the agency's structure. "In theory it's a great idea, but in practice it might be a struggle," Stallard lamented.
Still, some interesting NASA contracts are on the way that could help rocket companies pursue their private ventures. NASA officials see opportunities in a pending International Space Station commercial resupply services contract, soon to be awarded to leading launch operators SpaceX or Orbital Sciences (pictured above). Another launch opportunity: a competition to fire sounding rockets at NASA's facility at Wallops Island in Virginia.
7. Where's all the NASA cash headed?
NASA outsources 85 percent of its budget—that's about $8 billion to $9 billion available to businesses. Of that money, all but around 20 percent goes to the larger companies and contractors.Here are the top five 2007 recipients of NASA loot: United Space Alliance (Lockheed Martin and Boeing's shared space shuttle launch operation); Lockheed by itself; Jacobs Technology; ATK; and Boeing flying solo.
A large number of contracts have been released in the last year, most of them setting the table for the 2015 launch of the shuttle's replacement, Ares I. The moonshot model, Ares V, will come next, followed by contracts supporting the lunar lander, Altair. Then we'll see how the presidential election affects all those priorities come next year.
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