These are times of uncertainty and angst for stakeholders in the government side of the space business. Government spending on space worldwide is headed for a slowdown, according to a recent analysis by Euroconsult. This is driven primarily by the United States, by far the biggest spender on space activity, which will be pulling back in the coming years as it seeks to bring its massive budget deficit under control.
As a result, funding likely will be flat — at best — over the next several years for NASA, which is trying to replace the space shuttle in a way that somehow reconciles two different visions of its human spaceflight future. This threatens to severely limit the number and scale of robotic space and Earth science missions the agency can undertake in the coming years. The Defense Department, meanwhile, is moving beyond the research and development phases and into the production phases of its satellite-fleet replenishment programs, raising questions about how the nation will stay on the cutting edge of space technology in the years ahead.
This contrasts with the commercial side of the business, which remains dominated by satellite telecommunications. The sector, which overextended itself during the telecom boom of the 1990s — and was hammered when the market collapsed — managed to rebound largely on the strength of U.S. government business, and later was able to expand its commercial business even as the global economy fell into recession. The industry is by all accounts healthy and growing.
Just a few years ago, the U.S. government was pouring money into military space programs and there was general agreement on the future direction of U.S. human spaceflight. As recently as last year NASA’s budget was expected to grow steadily through 2015, even if the consensus on how to spend the largest chunk of that money had unraveled over U.S. President Barack Obama’s plan to scrap the Moon-focused Constellation program in favor of nurturing commercial crew taxi services and developing technology that might one day change the economics of deep space exploration.
The decline in U.S. military space spending was more predictable with the Pentagon’s satellite fleet recapitalization cycle beginning to wane — following the cancellation of two major development programs. But the industry had expected by now to see more activity in newly prioritized mission areas such as space surveillance and in alternative approaches to fielding space capabilities, including Operationally Responsive Space and hosting of government payloads aboard commercial spacecraft. These activities appear now to be getting squeezed by cost growth on the established programs and declining overall budgets.
The space industry has weathered downturns before, of course. The termination of the Apollo Moon program in the early 1970s brought massive work force dislocations, for example, and the end of the Cold War a decade and a half later led to declines in defense spending that helped drive a wave of consolidation through the aerospace industry.
Similar forces are at work today, but this time they’re working simultaneously. The retirement of NASA’s space shuttle, with its annual budget of $3 billion and work force of close to 15,000 civil servants and contractors — down from a peak of nearly 18,000 — would in and of itself have changed the landscape of the space industry. Combine that with a zero-growth NASA budget and a declining military space budget and you have the recipe for a seismic shift in the industry.
In a perfect world the U.S. government would do a better job managing this shift, preserving key strategic capabilities, eliminating outdated and costly infrastructure and giving the private sector the direction it needs to retool for the future. But bureaucracies and entrenched economic interests die hard and government decision-making is a messy business, especially in democracies. Moreover, it is difficult if not impossible to properly plan for the future in the absence of a shared vision of that future.
Over time, however, the industry will evolve, as it always has. The space sector today looks quite different from the one that existed 20 or even 10 years ago — there are fewer big government prime contractors, top-tier subcontractors and propulsion companies, to cite a few examples. In the meantime, however, new companies have sprung up to address emerging market niches including commercial communications — which has undergone a dramatic expansion in the last 20 years — remote sensing and even human spaceflight. While virtually all of these companies leverage government-developed technology, in some cases they have become the primary drivers of innovation in their particular field.
Those companies that are best able to innovate and adapt will survive, perhaps even thrive in the coming years; those that cannot — or will not — will struggle or disappear entirely. In this regard, commercially oriented space companies, wired to respond to the vagaries of the marketplace, might be better suited to the current environment than their government-contracting brethren. But an overly passive government — one content to let outside market forces shape the space industrial base — is going to see its choices limited in the years ahead, particularly when it comes to exploration and certain national security functions. If the government wants a say in the capabilities that will be available to it a decade or two from now it is going to have to figure out its priorities and begin making the necessary investments. Soon. Unfortunately, that might be too much to ask of a group that right now cannot seem to find a way to guarantee that its doors will stay open for more than a week or two at a time.