Government Spending Boosts European Space Hardware Sales

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PARIS — Europe’s space industry manufacturing revenue grew by 9.3 percent in 2010 over the previous year, with direct space-sector employment rising by 5.5 percent, on the strength of a big increase in sales to European government customers, the Eurospace space industry association said.

Revenue from European government customers, led by the European Space Agency (ESA), accounted for 52 percent of the 6.2 billion euros ($8.4 billion) in 2010 sales. European government contract revenue booked in 2010 was up 13 percent over 2009, helped by several large contracts including the Galileo navigation constellation.

Some 23 percent of the revenue came from private-sector customers, including Europe’s two biggest satellite fleet operators, SES of Luxembourg and Eutelsat of Paris, and also the regular business from Europe’s Arianespace launch services consortium, which orders Ariane 5 rocket components from European manufacturers.

The revenue figure is a record for European space manufacturers, Eurospace said in its annual report on the industry’s health, released the week of July 15.

With 34,334 full-time direct employees, Europe’s space sector is approaching the peak levels reached in the mid-1990s.

As has long been the case, space sector employment is concentrated in those nations whose governments are spending most on space programs.

In addition to feeding their national industries with their own contracts, these governments can count on the 19-nation ESA to feed their domestic industrial bases as a result of ESA’s geographic-return rule. The rule directs contract volume to nations in proportion to their contribution to ESA programs.

In the five years ending in 2010, direct space employment grew by 20 percent to the present figure of 34,334.

France, with Europe’s biggest space budget, still accounts for the largest share of space jobs, with 35 percent of the total employment located there. But France’s space sector grew by just 8.3 percent between 2005 and 2010.

Germany’s space sector grew by 38 percent during the same period. It now stands at 6,100, or slightly more than half of France’s 12,100 space jobs.

Italy, whose national budget ranks third in Europe behind France and Germany, saw its space industrial base grow by 34 percent during the same five-year period, ending at 5,100 full-time jobs.

The United Kingdom, which ranks fourth in Europe in space spending but is well behind the top three, reported a relatively modest 8 percent increase in employment, to 3,550, during the five-year period.

Spain, whose government space spending has increased sharply in the past decade, had a correspondingly large increase — 33 percent — in space sector employment. Belgium, which for years has been the nation with the highest per capita government space budget, saw its space employment grow by nearly 22 percent.

These six nations accounted for 90 percent of all European space industry jobs, according to Eurospace. Ten other nations accounted for the remaining 10 percent of jobs.

Despite the continuing dependence on government contracts for the majority of its business, Europe’s space industrial base counts on commercial customers for 37 percent of its revenue, compared with an estimated 10 to 15 percent for U.S. space hardware companies.

The principal difference between the two sides of the Atlantic is the absence of a strong military space sector in Europe. Revenue from customers identified as military totaled just 400 million euros in 2010.

This figure does not include sales of military hardware — satellites and ground equipment — to nonmilitary customers. For example, the French space agency, CNES, routinely acts as the direct customer for space systems ordered by France’s arms procurement agency, DGA. The same is true for the Italian Space Agency, ASI.

In Germany, a company called MilSat Services acts as prime contractor for Germany’s military satellite communications system. In Britain, Paradigm Secure Communications owns and operates the Skynet military telecommunications system under contract to the British Defence Ministry.

When these customers are included, total military space hardware revenue reaches about 800 million euros, a figure that has not much changed in the past five years and is unlikely to increase in the near future given current military space budget forecasts in the biggest-spending nations.