But don’t make too much of the numbers

Planet Labs is hiring. So are Spire Global, OneWeb, Orbital Insight and Terra Bella, formerly known as Skybox Imaging. While space industry startups fueled by venture capital and angel investment constantly advertise job openings, NASA and many of the space industry’s largest employers have trimmed their workforces in recent years.

In the United States, space employment peaked in 2006 when 266,696 people worked for civil and commercial organizations, according to the Space Foundation’s annual Space Report. That workforce declined by slightly more than 17 percent to 221,585 in 2014, the latest year with data available.

Numbers don’t tell the whole story. Entrepreneurial space companies established in the last few years to sell data and services drawn from space-based sensors do not fit easily into any of the U.S. Bureau of Labor Statistics’ categories the Space Foundation and other organizations typically use to monitor industry employment levels because many of the new firms don’t manufacture satellites or rockets. Industry employment statistics are far better at tracking jobs for aerospace engineers and machinists than determining whether space-related startups are hiring software engineers and data analysts, not to mention accountants and sales staff. “My suspicion is that as these new companies continue to grow and evolve, hardly any of those jobs will end up getting counted because they are not traditional, manufacturing type jobs,” said Micah Walter-Range, the Space Foundation’s director of research and analysis. “Companies building small satellite launch vehicles should be captured fairly well. Earth observation data and analytics providers may not.”


NewSpace accounts for thin slice of satellite market

Even if the NewSpace slice of the satellite manufacturing market doubles in the next decade, it will remain a tiny portion of an industry dominated by massive communications satellites.

Between 2010 and 2013, the market for satellites weighing less than 300 kilograms designed for commercial remote sensing, communications and meteorology missions in low Earth orbit climbed from one percent to two percent of the overall market, according to data compiled by Avascent. In the next decade, the NewSpace portion of that market should continue to expand.

“We don’t forecast that it will drive growth, but we see it doubling,” said Lori Hammer, Avascent senior product manager.

Avascent expects the overall spacecraft manufacturing market to grow one to two percent annually between 2016 and 2025. “If you account for inflation that is basically flat,” Hammer said.

newspace-accounts


Even an accurate tally of the new jobs would be unlikely to make a significant difference in the industry’s overall workforce, however, because the fledgling businesses tend to be so small. “It’s great to hear about all the different startup companies but if you add five or 10 of them together, you probably have a project team at Boeing or Lockheed,” Walter-Range said. “I don’t want to downplay the role of startups. This whole part of the industry has seen substantial growth over the past several years, but it is still early enough that we are not seeing the final implications of all that activity.”

The same is true for spending. Space startups investing millions of dollars in small satellites represent a tiny portion of total satellite sales. “Because the per unit cost of these small satellites is very low compared with traditional geosynchronous satellites, it’s not that big a share of the overall market,” said Jonathan Beland, a senior analyst at Avascent, a Washington-based consultancy. “At least not yet.”

Government spending, which has grown in the United States and internationally, dominates the overall market. NASA’s budget rose from $15.1 billion in 2006 to $19.3 billion in 2016. U.S. military space spending also trended upward, increasing from $25.7 billion in 2006 to $27.6 billion in 2012, when the annual Aeronautics and Space Report of the President reported a precipitous drop in its numbers. Rather than indicating a real decline in spending, analysts think the latest figures do not include classified space work conducted by the Defense Department, National Reconnaissance Office and National Geospatial Intelligence Agency in its totals. Avascent anticipates government space-related spending will continue to rise. (see graphs)

If 2015 offers any clues, the entrepreneurial space sector could begin to claim a larger share of the market in the future. Venture capitalists invested $1.8 billion in space companies in 2015, more than twice the amount received in the preceding 15 years combined, according to Start-up Space: Rising Investment in Commercial Space Ventures, a report released in February by the Tauri Group, an Alexandria, Virginia, consultancy.

Two large transactions claimed the majority of that $1.8 billion, however. Last year, Fidelity Investments and Google spent $1 billion to purchase approximately a 10 percent stake in SpaceX. OneWeb raised $500 million in a series A investment round.

No one knows how long fledgling space companies will remain attractive to investors, but Hoyt Davidson, managing partner for Near Earth LLC, a New York investment bank, hopes the bubble doesn’t burst anytime soon. “We are probably in the single digits or low double digits in terms of the number of space businesses that have been funded,” Davidson said Feb. 23 at the SmallSat Symposium in Menlo Park, California. “We are seeing a lot of interest in business plans. I hope we are just at the start of this.”

Entrepreneurs hope to transform the space industry. Instead of building state-of-the-art spacecraft weighing hundreds or thousands of kilograms, they plan to offer weather data and Earth imagery with constellations of dozens or hundreds of smaller, less expensive satellites packed with commercial components. Other new ventures are intent on slashing launch costs for payloads of all sizes.

U.S. vs International GovSpace spending

GovSpace

“Commercial business models are being implemented at virtually every turn, and a great deal of credit for that goes to the success of the commercial satellites operators and all the downstream products and services flowing from efficient value chains that aren’t perturbed by government contracting quirks, quacks and inefficiencies,” Elliot Pulham, Space Foundation chief executive, said by email. “GPS chipsets have become commoditized, stamp-em-out cubesats are becoming commodities and there are over three billion space apps running on smart phones around the world.”

These radical changes present challenges for some of the established space companies, especially the ones that have evolved over decades to satisfy their customers’ detailed requirements, comply with government contracting rules and minimize risk. To adapt, veteran space companies must transform themselves by reducing costs and streamlining operations to bring products like geostationary communications satellites to market more quickly, according to Space: A Buyer’s Market, a report published in February by AlixPartners, a New York-based consultancy.

“Lets stop thinking about these as craft-built masterpieces and recognize them for what they are: aerospace industrial products,” said David Wireman, an AlixPartners managing director. “If we can produce them cheaply, they don’t need to have 15-year life cycles. Technology is changing so rapidly that a 15-year life cycle doesn’t make sense anyway.”

It usually takes companies two to three years to develop sophisticated communications satellites that are designed to work for at least 15 years in geostationary orbit because the satellite operator doesn’t begin to realize a profit until sometime around year seven. “Satellite operators and satellite manufacturers have to work to compress that cycle time and not only make systems less expensive but put things in orbit a lot quicker,” said Eric Kronenberg, an Alix Partners managing director.

Space companies are trying to adapt, but it can be a struggle for some large organizations with thousands of employees who have spent decades working under old business models. “Some companies are succeeding in changing their culture,” Kronenberg said. “Others are having trouble.”


Why is space suddenly cool again?

In 2015, theatergoers flocked to The Martian while Gravity, an orbital-debris disaster flick, pulled in seven Oscars the year before. Popular newscasts celebrated New Horizon’s voyage past Pluto and the dueling reusable rocket campaigns waged by SpaceX and Blue Origin. J.J. Abrams, the director of Star Wars: the Force Awakens, produced a documentary series about the teams competing for the Google Lunar X Prize. Neil de Grasse Tyson surpassed 5 million Twitter followers.

What’s going on?

In the 1990s, public interest in space programs was so low the animated cartoon characters Bart and Homer Simpson scrambled frantically for a remote control to turn off the television before they had to watch another space shuttle launch.

“Space has always been cool, but not everyone realized that,” said Loretta Whitesides, astrobiologist and former Zero Gravity Corp. flight director who is signed up for one of the first trips on Virgin Galactic’s SpaceShip Two. In the 1990s with Congress calling the shots, space projects seemed important and officious, Whitesides said.

Now that a new breed of space companies is daring to build reusable rockets, offer suborbital tourist flights and launch massive constellations of satellites that offer a new perspective on Earth, “it feels like everybody gets to play,” said Danielle Carmichael, a NASA Ames Research Center public affairs assistant.

“The government is no longer the only player in the exploration of outer space,” said Jeffrey Manber, NanoRacks LLC managing director. “Boy, that makes it more interesting!”

The space industry’s new entrants not only inspire people to dream of space travel, but they create jobs. “Thousands of kids are being hired out of college,” said Whitesides, whose husband, George, is Virgin Galactic’s CEO. “There is actually somewhere to go or something to aim for.”

In addition, the entrepreneurs provide dramatic story lines for Americans who love a good rivalry. “In computers it was IBM versus Apple,” Manber said. “The rivalry between Elon Musk and Jeff Bezos is making space exploration dramatic and understandable.”

When billionaires like Musk, Bezos, Paul Allen and Richard Branson pursue their dreams of space travel, they add to the industry’s allure. “They are space rock stars, the Hollywood equivalent of the geeky nerd,” said Debra Facktor Lepore, strategic operations vice president and general manager for Ball Aerospace & Technologies Corp. “I think people are saying, ‘I’d like to be like them.’ ”

Even the fictional book and movie The Martian presented a compelling space hero. In the face of seemingly unbeatable odds, Mark Watney, the astronaut-botanist left to fend for himself on Mars, remained clever, witty and determined to persevere.

People also are becoming enthusiastic about the idea of space travel as they view vivid images transmitted by satellites large and small. Audiences were thrilled by the grainy black and white pictures transmitted by Apollo missions, but modern cameras on the Curiosity rover and New Horizons satellite show Mars and Pluto’s unfamiliar geology in vivid colors.

Those images let people share the thrill of discovery.

“Humans want to explore,” said Lepore. “It’s in our DNA. When you see things for the first time, it’s really cool.”