The Canadian Space Agency (CSA) has released its 2020 State of the Canadian Space Sector Report which shows a decrease over the previous year and multi-year flat growth. It is apparent from the data that Canada isn’t keeping up with global growth.
2020 State of the Canadian Space Sector Report bottom line
A note on methodology
A caveat on the data discussed in the report. A good portion of the data is sourced from an opt-in questionnaire sent to identified stakeholders. The CSA states that it gets a high number of responses and that for this report 208 organizations participated “including all the major space players.”
While the report title is for the year 2020, the majority of the data is from 2019. According to the CSA “most organizations” responding to the questionnaire had year ends of March 31, 2020 and the remainder reported for the 2019 calendar year.
Data is also collected from CSA “transfer payments (Contracts, Grants, and Contributions) in cases where this information has not been included as part of the survey responses to more fully capture revenues.” As well some data is sourced from publicly disclosed reports such as publicly traded companies. For the complete methodology read or download the included report below.
In keeping data from individual organizations confidential the CSA states that “in certain circumstances, a detailed explanation or in-depth reporting of the results cannot be provided in order to protect the confidentiality of the respondents.”
The bottom line
In 2019 total Canadian space sector revenue was down 3.2% over the previous and totalled $5.5B.
Conversely, the global space sector for 2019 was US$428B according to the Space Foundation, which represented a 3.2% growth over 2018 which had US$414.75B in revenues.
I’ll also mention that the Space Foundation reported that global space sector revenues in 2020 was up 4.4% over 2019 and totalled US$447B.
According to the CSA “the average annual growth rate of the space sector between 2015 and 2019 was 0.89%,” in other words, flat growth.
The key question is, why isn’t Canada’s space sector growing?
According to the data 83% of the revenues ($4.6B) came from satellite communications. Revenues declined 1% year-over-year and over the last five years grew only 2%. Perhaps with new low Earth orbit satellite communication revenue from the likes of Telesat’s Lightspeed constellation will help. But those revenues won’t be booked for several years yet.
Another data point that stands out is the Domestic vs Export revenue. Canadian companies appear to be doing an adequate job at increasing export revenue. However, domestic revenues show a clear and ongoing decline. Over the past five years domestic revenues have declined a whopping 16.5%.
Part of that decline can be attributed to the government not buying products and services from Canadian companies and a decline in spending on programs. As the graph below illustrates, in the case of the Canadian Space Agency, spending mostly grew from 2005 to 2016 (with the clear exception of 2012). This uptick in spending was primarily the result of the RADARSAT Constellation Mission (RCM). Once the RCM program spending was done we see a drop in spending between 2015 to 2018 before a small uptick in 2019 and 2020.
The chart below illustrates CSA spending in the last 20 years. Take inflation into account, and increases in internal spending (salaries etc.), and Canada’s space program isn’t spending anywhere near what it used to on programs. I will discuss this further next week when we analyze the CSA’s 2020-21 results.
Looking at more of the data
New sections, additional data and COVID-19 questions
New to the report this year are sections “on gender, return on investment (ROI), and analyses conducted in tandem with Statistics Canada through the Linkable File Environment (LFE), which contains data from 2018.”
In her President’s message Lisa Campbell states that “COVID-19 significantly impacted the Canadian space sector in the second quarter of 2020. Traditionally, the 2020 survey would only contain 2019 data, but given the circumstances, questions were added to assess the preliminary impacts of COVID-19 during the 2020/2021 fiscal year. Results indicated that COVID-19 had a significant negative impact on company revenues, demand for services, employment, and supply chain operations across the Canadian space sector.”
It’s appears that based on questionnaire responses on the impact of COVID-19, that Canadian sector revenues for 2020 will show another decrease in revenues.
Revenues, domestic vs export, by market and by region
Let’s start with a breakdown of revenues by value-chain segments and sub-segments. There are two main segments, upstream and downstream.
According to the CSA here are the numbers.
Proportion of Revenues by Space Value-Chain Segments -2019. Credit: Canadian Space Agency.
Upstream segment
- Which comprised of the research, engineering and consulting as well as the space segment manufacturing and ground segment manufacturing sub-segments – generated $0.9B in revenues in 2019.
Downstream segment
- Which comprised of the satellite operations, manufacturing of products (e.g. terminals), development of software applications, and the provision of services (e.g. broadcasting) sub-segments – generated $4.6B in revenues in 2019.
Sub-segments
- Research, Engineering and Consulting amounted to $293M in 2019, a 33% growth ($73M) from 2018. This sub-segment accounted for 5% of total revenues in 2019.
- Space Segment Manufacturing amounted to $332M in 2019, a decrease of 20% (-$83M) from 2018. It accounted for 6% of total revenues.
- Ground Segment Manufacturing amounted to $306M in 2019, a 72% increase ($128M) from 2018. It accounted for 6% of total revenues.
- Satellite Operations amounted to $957M in 2019, a 3% increase ($29M) from 2018. It accounted for 17% of total revenues.
- Products and Applications reached $1.1B in 2019, a 22% decline (-$293M) from 2018. It accounted for 19% of total revenues.
- Services amounted to $2.5B in 2019, a 1% decline (-$36M) from 2018. It accounted for 46% of total revenues in 2019.
A closer look at Earth observation (EO)
Additionally as Earth observation is one of the fastest growing space segments globally let’s look at the numbers. Will global growth be reflected in Canada in subsequent years. It should. So here’s the numbers as they stand now.
In 2019, EO revenues totalled $248M, accounting for 4% of total space revenues. The majority of EO revenues (60%) was in the upstream segment:
- Research, Engineering and Consulting: $47M
- Space Segment Manufacturing: $44M
- Ground Segment Manufacturing: $57M
The remainder of revenues (40%) were related to activities in the downstream segment:
- Satellite Operations: $22M
- Products and Applications: $40M
- Services: $37M
“EO revenues declined by 11%, or $30M, in 2019. Between 2015 and 2019, EO revenues experienced a decline of 41%, or $175M, from $423M to $248M.”
A closer look at Satellite Communication
Since satellite communication accounts for the majority of revenues here’s what the CSA had to say. “Satellite Communication revenues declined by 1%, or $56M, in 2019. Between 2015 and 2019, Satellite Communication revenues experienced 2% growth, or $102M, from $4.5B to $4.6B.”
“In 2019, Satellite Communication generated $4.6B in revenues, accounting for 83% of total space revenues. The vast majority (88%) of Satellite Communication revenues was derived from activities in the downstream segment, broken down as follows:”
- Satellite Operations: $932M
- Products and Applications (e.g. antennas): $748M
- Broadcasting Services: $2.0B
- All other telecommunication services: $300M
“The remainder of Satellite Communication revenues (12%) was related to upstream segment activities:”
- Research, Engineering and Consulting: $58M
- Space Segment Manufacturing: $237M
- Ground Segment Manufacturing: $239M
Revenues by Region, Domestic vs. Export (in $M): 2018–2019. Credit: Canadian Space Agency.
Domestic vs export, by market and by region
The CSA reported that the breakdown of domestic vs export as follows.
- 58% ($3.2B) were from domestic sources.
- 42% ($2.3B) were from exports.
“The compound annual growth rate (CAGR) between 2015 and 2019 was +0.9% for the entire space sector, -3.7% for domestic revenues, and +9.7% for exports.”
“Broadcasting is a large contributor to the space economy but is in continued decline as reflected in the divergence in numbers when broadcasting is excluded vs. included in the analysis. When excluding broadcasting, total revenues generated by the Canadian space sector grew from $2.7B in 2015 to $3.4B in 2019. With the exclusion of broadcasting, the CAGR between 2015 and 2019 was 5.9% for the entire space sector, -0.2% for domestic revenues and +9.7% for exports.”
Read or download the 2020 State of the Canadian Space Sector Report
- Past State of the Canadian Space Sector reporting.
- The 2020 report on the Canadian Space Agency website.