Surveying the Global Space Sector

Futron's 2001 Space Competitiveness Index. Credit: Futron/Avascent.

What did the global space sector look like in 2011? In the Space Competitiveness Index (SCI) at the time Canada has just fallen to 7th behind India.

Since then, one could argue South Korea, which was ranked 8th at the time, is now poised to pass Canada, if it hasn’t already done so. Australia wasn’t a major factor at the time. Now they are too are poised to make a run at Canada’s position within the globals space sector.

It should be noted that Europe, represented by the member nations of the European Space Agency, was 2nd, but that individually several countries would be ahead of Canada.

This interview by Eva-Jane Lark with Joe Fuller, CEO of Futron at the time, first appeared in Space Quarterly Magazine in December 2011. In July of 2014 Avascent acquired the satellite, space, and telecommunications businesses of Futron Corporation and discontinued the Space Competitiveness Index.

A good follow-up study was conducted by Euroconsult in 2015 regarding Canada’s space program. That report, the Comprehensive Socio-Economic Impact Assessment of the Canadian Space Sector is available online.

Surveying the Global Space Sector

Eva: Welcome Joe, it’s great to have you here to chat with us at Space Quarterly! Can you tell us a little bit about why you started Futron and how it has evolved over the past 25 years?

Joe: I started Futron because I thought I could make a difference. Before founding Futron I’d been involved in project management at NASA and I thought there had to be a better way of doing that. The initial focus was on systems engineering, program management and on the management of technology. The name Futron really came from my approach to, and philosophy of, management – that is, if you can envision something, you can make it happen. The challenge, of course, is getting from the present state to the future state. I had been very future oriented and thought I could combine the concept of future and technology management to make a difference. Along the way we became involved in technology transfer, forecasting, estimating and literally predicting the future. From there we got involved in a lot of commercial space activities as well – with NASA and the Federal Aviation Administration (FAA). That opened up to us a lot of marketing and industry forecasting activities that we are probably better known for than some of our program and technology management activities.

Eva: Who are your major customers and competitors? What portion of Futron’s business is the satellite industry, traditional big aerospace, government, NASA and the emerging NewSpace sector?

Joe: We have actually done work for almost everyone. Perhaps the majority of our work is for NASA. We also do a lot of work for traditional aerospace – Lockheed Martin, Boeing, and in the past Loral. In the NewSpace/entrepreneurial arena, we’ve done a lot of that work for the government and for ourselves. Recently, we’ve been doing quite a bit of work on the international side as well. It’s almost as if we have done work for anyone you can name at some point, now or in the past, including the Japanese and Australian governments as well as the Canadian Space Agency.

Eva: Do you have any major competitors?

Joe Fuller, former CEO of Futron
Joe Fuller, former CEO of Futron. Credit: Futron/Avascent.

Joe: That’s always a tricky question to answer. We do have some competitors. In some cases they have spun out of Futron, probably three or four times that’s happened. Most of the time, they have another idea and go off and pursue it. But in one case, that company has become a major competitor. We have competitors like Frost and Sullivan, SAIC – some of the larger strategic market research firms, and large consulting firms like McKinsey. We’ve worked with most of them and we’ve competed against them. Most of the time, we collaborate and partner with them. We are brought in on some of their activities to provide our space market expertise and knowledge. We’ve done due diligence work for venture capital, private equity firms and for banks. Because the market is the biggest risk, whenever there is a financial transaction going on, people want to know what is the current market and the future market potential.

Eva: What have been the most interesting recent changes that you feel will have potential for the future?

Joe: I look at trends. I think NASA is in transition. Some say the most significant transition event is the end of the shuttle. Without the shuttle, NASA must get serious about their future. They are in transition and need to transform. Transformation is needed across the industry. Major changes are occurring in the space industry. And with change comes opportunity. We’re positioning ourselves to help NASA, and industry, make the critical decisions to help with the transition, the critical decisions required for transformation.

Eva: What do you feel the most likely changes are going to be in terms of projecting some of these trends forward?

Joe: Some of these changes are starting to happen now. I think there is going to be much more international collaboration although there is a lot already. I think that the commercial industry in time (it’s going to take time) is going to assume a much more important position. The supply chain is going to go global and that has already started. Except for certain rules and regulations, and laws such as ITAR, you can buy a launch anywhere in the world now except for a Chinese launch. You can readily transport your payload anywhere in the world. The commercial sector, except for these restrictions, is essentially already doing that.

Eva: Do you think that those rules and laws are going to ease up for the commercial and entrepreneurial sector or are they going to become more rigid?

Joe: I think they are going to ease up. Space is globalizing, just like the remainder of the world, and other industries. These rules and laws are kind of anachronistic; they’re things of the past. They haven’t caught up to the present global trends. They will change. I’m convinced they will.

Eva: One of Futron’s major areas of focus is on analyzing, monitoring and measuring the aerospace industry and they say “what gets measured, gets improved upon (or accomplished)”. What are you measuring and analyzing now that you didn’t used to?

Joe: Most recently, it is our Space Competitiveness Index – comparing the top ten spacefaring nations across about 60 different metrics. After four years, we are beginning to see trends. We’ve made some comments about Canada’s position and that caused a bit of a stir. Since we’ve done the first study, their relative competitiveness has declined slightly. It’s a relative measure so that it doesn’t necessarily mean Canada is getting any weaker, it just means that others are getting stronger and the gap is closing. The same dynamic was evident in the Index for the U.S., which incidentally was the only country to show relative declines four years in a row.

Now we’re interested in saying “Hey, it’s one thing to just measure and see that this is occurring but you need to do a diagnostic, root-cause analysis to determine what is happening, why is it happening, what are the implications and are we okay with it or do we want to make some policy changes to attempt to influence it”. We’ve recently developed a benchmarking approach, where we take that data and develop metrics around issues that a customer might have. We’re in the process of completing a study for Australia, that will be out soon and available on their website. The Australians had an interest in knowing how well they were utilizing space. They had several areas where they thought they were doing well but they really had no idea of where they stood relative to others. They wanted to know how they compared to similar nations of the same economic scope such as Canada (similar land mass, population, GDPs) but also countries that they are close to geographically, like India and Singapore, or with whom they shared a similar heritage, such as South Africa.

Eva: Has that led to other countries wanting to have similar benchmarking done?

Joe: We shall see. We just presented the results in October at the International Astronautic Congress in South Africa jointly with our Australian client. Awareness of this benchmarking service is only starting to build.

Eva: I expect that you will have a head start on being able to prepare a similar report for the other countries mentioned as comparables…

Joe: Exactly. We are starting to do that. We will be showing some of the other countries mentioned a top level view of how they fared to see if they have an interest in a significantly more detailed report on their own progress. We have the methodology now. We have a lot of the data and essentially what we are doing with the Space Competitiveness Index is building a knowledge base that we can use to develop more analytics and diagnostics. Every time we analyze another country, that adds to our knowledge base. And that knowledge base is quite strong already because of work we have previously done over the last four years. To determine the top ten, we had to sort through at least the top twenty. So right now I don’t think anyone can touch us when it comes to the kind of data that we collect. We look at human capital, government and industry. We have metrics for each one of those areas. These reflect the strengths and weaknesses of each country. By examining a diverse array of space-related activity by these nations—everything from launches to commercial space policy to subcomponent manufacturing—we maintain a balanced perspective, taking the full range of country space activity into account.

Eva: Measurement of the industry is becoming more pronounced today than it has been in the past…

Joe: Basically in the past it was an industry focused on accomplishing specific government space program goals, especially those with a political or scientific focus. It’s now becoming more of an entrepreneurial industry focused on economics. We also do two other studies that (when you put them together) make us pretty powerful in terms of the scope of our information and analysis. For the Space Foundation, we research all the facts and figures and provide data support for their annual Space Report, and have for four years. We’ve also conducted the Satellite Industry Association’s annual survey, focused on the commercial industry, for 14 years. There are some interesting findings: commercial space is growing faster than the overall space economy, and overall space is growing faster than the global economy. The space economy overall is growing by about 6-7% annually, and commercial space is growing by about 10-11%, something people may not expect. It’s really driven by space services like Direct-to-Home TV.

Eva: The satellite industry rarely seems to talk about itself as a space industry. So often when people think of space they don’t think about this large successful industry

Joe: Right. The global space industry is now valued at more than $250 billion–bigger than most people think it is.

Eva: What else do you feel can be done to enable and expand the space industrial base as opposed to building one off rockets for a major customer like NASA?

Joe: It’s really a tough and challenging issue. The simple answer is that the supply chains will go global and that will end up strengthening the space industrial base. But at the moment we’re building one-offs and it really can’t support some of the secondary and tertiary industry suppliers trying to make a living. There aren’t really enough customers and demand yet.

Eva: Including a bit of a fickle customer at that…

Joe: Right, right – who often only builds things in small numbers. If you have a manufacturing industry, you want volume and scalability. It’s not a good industry for that. There are a lot of instances where people are accustomed to going to their supplier for a particular part, component, or sub-system and when they do and are told “sorry, we no longer make those” and then they’re scrambling. In the last several years people have become more aware of this happening in the industry and have been looking for alternative suppliers. Not a single national security mission launches without some foreign content; people are fooling themselves if they think that the supply chain isn’t going global. Ultimately that may be the solution, because if you have suppliers – one in Canada, one in the UK and one in the US then you have three – as long as they are in friendly countries, they are going to want to sell to you and you’ll have choices to buy from.

These are interesting times and I have to keep emphasizing that the industry, supply chain and industrial base is globalizing. I know there are a lot of studies going on with people looking at alternatives. I’m sure there are some corrective actions that can be taken but the better thing is

to open it up like they have in other industries. It will have to work sooner or later. Some examples such as Boeing and Airbus had challenges but there are numerous other examples where it is working. And Airbus and Boeing have learned from those failures and will ultimately make it work.

Eva: When you think of the emerging entrepreneurial sector, what trends are you seeing develop there?

Joe: I’m pulling for them. I’m often asked by entrepreneurs, where I think they should focus. Unless you are a very wealthy individual, like Elon Musk, Jeff Bezos, etc and can start with a large fortune, I tell them (like Dustin Hoffman is told “Plastics” in The Graduate) one word – “SERVICES.” Essentially at the moment, what you get from space is information. Information about the globe or a region of the globe and that information have value. Or it might be a position – when you think of all the new services based on GPS signals, that’s a large market, accounting for billions in revenue all by itself. And most of that information is provided for free by what has effectively become a global utility: the GPS system.

To get back to your original question, I’m pulling for every one of them. I want them to be very successful. I think they’ll change the game. Space basically grew out of supplying a government customer who wanted customization. They grew accustomed to that. Now it’s a different game. The emerging entrepreneurial sector wants to produce products in volume and spread the overhead across that volume. It’s about having many customers and not just a few, or one, customer. I’ve been asked if I think the entrepreneurial space sector, or space tourism is going to succeed and I say – “There’s risk involved, and I don’t know if it is ultimately going to succeed, though we have a lot of confidence that there’s a market out there.” However it’s not really about this first generation of space business, but about the next and the next. What will that be? First there will be cargo, then crew delivery and I believe those will succeed. My NASA friends will say, “Well, that’s not really commercial because there’s not enough customers”, and there’s some truth to that. However – It’s what’s next that is most important.

We did the original space tourism study and we predicted it would be a certain size market and there is now a lot of activity in that arena and people give us a lot of credit for that. But again we were just looking at taking people into space. Now there’s a big secondary market developing to do research in space from these platforms and that wasn’t originally in the cards.

That’s why we have the name Futron. It’s not about the present, it about what the future will hold. And while that’s unpredictable, innovation theory shows that you often start off in one direction and end up in another with a tremendous market. I don’t doubt that this is what will happen with space. Futron was formed from Future, and we are very focused on the future, and Tron which has to do with our focus on technology.

Eva: Thank you so much, Joe for sharing your insights on the industry with us!

About Eva-Jane Lark

Eva-Jane Lark is a Vice-President and Investment Advisor at one of Canada’s largest full-service investment firms. A passionate observer and advocate of commercial space development, she is frequently invited as a speaker and panelist to offer her keen insights into emerging new space industries and their financing, and on space resource development.

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