June 29, 2018

Washington must seize space industry opportunity

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I just returned from three days at New Space Conference 2018, the premier forum for space entrepreneurs, investors, innovators, government decision makers, and commercial space companies. The space economy is at a tipping point. Private competition is lowering the cost of launching things into space so dramatically, that new ambitions for space have become possible, sparking a new wave of entrepreneurship. Jeff Feige, chairman of the Space Frontier Foundation, the conference sponsor, said in his opening remarks, “There are hundreds of businesses in this industry that I don’t know.”

I was on the edge of my seat. Erich Fischer, a principal at Deloitte Consulting with decades of experience in the space industry, said, “We are at the most critical juncture since the early 1970s. Either we will midwife a renaissance in sustainable space development, or we will blow it.”

The gurus in the major banks seem optimistic we won’t blow it. The major banks have analyzed the space market and said it is on a trajectory to grow from a $350 billion market opportunity to somewhere between a $1.1 trillion and $2.7 trillion opportunity by 2040.

It’s not about the trillions but about the talent. Behind those dollars will be some of the greatest engineering talents in the world. As ever, the problems encountered in the harsh environment of space attracts those who are capable of working at the leading edge of science and engineering. To have sustainable human life outside our planet will require solutions to problems of water, energy, and food security. Space businesses will attract the kind of idealists and visionaries that drive innovations in data, communications, and materials science that have cross-functionality in other industries and will better living conditions on earth.

The question that plagued me for three days at this conference was this: What could Washington state do to capture as much of that talent as possible? And, how can we attract the human capital of the space industry, and what would be the cost of losing that market to another state or nation?

Unsurprisingly, other nation states have been focused on these same questions and are responding with urgency. In 2018, the U.K. passed new space legislation and set a goal to increase its share of the space market from 6.5 percent to 10 percent by 2030. Australia, opened its first Space Agency in June of 2018 to show its government commitment to capturing a piece of the booming space market. The United Arab Emirates is investing heavily in a state-of-the-art space center with an ambitious agenda that includes not only missions to Mars but permanent human settlement of Mars by 2117. For the UAE, the government investment in space appears to be quite explicitly a play to develop and retain human capital—engineers, experts and researchers. The space objective is merely the tactic by which the strategy of developing the world’s foremost knowledge economy is being accomplished. Likewise, Luxemborg has gotten more aggressive at leveraging its position as a space leader in Europe. In 2018, it announced the creation of a Space Investment Fund, and a Space Development Agency.

Other U.S. states are racing ahead as well. California, Colorado, Texas and Florida are some of our competitors. California is being awarded ten times more NASA Small Business Innovation & Research grants than Washington.

Unfortunately, Washington policymakers seem quite cool to advancing initiatives to show policy support for the space industry. This year, a Senate bill sponsored by the industry to provide a capped amount of business and occupation (B&O) tax credits for research and development in advanced spacecraft manufacturing received a public hearing but failed to move out of the state Senate Economic Development & International Trade Committee. See Senate Bill 6411 (2018). AWB considers this a missed opportunity.

TVW archive of the hearing is here. At the hearing, the industry, represented by leaders from Sistima Technologies of Kirkland and Blue Origin of Kent, testified to the thousands of high-tech, high-paying jobs the industry provides. Industry highlighted its partnerships with universities, and its hundreds of internship opportunities. They testified that local incentives keep us competitive with the other states and nations that are trying to usurp our position as the Silicon Valley of space.

A strong presence from this industry is key for K-12, community and technical colleges, and our flagship four-year research institutions. At the hearing, University of Washington faculty testified that the students who work on a capstone research project are highly likely to get a job in the industry when they graduate. U.W. is developing a new space policy and research center, with more than 50 faculty involved and more than 20 industry partners who are interested in joining the effort. The industry, they said, is equipment intensive, and works on thin margins. Students at Raisbeck Aviation High School in Tukwila spoke of the career inspiration and opportunities they got from interaction with local space companies. They saw the tax incentive as a mechanism to make sure sufficient jobs are available to allow them to get hired locally rather than being forced to take jobs out of state to pursue their passion. A representative from the Georgetown campus of South Seattle Community College also testified about the opportunities for their aerospace programs.

AWB is proud to represent a number of leading businesses in the New Space industry sector. Looking to the 2019 legislative session we will partner with our local chambers of commerce raise awareness about the globally competitive context for this industry. There is a race to acquire the human capital that has the know-how to manufacture and problem-solve for the space environment.

Let’s work together to figure out how to win it.