Industry pleads for budgets and visions

In the years when Philippe Busquin was the European commissioner for research, Europe’s space industry was dreaming of a brighter future through the implementation of the green and white papers on space, adopted in 2003 and 2004.

These efforts toward a European space policy were eventually restarted, almost from scratch, when José Manuel Barroso took over from Romano Prodi as president of the European Commission, to the great disappointment of the industry. Through a series of European space councils, involving the European Space Agency (ESA), the EU member states and the Commission, a new space policy was drawn up. A communication was officially approved by the Commission on 27 April and was endorsed by ESA yesterday (9 May). It will be approved by the next Space Council on 22 May.

This communication defines four goals: a better co-ordination of EU, ESA and national space programmes, a better synergy between civilian and defence space systems and technologies, a durable funding for space applications (mostly GMES), and a coherence between space policy and EU international relations.

For the European space industry, the new policy presents many positive aspects despite a difficult environment. It takes into account the need for Europe to maintain its operational capabilities. Space agencies are funding developments, but the industry is not able to fund recurrent operational systems, so a relay is needed. It will be the Commission’s role to organise the public users to maintain the infrastructures, from launch pads to satellite systems.

On the other hand, the policy seems to miss the point on some new applications where space could be of considerable help for EU citizens, according to some representatives of the space industry. It includes no provision for how space systems and technologies could solve infrastructure problems for the new member states. Space could play a key role for remote sensing, telemedicine or reducing the digital divide. There seems to be little contact between the Commission’s enterprise and regional policy departments. The latter has a €353 billion budget through 2013, with about €150bn devoted to development aid to new member states. A new satellite system to provide high-speed internet access to the most remote regions of Europe could be funded for less than 0.5% of this budget line.

Unfortunately, space systems are difficult to sell within regional policies. They operate on a large scale and are not visible locally, unlike a highway or a hospital. Satellites can answer wide and dispersed needs, and would easily foster an industry of services, translated locally into new jobs, but space industry has no local relays to marshal these demands. "This could be a job for the relevant directorate-generals," according to Gilles Maquet of Astrium (a part of EADS), who asks for a "Verheugen-Marshall plan".

Also missing is a more streamlined industrial policy as national interests still tend to prevail, which results in a duplication of competences largely funded through ESA’s industrial return policy. This situation might yet worsen with new EU member states joining ESA. For the space industry, there is a real need for industrial convergence and interdependence, with centres of excellence spread out all over Europe, instead of redundant small national contractors. In most cases, these contractors are unable to acquire critical mass and to become competitive on the international market. As a result, they rely on ESA contracts.

There has nevertheless been a dramatic consolidation in the European space industry over the last 15 years. The nine main space contractors of the early 1990s have become just two. Astrium is an integrated company based in France, Germany, Spain and the UK, with a major Dutch subsidiary, while Thales Alenia Space is a French-Italian venture with subsidiaries in Belgium and Spain. Today, this space industry is leading on most international commercial markets like launch services or communication and remote sensing satellites, despite a disadvantageous exchange rate on a business charged in US dollars.

This commercial success obscures a less rosy outlook. Both Astrium and Thales Alenia belong to large aerospace, communication and defence groups whose stockholders are clearly asking for higher return on investment. The objective is set at 8% margins, largely beyond the capability of European space manufacturers, which are usually achieving 2 to 4%, at the price of large efforts in productiveness. Voices are already heard asking to get rid of ‘non-profitable’ businesses.

With limited institutional markets to build on - unlike its US rivals - Europe’s space industry cannot survive without a large share of the commercial market. It cannot pay for its R&D efforts through military contracts either. Europe’s spending on space activities (through ESA, Eumetsat and national space agencies) represents about one-sixth of the equivalent budgets in the US. The gap is even wider when it comes to military space, where the ratio is 1/20.

"Europe has not understood the strategic importance of military space yet," says Joël Chenet of Thales Alenia Space. "And things are not improving as we see no movement, no discussion towards European milspace [military space]." Some NATO members within the EU claim that there is no need for Europe to duplicate the US effort, from which they benefit through the alliance. "There will be no co-ordinated space effort in Europe unless a constitutional treaty gives a responsibility on defence issues to the EU," says Chenet.

Not only is Europe’s budget limited, but it is also shrinking (ESA’s industrial orders dropped by 31% in ten years), while all other space-faring countries are increasing their efforts. "At the current pace, we’ll soon be downgraded from the premier league," complains Maquet. "In terms of purchasing power, India is already surpassing Europe."

This might be the most important missing element, according to the industry: the new space policy lacks the ambition and long-term vision that all other space powers are pushing forward. "There is not a single mention on manned space although it has now become a major objective not only for the US and Russia, but also for China and India," says Maquet.

In the years when Philippe Busquin was the European commissioner for research, Europe’s space industry was dreaming of a brighter future through the implementation of the green and white papers on space, adopted in 2003 and 2004.