Portugal Space Day – Brussels, November 11th 2015
The Space Industry: A Portuguese Sector with Potential and the new challenges for Space in Europe

November 11th

by António Neto da Silva, President of PROESPAÇO

 

A) PORTUGAL – Inside view

• Each Euro invested generates a spin-off factor of close to 4 on the country’s income
• The value added per employee amounts to 4 times the national average
• The sector is a 100% exporter, without any imported intermediate inputs.
• Given the extremely high level of accumulated knowledge in our Industry, with its being, in some areas, unique worldwide.
• On account of the exclusiveness of its technology and the projects in which that technology constitutes the core element, it is the only sector where Portuguese companies - generally small ones - subcontract giants like Thales Alenia Space, Airbus Defence & Space, etc.  Portuguese companies take the prime role and we subcontract the European giants.

Within that framework, Portugal’s decision making politicians were called upon, at an Interministerial meeting of the European Space Agency held November 2012, to make strategic options that, as a consequence, would be decisive for the future of the Space Industry in this country.  Within a context of Public Finances being hit by a severe crisis, it meant undertaking investment commitments for the next three years (2013 -2015).  That is to say, a pledge to subscribe to the so-called ESA Optional Programs that would best adapt to the national space industry’s requirements and response capability.

After more than a year of intense awareness initiatives conducted by PROESPAÇO, aimed at sovereign bodies, Portugal’s political decision makers came to the realization of how extremely important it is for Portugal to participate in the ESA.  This meant that they had grasped the decisive need to invest by subscribing to its Optional Programs, thereby ensuring the future development of an industry which, although unbeknown to ordinary citizens, exerts a major influence on improving the quality of their everyday life - quite aside from the fact that we are talking about investments with a guaranteed return of well above the average.  This is an industry that can boast of being among the 6 most technologically-advanced worldwide, with Portugal as a global leader in some of its niches.

It has already been established that all investments made in this sector on an international level show a fairly short term return for the country and its industry.  In fact, each Euro invested generates a spin-off effect of close to four on our national income.  Aside from that, the gross value added produced by each employee in this sector is four times higher than the national average. In light of this reality, when the time came to decide on the future of Portugal’s Space industries, political decision makers took that on board.

Mindful of the financial difficulties that the country faces, PROESPAÇO (Portuguese Association of Space Industries) asked the Government to restore the level of state investment in ESA programs to that realized in 2005;  in other words, after a monetary correction, some €36 million for the entire three years.

It is evident that whoever works in this business sector, a world leader in technology, expects to see Portugal climb to higher levels of development in future, with it investing the same percentage of GDP in Space as allocated by more developed ESA countries.  But right now, and at a time when the State is in the grip of a financial crisis, it is, above all, vital to keep it on the front burner – which is tantamount to saying how important it is to safeguard investments and know-how accumulated throughout the past fifteen years, going back to 2000 when the country joined the ESA.

That, therefore, entails safeguarding a business sector in which Portugal has already achieved a high reputation for quality - acknowledged and praised on the international stage.  Furthermore, it constitutes one of the most advanced technological sectors, served by some hundreds of technicians of exceptional quality, of whom about one third hold PhDs.  It is also a sector where we would see them compelled to immigrate to other markets, resulting in the throwing away of many millions of Euros invested by my country in their trainning. 

Incidentally, the highly creative ability of our technicians has made this sector a niche of excellence in Portugal.

The country has realized that it should maintain and bolster this capital of quality and prestige, as it would make no sense to abandon a movement that propels us toward the most ambitious of global cutting-edge technology programs, which have an enormous impact on raising people’s living standards, even if they themselves are unaware of that.  

It is because the Space industries are engaged in constructing the intelligence of satellites, as well as manufacturing the key hardware integrating them, that we can access the solutions we utilize today;  such as GPS/GALILEO and the detection of illegal ships in Portuguese waters, or those of major importance for the economy, such as timely alerts warning of the risk of forest fires in identified areas, the advance of desertification or the optimization of agricultural irrigation systems - just to mention but a few examples.

Portugal, in order to develop, must invest in this sector, which is one of those with the highest income elasticity of demand worldwide.  If the signal sent out at the Interministerial Meeting in November 2012 failed to meet the industry’s desires, it did however, in spite of everything, represent an increase of 20% in the subscription made to Optional Programs at the 2008 Interministerial Meeting.  And in the mid-term InterMinisterial 2014 it was further reinforced by about €10 million.

This Sector, decisive for the technological upgrading of Portugal, does have a future may Europe implement the right policies.

 

B) EUROPE – Trends and needs of Public Policy for Space

1. Space is an area of excellence of Europe thanks to the consistent and persistent investments of member States since the 60’s.
2. European space industry (upstream) is small in absolute and relative terms (38200 employees throughout Europe / 7,26B€ of turnover) but it is performing well and demonstrates its competitiveness on the commercial markets. Historically its sales are well balanced between commercial and European institutional customers.
3. Governance: Industry doesn’t care about public governance, it can live with several customers and adapt to their various requirements but:
1. There is a need for coordination between institutions: make optimal use of public funds and avoid duplication of efforts
2. There is a need to Ensure European value for European money (other wording for a Buy European Act)
4. European institutions must support industry competitiveness
1. Competitiveness resides within companies organisation, skills, motivation, strategy, etc...
2. Competitiveness can be supported through adequate public R&D policy, focusing on needs expressed by industry, targeting high TRL (Technology readiness levels) developments
5. European industry needs competent customers, knowing what they want and determined to get it
6. The role of public customers in space is evolving and new models are arising (in the US)
1. Less state-owned systems, even in launchers
2. Institutions define their long term needs in terms of service requirements
3. More initiative (and risks) are left to industry in the development phase against long term commitments for procurement of services by institutions
   
7. Is such model desirable for Europe?
1. It allows for flat rate multi-annual budgets, which might be attractive
2. It implies a massive transfer of risk toward industry provided it is remunerated in consequence
8. Is Europe ready to adopt such scheme?
   1. Not before long
   2. European domestic market is still weaker than other space powers: Europe makes little use of space resources as compared to other space powers
   3. The revision of the 2007 European Space Policy suggested by the Italian Presidency is to be considered in light of such reflections
9. However, in the short term some critical policy measures should be implemented:
1. Implement a full-fledged space industrial policy supporting through space-specific procurement both the industry competitiveness and European non-dependence.
2. Reap the maximum benefits of EU investments in space by ensuring that the transversal aspects of space are embedded into the various future EU policies (e.g. telecoms, transport, environment, agriculture/fisheries etc.).
3. Turn H2020 into an instrument promoting industrial leadership and duly taking account of the industry’s needs to consolidate the share of the global markets it has been able to grasp.
4. Commit to the full deployment of the space and ground segments of both GALILEO and COPERNICUS and put them in operational mode while devising tools facilitating the market uptake of downstream services & applications.
5. Foster synergies between space, security and defence in line with the conclusions of the December 2013 Council for Defence and promote efforts towards a future Space Surveillance & Tracking programme.
6. Step-up EU engagement and political support to future international initiatives for Space Exploration. 
7. Initiate long-term reflections on future possible ambitious programme(s) of the EU in space.