SOURCE: Euroconsult

Euroconsult

February 16, 2011 12:14 ET

Worldwide Government Spending on Space to Flatten Over Next Five Years

End of Investment Cycle May Give Way to Era of Partnership

PARIS and MONTREAL--(Marketwire - February 16, 2011) - Euroconsult, the leading international consulting and research and firm specializing in the space and satellite sectors, announced the findings of its just-published report "Government Space Markets, World Prospects to 2020." According to the report, government spending on space hit a number of major milestones in recent years, including a historic peak in combined government spending of $71.5 billion in 2010. However, after 10 years of spending increases across the globe, this trend is about to come to a halt. According to Euroconsult, public space program financing will slow dramatically in the next five years due to several factors.

"Government investments in many space applications are cyclical, particularly when related to the procurement of operational systems," said Steve Bochinger, President of Euroconsult North America. "Defense procurement, which has driven budget growth for a decade -- particularly in the United States -- is a typical example. Furthermore, following stimulus funding allocated to space projects to support national economies and innovation, most governments have returned to more stringent budget spending. This has already resulted in cutting non-priority budget items and, potentially, space programs."

CIVIL PROGRAMS SUPPORT INVESTMENTS IN SPACE APPLICATIONS
According to the Euroconsult report, overall growth in civil program expenditures will be sustained -- albeit at more moderate growth rates -- thanks to a growing commitment from a wider range of countries and agencies. Leading programs such as those in the United States, Europe, and Japan are expected to see continuing budget pressure. In Russia and countries reaching 'space maturity' (e.g., China and India), space expenditures will continue to grow, though more modestly than in the past.

Defense space programs are expected to be influenced by military agency procurement cycles as well as the completion of most programs currently under development, especially in the United States. Developing initiatives in other countries (such as Australia, Canada, and emerging countries) are expected to open the door to other commercial opportunities for the commercial space industry, the Euroconsult report indicates.

A total of 692 satellites will be launched by governments in the coming decade, up 43% from the previous decade. This is a direct reflection of the increasing number of new space-capable countries across the globe. Civil agencies will launch roughly 75% of these satellites, a significant increase compared to the last decade during which they accounted for 67% of all government satellites launched.

SPENDING TRENDS IN KEY APPLICATIONS
Applications that drove overall spending increases in 2010 included manned spaceflight, SatCom, and Earth observation. Government spending on space security, satellite navigation (SatNav), science and exploration, and access to space declined. According to Euroconsult, in the coming five to ten years, a number of important trends will emerge or continue that will have a major impact on overall government space spending.

  • SatCom grew by 49% in 2010 to reach $8.4 billion fuelled, primarily by defense spending. Spending should, however, return to historical levels in the short term.
  • Manned spaceflight spending totaled $11.6 billion in 2010, but the current transition of the American program should lead to decreasing investment in the future.
  •  Earth observation reached $8 billion and spending will continue to be driven by defense, climate change and the growing participation of emerging space nations in Earth observation, with spending likely to exceed the $9.5 billion mark by 2015.
  • Science and exploration budgets totaled $5.6 billion in 2010. After a period of decreasing investment, budget growth should resume in the coming years, especially in the United States.
  • Access to space (launch capability) investments reached $4.6 billion in 2010, and should be sustained in the coming years as more governments see independent access to space as a top priority of their space programs.
  • SatNav spending totaled $2.9 billion, a 22% drop due to the end of the European Space Agency's financing of Galileo. Growth should resume in the short term with deployment of several new domestic systems.
  • Space security budgets fell to $1.7 billion, a 47% decrease which is linked to program challenges and cancellations in the United States. Governments are expected to support funding in this area to adapt to a wide variety of threats to protect their space assets and capabilities.

The Euroconsult report details developments on government expenditures on an application-by-application basis, including in-depth analysis on each of these applications.

BUDGET PRESSURES TO ENCOURAGE PARTNERSHIPS
With governments across the world adopting strict spending policies, the space sector will experience a new era of cooperation as governments strive to make their programs as efficient as possible in order to compensate for budget limitations. According to Euroconsult, these constraints will lead to enhanced cooperation with the private sector and more multilateral government projects. Areas of cooperation will likely favor innovation in programs, financing and management.

"We have seen a trend towards partnerships and innovative schemes for financing and risk sharing with the private sector," said Bochinger. "European countries have pioneered these innovative schemes in the late 1990s because they were facing tough budget constraints. Whether it be public-private partnerships, Private Finance Initiatives, hosted payloads, COTS or service agreements, more governments across the world are looking for extended cooperation with the private sector. Countries are also expected to undertake an increasing number of international cooperation projects in an effort to reduce costs. This is applicable not only to space science and exploration projects but also for satellite applications including defense and security."

About the report
Government Space Markets, World Prospects to 2020 is an exhaustive assessment of all the applications important to government space programs. The report provides unrivalled insight into government agencies looking to benchmark and initiate partnerships and serves as an indispensable planning tool for companies looking for government space business. It offers exclusive data, forecasts, and analysis for all major space applications including Satcom, Earth observation, Satnav, space science, manned spaceflight, access to space, and space security. Each application is analyzed in detail, including priorities and objectives, current trends in civil and defense programs and future trends in government spending and satellites to be launched. The comprehensive overview pulls all that information together to assess consolidated trends and identifies budget trends and leading agencies in terms of investment in a given application. 

About Euroconsult
Euroconsult is the leading international consulting and analyst firm specializing in space applications, communications, and Earth observation. Euroconsult provides strategic consulting and analysis, develops comprehensive research reports and forecasts, and organizes events including the annual World Satellite Business Week, the industry's leading executive-level gathering (www.satellite-business.com), and the Symposium on Earth Observation Business. With 25 years of experience Euroconsult has over 560 clients in 50 countries, including leaders throughout the satellite industry: satellite manufacturers and launch service providers; equipment providers and integrators; government agencies; satellite operators and service providers; media and broadcasting companies; and banks and investors. The company has completed 500 satellite-related consulting projects. Euroconsult is based in Paris with offices in Montreal and Washington, DC. www.euroconsult-ec.com.

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