Space Industry and is Space Exploration Worth the Cost

Introduction

After the World War II the rockets and satellites became an inevitable part of the military but in course of time they found civilian applications. For a long time, the space industry was constrained to the government organizations. However today many major private commercial enterprises have also set foot in this field with the foresight of the long-term goals. The exponential growth of the space industry has unfolded new business opportunities like the space tourism. The presence of multiple organizations in this field has accelerated the race in this industry. The Advances in material science enables experimenting beyond the old thresholds using fewer resources than ever before. The space industry was very expensive however the recent advances helped to bring down the cost dramatically. The cost and the technology are the two areas that space industry can leverage. The commercial scope of space industry promotes private investment and public private partnerships in this field.

The space industry is not anymore reserved for the government alone. The private companies entered this field more vigorously and swiftly than the government agencies. Today these companies are competing each other and this healthy competition makes better development and progress. The leading ones include SpaceX, Blue Origin and Virgin Galactic. Earlier private companies concentrated on satellite market for many years but today they are looking broader into this industry and aiming at human spaceflight.

The commercialization of space is a leap of faith because the space industry raises a lot of questions about the risk associated with it. The technology incorporated in this industry is very much advanced as well as complex. The system is prone to errors as it is dealing with complex factors. But however, error is not an option in a field where single error leads to tremendous loss of time, money and even human life. The space industry deals with technology which requires extremes steps and planning. An extremely minute miscalculation would result in total loss and wastage of years of planning. Investing in this industry is actually taking a huge risk because there is no assurance. With a lot of business opportunities in the space industries, whether investing in this industry worth the risk? Every business has its own risk but the should be worth it. There always a 50-50 chance for success and failure when doing business in the space industry.

Key Literature and Theoretical Background of the Topic of Investigation

Broadly speaking space industry can be defined as the companies that provide goods and services related to space and are involved in the space economy. It involves long term goals, the first thing would be research and development of the technology needed, secondly manufacturing and implementation of these hardware and technology and lastly providing the service to the end users. The findings of analysts expect the space industry’s value between $1.1 trillion and $2.7 trillion by 2040 (One giant leap for Wall Street: the risk and opportunity of investing in space, 2017). Global space industry is worth $350 billion today. In the OECD countries there are about 1.2 lakh people working in this industry and related structure. The Russian space industry employs about 2.5 lakh people. Space industry also includes companies that build the satellites and the ones operating them. Most of the major companies rely of satellite communications for their businesses. The space industry will absorb much of the business that depend on satellites in course of time. The privately held companies would go public in course of time and will provide investors a way to invest in space. 

Satellite Manufacturing

This sector is responsible for manufacturing satellites and their subsystems. Today all space agencies want their satellites to be designed and produced faster than ever before. Earlier it took years for manufacturing of satellites now it is reduced to as little as 18 months. The invention of new innovative tools like 3d printing, robotics and automation will also help to enhance the manufacturing process. Satellite building is about to have intense growth with the advent of these technologies and because of the commercialization of the space industry. Satellite manufacturing market is about to reach $600 million by 2022. Approximately 3,500 small satellites are scheduled to launch by 2028. By 2040 there would be about as many as 20,000 operational satellites in the orbit as compared to the 1,400 today (Analysts Predict a Golden Age for Cubesats… If they Can Get Launched, 2018).

Support Ground Equipment Manufacturing

Global ground support equipment manufacturing market is expected to reach $24 billion by 2023. Recently the space industry has witnessed continuous growth in the development of ground support equipment. The need for large initial investment is the only draw back that opposes the growth of this industry (Global Opportunity Analysis and Industry Forecast, 2017).

Launch Industry

Even though uncertainty and setbacks exist in the industry, the launch industry continues to grow. Reports suggests that over 100 different launch vehicles have been under construction in the last four years. There were only 20 in 2015. The launch prices offered varies from $10k to $50k per kg. They are not cheap but they do provide convenience. Today there are several successful companies in the space industry. The main objective of these are to reduce to reduce the cost of access to space. Some of the most successful ones are (How Much Money Private and Public Companies Have Poured Into Space, 2018)

SpaceX

Founded by Elon Musk in 2002, it had a huge growth. The company has an ultimate goal of space colonization. They have utilized the business opportunities in design, manufacture and launch of rockets and are competing directly with the previous contract holders for NASA. They made the reusable rockets and set example for sustainability in the space industry. They have bagged $12 billion in contracts and nearly 60 completed missions for both commercial as well as government clients.

Blue Origin

Founded by Jeff Bezos in 2000, it aims at human space flight targeting the space tourism industry. The company made rockets that allows space craft to land vertically which was only conceptual before them.

Virgin Galactic

Founded by Richard Branson in 2004, it describes itself as the world’s first commercial space line. It aims to provide launch into space from a jet plane rather than the conventional way, from ground and provide 6 minutes of weightlessness in course of 2.5 hr flight to the passengers. It ran to an accident in 2014 losing the life of the pilot. Factors that will shape the Space Industry in the upcoming years (Five Factors That Will Shape The Space Industry Over The Next Five Years, 2017).

Sustainability

The space junks due to the non-sustainable space experimentations led to growing threat of orbital debris. In a sensitive field like space industry these space junks are a serious threat. It can cause serious damage, so companies have an incentive to go after it. Space debris monitoring and removal market will be worth around $2.7 billion by 2021. This industry has a lot of opportunities and very less competition (Weinzierl, 2018).

Data

Space Industry is all about experimenting and learning to solve the complex challenges during the space exploration. So, the data generated should always be collected, shared and analysed. By incorporating machine learning and big data analytics decision making and analysing can be made easily. It is expected to generate over $100 million in less than 3 years.

Analytics

The raw data alone can’t solve an industry which is vulnerable to minute calculations. The data harvested should be analysed for intelligent decision making and development of technologies. Contracts are being made for sharing of data held by different organizations in this industry. The military of different countries has eyes set on this data since it can be used for both offensive and defensive way.

Partnerships

The development of space technology is extremely difficult. So, to bring about profit and results, the partnerships act a catalyst. The joint research agreements always prove to be worthy. The great opportunities in this field always attracts investors like a honey pot.

Property Rights

The rapid growth in space industry clearly gives us the image that space colonization is not far. There will be competition over space resources. So, there should be international legal framework under which space commerce should work. The land on other planetary bodies can be purchased just like we do on earth. Major hotel chains had already made plans for this.

Insurance for Space travel

It would seem insane but it’s not. Last year analysis made it clear that the space insurance company collected $715 million in premiums and had to pay $636 million for claims, yet there is profit margin of considerable amount (Why on Earth would a company offer insurance for space travel, 2018). The main problem in this business is that there is very few customers and the risk is high. But the space flight is becoming more and more advanced with time, so Space travel insurance will remain profitable, more over the profit margin will increase tremendously in the coming years. When success rate decreases the insurance, company can increase the charge and keep up with profit. On one side we can see the advancement of technology reducing the failure rate but the increasing space debris possess a serious threat for the future of space industry (Gubby, Wade and Hoffer, 2016).

Risks

The future of space industry is totally based upon assumptions. One major setback in this field could affect the entire industry adversely. The assumptions may not always happen as planned. This acts as a hindrance in receiving the funding during businesses in the space industry. Failure comes in two types – the loss of scientific opportunities and the loss of human life. The rules and regulations imposed on the industry by different government really lags the progress of the industry because everything would require sanctions from the government. Since space industry requires very high initial budgets, many companies can’t get into the market and some won’t last long. Unlike conventional business operations there is little reasons to believe competition will drives prices down in the space industry. Greater risks might be taken in order to increase profitability. As this field becomes more competitive and the introduction of more companies to this field increases the probability of accident or emergency.

As per the international treaties, the state launching a probe or satellite is liable to pay compensation if any damages or accidents occur. But the costs of space explorations will be extremely high making most of the poor countries to depend on commercial launchers but even if the commercial launcher makes any mistake the poor country would have to pay the price. This treaty should be modified making the launching agency equally responsible. The issues concerning the safety of astronauts is also not yet completely sorted out. Even with the advancements in technology the space travel is still inherently risky. The response of the public if a private flight ends in loss of life would make it difficult for the industry to pick up after the incident. The growth of space insurance is a blessing for some companies since one failure may not result in total loss. The loss of hardware can be claimed from the insurance companies. But the insurance companies do charge heavily but its always better to be insured (Langston, 2016).

Direction of Rresearch and Expected Findings

Private space flight should create many opportunities for scientific progress and opens wide business opportunities. Commercial companies winning the contracts for space missions over the old and experienced government agencies is a clear picture of new model and new way of profit. The private companies have overtaken the government agencies by doing the work faster and cheaper. Take the example of Falcon 9 rocket by SpaceX. They took only 5 years and $400 million to develop this rocket which is successfully launching missions. On the other hand, if this was done by NASA it would have cost them 1.4 billion USD. The existing industries on earth are looking for ways to expand, and space is a great opportunity. The expanded space economy would provide better opportunities for growth (These 5 industries will be first to do business in space, 2017).

Energy

It is the largest industry on earth. It is valued over 8.4 trillion USD and has a compound growth rate of 4.1% annually. Solar energy when gathered from space would be more effective as there is no hindrance there. So, energy field opens up wide opportunities during the expansion of space industry. Business plans to harvest the solar energy more efficiently will have scope both on earth and space.

Mining

The global mining industry lost its market value from $1.6 trillion in 2010 to $714 billion in 2016. Resources can be mined from the celestial bodies like the asteroids and the Moon. With the decrease in space exploration costs asteroid mining would become reliable and cheap.

Transportation

The in-space transportation should be established for colonizing the space and for transporting the necessary resources. In-space superhighways would be created for it. Even though its conceptual, the existing Ariel taxi business can be extended to meet the space constraints.

Construction

Orbital construction systems will be launched not long from now. The 3d printing technology is the leading one for enabling construction in the zero gravity. The methods implemented for construction on earth and in space would be entirely different but will be equally valuable.

Hospitality and Real Estate

Humans will colonize the space in the near future for sure. ISS has human presence for the past decade. Commercial space stations will be put up and hotel chains etc in the space is about to happen. The space tourism is anticipated to generate $37 billion in the next decade alone.

Structure of Final Report

After several costly failures, NASA changed their mission strategy to send several smaller and less expensive missions rather than large costly ones once in many years. The aim is to balance the cost and risk (Scientists See Big Rewards (and Risk) in Private Spaceflight, 2013). There is a need for upgraded versions of authority for directing and monitoring the routes, launches and landings on earth, between and on other planetary bodies. The safety concerns should be maintained at much more intensity for space exploration. The protocols for space explorations should be standardized. Private space industry faces less public scrutiny allowing them to easily take risks. Due to the development of space technology only less than 1% of the launches with people have been unsuccessful from the year 2000 onwards. This makes it clear that the risks associated with the space industry does not possess much threat for doing business in the industry.

Reflective Report

The development of reusable rockets and cheap disposable rockets helped doing business in the space industry more profitable. This technology is accomplished by SpaceX, Blue Origin, Vector and Rocket Labs. The huge growth of these companies gives a clear-cut image that the business in space industry is worth the risk.