U.S. SPACE INDUSTRY DEEP DIVE

Transcription

1 1 U.S. SPACE INDUSTRY DEEP DIVE A COLLABORATION BETWEEN THE DOC AND THE USAF, NASA, AND NRO FINAL DATASET FINDINGS International Symposium for Personal and Commercial Spaceflight 2014 October 16, 2014 Brad Botwin Director, Industrial Base Studies

2 2 OTE Industry Assessments Background Under the Defense Production Act of 1950 and Executive Order 13603, ability to survey and assess: Economic health and competitiveness Defense capabilities and readiness Mandatory Data Collection Authority under Section 705 of the Defense Production Act. Enable industry and government agencies to: Share data and collaborate in order to ensure a healthy and competitive industrial base Monitor trends and benchmark industry performance Raise awareness of diminishing manufacturing and technological capabilities

3 U.S. Space Industry Deep Dive Assessment Background Partnership with the U.S. Air Force, National Aeronautics and Space Administration, and the National Reconnaissance Office. The principle goal is to gain an understanding of the intricate supply chain network supporting the development, production, and sustainment of products and services across the defense, intelligence, civil, and commercial space sectors. Objectives: a) Map the space industrial base supply chain in unprecedented detail; b) Identify interdependencies between respondents, suppliers, customers, and USG agencies; c) Benchmark trends in business practices, competitiveness issues, financial health, etc. across many tiers of the industrial base; and d) Share data with USG stakeholders to better inform strategic planning, targeted outreach, and collaborative problem resolution. 3

4 4 Overview of Respondents Respondents by Type of Organization Commercial Companies 3,585 Universities 125 Non-Profit Organizations U.S. Government Agencies Total 3,780 62% of respondents are small businesses, as defined by the Small Business Administration Respondents by Average Annual Net Sales ( ) Very Small (Less than $10M) Small ($10 50M) Medium ($50 250M) Large ($250M 1B) Very Large (Greater than $1B) 1, No Sales 306

5 5 60% Involvement in Market Segments 50% 52% 50% 48% 40% % of Respondents 30% 20% 35% 33% 32% 29% 28% 27% 10% 0% Space Aircraft Electronics Energy C4ISR Missiles Ships Ground Vehicles (Military) Healthcare

6 6 Structure of the DOC Survey Created 16 general segments comprised of 360 individual products & services. Product and Service Segments: A. Spacecraft & Launch Vehicles B. Propulsion Systems & Fuels C. Navigation & Control D. Communications Systems E. Space Survivability, Environmental Control/Monitoring, and Life Support F. Payload Instruments & Measurement Tools G. Ground Systems H. Non-Earth Based Surface Systems I. Power Sources & Energy Storage J. Electronic Equipment K. Computer Hardware & Robotics L. Software M. Materials, Structures, and Mechanical Systems N. Manufacturing Tools & Specialty Equipment O. Services P. Research & Development Respondents detail their critical suppliers, customers, and involvement in over 205 USG space programs.

7 7 Single and Sole Source Suppliers* Sole Source Supplier 11% 7,361 unique critical suppliers. Single Source Supplier 21% Not Sure 7% Not Single or Sole Supplier 61% Top 5 Sole Source Product/Service Areas: 1. Integrated circuits/ semiconductors 2. Adhesives 3. Chemicals 4. Machining services 5. Antennas/antenna systems * As a percentage of total products/services provided.

8 8 Supply Chain Mapping: GPS III 462 entities in supply chain map. 43 respondents indicated potential loss of viability/solvency with a sudden decrease in USG demand. 12 respondents were identified as high/severe financial risk. GPS III respondents support over 236 USG space programs. Most prominently: GOES-R (NOAA) AEHF (USAF) MUOS (U.S. Navy) SBIRS (USAF) Other GPS Systems

9 9 Exposure to Space-Related Sales* Between 0-5% 1,140 Respondents Between 25-95% 341 Respondents Between 5-25% 463 Respondents Greater than 95% 190 Respondents Need to understand the potential impact of USG policy decisions on respondents, space-related or otherwise. * 1,646 respondents declared that they had no space-related sales.

10 Net Change in Space-Related Customer Demand for Respondents Business Lines ( ) 10 Inspection and Quality Control 24 Distribution/Brokerage/Reseller/Retail Manufacturing systems development and management Testing/evaluation/validation Raw materials provider Material preparation (casting, forming, molding, forging, etc.) Maintenance/aftermarket/repair/refurbishing services Information Technology (software, hardware, installation) Material finishing (machining, coating, plating, heat treating, etc.) Manufacturing (including assembly) Professional services (legal, accounting, consulting, etc.) Other services not specified Integration (product, systems integration) Product and design engineering (tooling, new processes, etc.) Research and development Net Change in # of Respondents (Increases in Demand Decreases in Demand)

11 Workforce: Fluctuations in Engineers, Scientists, and R&D Staff Change in Engineers, Scientists, and R&D Staff: Universities: +9,958 Small businesses: +4,762 Respondents that worked on Space Shuttle/Constellation: -7,955 Respondents with no space-related sales: +13,788 Respondents with >35% space-related sales: -6, , ,000 80,000 60,000 40,000 20,000 - (20,000) Net Change in Engineers, Scientists, and R&D Staff Dependency on USG Space Programs Not Dependent on USG Space Programs Dependent on USG Space Programs Very Large respondents dependent on current USG space programs constituted the majority of decreases.

12 Strategic Environment: Understand the Collective Problem 12 Top 10 Issues and Challenges Affecting Respondents Long-Term Viability Domestic Competition Labor Costs Proposed Cuts to USG Space Programs Foreign Competition Variability of Demand Healthcare Taxes Government Acquisition Process Skills Retention Government Regulatory Burden We have 2,000+ comments from respondents on these topics. Issues More Commonly Affecting Larger Respondents Domestic Competition Foreign Competition Variability of Demand Export Controls Issues More Commonly Affecting Smaller Respondents Healthcare Taxes Labor Costs Difficulty Presenting Innovative Products to the USG Barriers to Entry in Commercial Space Market

13 13 Potential Impact of Export Control Reform Based on proposed regulations, OTE identified 155 product/service areas in the survey that may move to the CCL under Export Control Reform 1,941 respondents provide at least one of these 155 product/service areas 1,288 of these respondents do not currently utilize the U.S. export control system for space-related products/services 865 of those 1,288 respondents are small businesses

14 14 Location of Top Space-Related Customers* Canada France United Kingdom Germany Japan India Italy Spain China South Korea Russia Israel The Netherlands Australia Sweden Mexico Brazil Singapore Turkey Norway * Based on total number of products/services sent to customers in each country. Space-related exports to highlighted country destinations may be eligible for Strategic Trade Authorization (STA) license exception.** 754 non-u.s. customers identified in the 13 highlighted countries. ** Only includes countries in Country Group A:5

15 New Report Released: Impact of U.S. Export Controls on the Space Industrial Base 15 More Reports to Come: Employment in the Space Industrial Base Small Businesses and the Space Industrial Base Challenges in the Space Industrial Base

16 New Project: Space-Related Propulsion Systems 16 Working with NASA s Marshall Space Flight Center and the National Institute for Rocket Propulsion Systems (NIRPS). Gather detailed data on U.S. propulsion supply chain to assess impact of USG procurement decisions on the industrial base. Using Defense Production Act (DPA) authority to expand and refresh data collected by OTE Space Deep Dive and the Aerospace Corporation.

17 17 BIS/OTE Contacts Brad Botwin Director, Industrial Base Studies (202) Christopher Nelson Trade and Industry Analyst (202) Jason Bolton Trade and Industry Analyst (202) For further results from this assessment, see: Visit us in Booth.

18 18 Space Deep Dive NDIA Collaboration In March 2014 both the House and Senate Armed Services Committees requested input from the National Defense Industrial Association (NDIA) to support ongoing legislative initiatives concerning acquisition reform. Initiative allowed for industry and USG stakeholders to identify problems currently in the acquisition process, discuss their root causes and recommend possible legislative and regulatory solutions. OTE provided NDIA top-level findings and comments on acquisition reform and implications for the defense supply chain based on aggregated results from its Deep Dive assessment. In late September NDIA's draft report will be shared with the stakeholders, then finalized and delivered to both Congress and the Pentagon. Issue areas communicated by OTE concerning USG acquisition reform include: Insufficient upfront and timely information on contract requirements; Cost of bid process is prohibitive for many small companies; USG contracts are seen as less attractive than commercial contracts; and Difficulty presenting USG with new & innovative products to meet current/future requirements.

19 USG Space Programs with the Greatest Non-U.S. Based Supplier Support Space Shuttle Program International Space Station Program EELV - Evolved Expendable Launch Vehicles AEHF - Advanced Extremely High Frequency GOES-R: Geostationary Operational Environment Satellite JWST - James Webb Space Telescope Commercial Crew and Cargo Program WGS Block I - Wideband Global SATCOM SBIRS - Space Based Infrared Systems SLS - Space Launch System Constellation Program GPS IIIA DSCS - Defense Satellite Communications System NPOESS - National Polar-orbiting Operational Environmental Satellite System TDRSS - Transmission and Data Relay Satellite System # of Products/Services Provided 19 Non-U.S. based suppliers support 215 USG space programs with 771 products and services. 44

20 Potential Impacts of a Sudden Decrease in USG Space-Related Demand 20 Pursuit of other U.S. customers 1152 Pursuit of new product/service lines Loss of personnel with key skills Reduced participation in U.S. Government contracts Decreased capital expenditures Decreased research & development expenditures Disproportionate reduction in sales revenue Increased product/service costs Reduction or elimination of particular product lines Pursuit of other non-u.s. customers Loss of organization viability or solvency 602 Elimination of all participation in U.S. Government contracts 443 Sale of key production equipment 276 Other # of Respondents

21 21 Overview of Financial Risk Metrics Metrics: Operating Margin EBIT/Pre-Tax Margin Net Profit Margin Debt Ratio Debt-to-Equity Ratio Current Ratio Quick Ratio Inventory Turnover R&D Intensity Z-Score Financial Risk Designation Low/ Neutral Risk 2,117 59% Moderate/ Elevated Risk 1,096 31% High/ Severe Risk %

22 Financial Health At Risk Product/Service Areas by Segment* 22 O: Services M: Materials, Structures, and Mechanical Systems J: Electronic Equipment P: Research & Development D: Communications Systems F: Payload Instruments & Measurement Tools L: Software C: Navigation & Control N: Manufacturing Tools & Specialty Equipment I: Power Sources & Energy Storage B: Propulsion Systems & Fuels K: Computer Hardware & Robotics E: Space Survivability, Environmental Control/Monitoring, G: Ground Systems A: Spacecraft & Launch Vehicles H: Non-Earth Based Surface Systems 0 1,000 2,000 3,000 4,000 # of Product/Service Areas Provided Low/Neutral Risk Moderate/Elevated Risk High/Severe Risk * Based on 354 high, 1,096 moderate and 2,117 low risk respondents