Commercial Space Industry May Be in Economic Bubble, Orbital ATK CEO Warns
After weathering downturns in the 1970s and 1990s, the commercial space industry might now be in a "third delusion" economic bubble, Orbital ATK CEO David Thompson said Tuesday at a Washington Space Business Roundtable (WSBR) event. "When you're in a bubble, it's hard to know you're in the bubble," he said.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Some proposed space ventures generating sizable commercial interest, such as asteroid mining and private missions to Mars, are unlikely to be past the talking stage in 10 years, he told us after his WSBR address. There likely will be space tourism by then, but only to suborbital altitudes and only for deep-pocket customers, Thompson said: "Space is still really hard, and it's not likely to get a whole lot easier in a hurry."
Calling it "the space cicada effect," Thompson said roughly every 15 years "we all temporarily lose our minds." The "first delusion" bubble started in the mid 1970s, with talk of space-based manufacturing, space colonies and solar-powered satellites, and was fueled by the promise of the space shuttle program revolutionizing the ability to put things into orbit, he said. That bubble ended with the 1986 space shuttle Challenger explosion, and the bubble itself didn't see much loss of private capital because many plans were only in the talking stages, he said. There were early commercial launches during that time and the beginnings of the commercial satellite sector, he said.
The second bubble, starting in the mid 1990s, was driven by the end of the Cold War and aerospace companies searching for new markets, plus the booming stock market and new communications and information technologies, Thompson said. "If you were in the satellite business, raising money ... was too easy," he said. That bubble cost the space sector $25 billion in written-off investment, but also saw the commercial imaging and direct-to-home satellite industries' birth, and wide deployment of the Air Force's GPS system, he said.
Signs of a current third bubble include the heated interest and investment in such applications as low earth orbit constellations, reusable rockets, orbital tourism, asteroid mining and private missions to Mars, Thompson said. Much as the first wave was fueled by the promise of the space shuttle, the retirement of the shuttle -- along with the International Space Station -- "has created some new opportunity," he said. "Many of the new ventures may be fantastically successful, or they may not. Perhaps the third time will be a charm."
Orbital ATK's venture into geostationary satellite life extension (see 1604120044) "may be a pretty good place to be" if the space industry hits tougher times in coming years, Thompson said. He also said the company is increasingly trying to play in the commercial satellite space with its push into electric propulsion, with the first launch scheduled for later this year. And Thompson said the ongoing improvements in the performance/price ratios for communications satellites -- that being bandwidth multiplied by satellite's life, divided by capital cost -- should continue at the same 11 percent per year clip for the foreseeable future -- that improvement being "one of the unrecognized success stories" of the commercial space industry in recent years.