A substantial national budget and a leading position in ESA makes France Europe’s strongest space nation. But can it withstand increasing international competition?
The future of France’s space industry, largest among the European Union nations, is beholden to European policy, say its leaders, They warn that the region’s stagnant space budgets will leave the industry in a diminished competitive position if the situation does not change.
The warning comes two months before the industry’s largest customer, the European Space Agency, decides its next multi-billion euro budget. “The trend has been flat budgets. It’s a stagnation of ambition; this is the main element of the [European space industry] landscape,” says EADS Space chief executive Francois Auque.
According to European industry trade body Eurospace, the 27 EU/ESA member states have lost 4,000 space jobs in the last four years. Of the 30,500 Europeans who still work in the space industry, France has 12,600. The decline is due to static government budgets and a much tougher commercial market. For example, worldwide orders for geostationary communication satellites declined steadily from 35 in 2000 to 13 last year.
Despite the intensified competition, of the European space-faring nations, France had the biggest space industry turnover in 2004 with its total of €2.2 billion ($2.7 billion) in revenues representing 46% of the total European turnover of €4.78 billion.
Of France’s 12,600 space employees, the workforce is split between 9,540 working for larger system integrators – essentially satellite manufacturers such as EADS and Alcatel Alenia Space – and everyone else. A further 1,800 work for subsystem suppliers, 1,100 for equipment suppliers and 140 in services.
Although international commercial orders remain weak, French industry benefits from the largest government annual expenditure on space within ESA member states. Last year the French national space programme was worth almost €1.1 billion for both civil and military programmes, and additionally the government paid the largest contribution to ESA in 2005 – €673 million. Through ESA’s policy of geographic return, much of that is to be spent with French industry.
The French space programme is overseen by the Centre National d’Etudes Spatiales (CNES). Founded in 1961, it employs 2,400 people, 1,800 of whom are engineers. CNES carries out work on launchers for access to space, civil applications such as satellite services, related science and technology research, and security and defence projects. In its own words its mission is to “guarantee France’s independent access to space”, albeit via ESA.
CNES is aided by the nation’s aerospace agency, the Office National d’Etudes et de Recherches Aérospatiales (ONERA), which is also headquartered in Paris. The two conduct research ranging from propulsion advances to improvement of the European Ariane 5 launcher with their “nozzle and aerodynamics” project. They are also working on a new re-entry vehicle called Pre-X, the French candidate for what could become a European reusable cargo or crew spacecraft under ESA’s Future Launcher Preparatory Programme.
All these programmes heavily involve French companies such as Safran, the Franco-Italian entity Alcatel Alenia Space and EADS Space’s French operations. These majors take an equally large share of Europe’s space business.
EADS Space, with revenues of €2.4 billion in 2004, employs around a third of the French space workforce, with over 4,800 people at sites in Toulouse, Velizy, Les Mureaux and in Paris. Its French operations are part of two subsidiaries: satellite manufacturer EADS Astrium and rocket developer EADS Space Transportation.
French satellite manufacturer Alcatel Space has been through a restructuring, swapping business units with Italian giant Finmeccanica. Alcatel divested its space services arm when, on 1 July, it formed Alcatel Alenia Space after merging with Italian satellite manufacturer Alenia Spazio. “Our market is now mainly commercial, with some French and ESA contacts,” says Alcatel Alenia Space vice-president for strategy and marketing Olivier Coste. The newly merged Alcatel Alenia Space has estimated 2004 sales of €1.8 billion.
Strong support
The combination of a substantial national budget, two supporting government agencies and leadership in ESA means that the French space industry is the strongest in the EU. Last year French companies received €1.27 billion from institutional customers alone, twice as much as nearest rival Italy. They also won €917 million worth of business from commercial customers, four times as much as closest competitor Germany.
Eurospace’s figures show that 62% of industry revenues were from satellite applications; 22% from launcher development and production; 12.5% from space science and infrastructure; and 1.6% from support and test activities. With a heavy presence in the main industry sectors, France’s industry is sensitive to market changes, but for the past 18 months those have been for the better.
After three years of steady decline the space market rebounded in 2004. But even with the 22% growth seen in that year, and the sector’s consolidated European turnover of €4.78 billion, the commercial market is still far below its 2000 and 2001 levels. The growth has not been from manufacturing, but from satellite services, and subsequently European space employment continued downwards, dropping by 3.2% to 30,500 last year. It is for this reason that the institutional market is so important.
The US-based Satellite Industry Association’s 2004 state of the industry report, published in June, showed that, of the satellite launches last year, 53% were government and 47% were commercial. In 2000 the balance was 66% government, 34% commercial. Despite the historical trend towards greater commercial activity, government purchasing is still the leader.
Alain Gaubert, secretary general of Eurospace, says: “Government support is needed to enable industry to become a world competitor and that in turn enables industry to provide government with good services.” In Europe that virtuous circle begins with ESA and its budget, which for 2005 is €2.97 billion. Next is the combined civil spending on the EU and ESA nations’ national programmes. In 2004 that was €1.74 billion, bringing the civil space spend in recent years to over €4 billion annually. The same countries’ total military space expenditure was about €700-800 million last year, and half of this was French. One of its major military programmes is the Syracuse communication satellite network.
While a total civil and military spend of €4-5 billion a year may seem a lot, European industry is fearful of growing budgets elsewhere. The USA, China and India “are increasing dramatically their budgets, military and civilian, and we are just flat-lining,” says Auque.
European governments spend less than half NASA’s annual budget and the US agency funds civil programmes only. The US Department of Defense, according to Auque, spends 20 times more than the combined military space budgets of the EU/ESA countries.
This disparity is an issue that will not go away. Gaubert says: “It’s a great concern to us. We spend a lot of time and many trips going to Brussels, but we’ve seen almost no results.” This has led to the kind of consolidation that produced Alcatel Alenia Space, but Coste says: “There is not much scope for [more consolidation and] fewer satellite manufacturers in Europe.” Industry feels it has done its bit, and now wants the European governments to do theirs. “Europe has not understood the strategic importance of space – for sovereignty, for discovery, for science and military networks,” Auque says.
The industry knows what it wants the governments to understand and act on. Through Eurospace it has published a series of position papers for action.
Research and technology and security and defence are key themes. On security and defence the industry calls for an immediate spending increase to €1 billion a year, increasing to €2 billion from 2012. This funding would go towards secure satellite communications, a new generation of optical and radar imaging systems, a European signals intelligence capability, space-based radar and an early warning system against missile attack.
Eurospace’s research and technology priorities focus on capabilities needed to keep industry competitive rather than sums of money. There are 21 technology priorities, including high-resolution, wide-swath synthetic aperture radar; advanced software; lidar systems; advanced chemical propulsion; reusable launchers; satellite formation flying; and new power sources such as nuclear. Some of these demands might be met by ESA budget changes. But Coste says: “We do not expect major budget increases. It will be where the money is spent that changes, not how much.”
Budget negotiation
However, all the industry’s demands might be met by the EU’s policies. The European Commission is renegotiating its entire budget and that includes planning for its next five-year research period, the Seventh Framework. During the Sixth Framework, €1.07 was spent on aeronautics and space. The EC has proposed a doubling of funding overall for the Seventh Framework.
Despite the EC proposals, the EU budgetary process is going through its own troubles with negotiations dragging on beyond the original deadline of June. With 10 new members expanding the bloc to 25 nations, everyone wants the funding cake sliced up to their advantage. Auque is concerned that comments made so far surrounding this tortuous process do not bode well for the industry. “Now they are speaking about the traditional [spend for space] and there has not even been a vote yet [by the EU ministers],” he says.
A separate EU space programme is being drawn up by ESA and EC officials under the aegis of a space council. Its third and final meeting to agree the programme is in October. Despite the cynicism surrounding budget talks, the EU’s embryonic space programme has already begun to deliver. Major parts of that will be the Galileo satellite navigation system and Global Monitoring for Environment and Security (GMES) constellation.
Already in its development stage, Galileo is the €3.4 billion public/private partnership to develop and deploy a 30-satellite navigation system. French companies are members of the two consortia that are combining their bids for the concession to operate the system.
The GMES Earth observation system is described by the EC as a concerted effort to make environmental and security-related information available to policy makers, to better anticipate crises. It is also at the start of its implementation stage and ESA has released €30 million for definition studies on the five “sentinel” satellites that will be its backbone.
Relative decline
However, these projects will not end what the industry sees as a relative decline in investment by Europe, in comparison with the USA, Japan, China, India and developing nations seeking spacefaring status. But French industry leaders have no problem with their government. The decision earlier this year to develop new upper stages for its ballistic missiles will ensure France’s capability in people and infrastructure will be maintained.
What French industry wants the rest of Europe to support, and what it argues is in Europe’s interest, are other key projects such as ESA’s Aurora exploration programme and Alphasat, the payload for the future Alphabus large satellite platform already under development. If the EU turns away from these key decisions, Auque has no doubt what it would mean: “Today we are shocked in Europe that China is selling t-shirts. Within 10-15 years, if we go on like this, China will be selling us satellites.”
ROB COPPINGER/LONDON
Source: Flight International