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A2100 satellite
The Abbey-Lane report claims that, among other things, export controls have led to the “near demise” of the US commercial satellite industry, yet American-built spacecraft, like the Lockheed Martin A2100 series (above) continue to rack up sales in the global market. (credit: Lockheed Martin)

A stroll down Abbey Lane

There are many things that are in short supply in Washington these days: open seats on the Metro subway system; power hitting by the city’s new baseball team, the Nationals; and, perhaps most of all, common sense. What’s never in short supply, though, are opinions, including opinions about space policy issues. With the appropriations process for 2006 already well underway and dueling efforts by the House and Senate to produce an authorization bill for NASA, people are finding plenty to say about the space agency and its plans for the future.

One of the latest efforts to influence space policy is in the form of a report published last month by the Cambridge, Massachusetts-based American Academy of Arts and Sciences. Their report, “United States Space Policy: Challenges and Opportunities”, was written by George Abbey, former director of NASA’s Johnson Space Center, and Neal Lane, former director of the White House’s Office of Science and Technology Policy under President Clinton. (Keeping with the long-standing tradition of naming panels and reports after their chairs or lead authors, this article will hereafter refer to the report as the “Abbey-Lane” report, or simply Abbey-Lane, with all apologies to the Beatles’ “Abbey Road” album.) The Abbey-Lane report, the academy noted in a press release, identified “threats to the nation’s long-term scientific interests in space” as well as other threats to “the long-term viability of the U.S. commercial satellite industry.”

The Abbey-Lane report claims to have identified “threats to the nation’s long-term scientific interests in space” as well as other threats to “the long-term viability of the U.S. commercial satellite industry.”

The report got some brief attention in the media, including a mention in the New York Times, but has had little effect yet on the current overall space policy debate, in part because many feel Abbey and Lane are discredited to some degree given their roles in previous administration. (Interestingly, Lane served at least briefly last year as an advisor on space issues to Sen. Kay Bailey Hutchison—a Republican from Texas—a tie whose effects may become clear later in this article.) However, do the claims made in the report have any substance? A careful review of the report reveals a number of flaws in the data and methodology they use to back up their claims, as well as some biases that go beyond simple partisan politics. Despite those problems, though, there are a few good recommendations in this report worth considering as part of the overall space policy debate.

The exaggerated demise of the commercial satellite industry

The first of four “barriers” that the report perceives for US space policy is that US export control policy has hurt the space industry. It is a conclusion that by now has become conventional wisdom in the space industry, as well as among its supporters in Congress. The Abbey-Lane report provides some background on how the stringent export controls came into being in the late 1990s, and it is here where the report does stray into partisan territory. Referring to mid-90s incidents where US satellite manufacturers allegedly transferred sensitive technologies to the Chinese, the report states, “The incidents and the fiasco that followed provided the opportunity for a political attack on the Clinton Administration’s more liberal export control policy.”

One of the problems with this claim, though, is that it is difficult to quantify the adverse effect export controls have had on the space industry. There are, of course, anecdotal claims of satellite contracts lost to European manufacturers and difficulties dealing with insurers or international partners. More recently, new ventures entering the space tourism market have run into problems with export controls, even when dealing with countries as friendly to the US as the UK. (See “Entrepreneurial space and policy”, The Space Review, May 16, 2005.) Quantitative estimates, in terms of dollars lost or similar metrics, have been much more difficult to come by.

Abbey-Lane makes an effort to do just that, but in the process overstates the effects of export control. The report refers to a 2003 report by the Satellite Industry Association (SIA), an industry trade group, which noted that “the U.S. share of global satellite sales plummeted from 64 percent of the $12.4 billion market in 1998 to 36 percent in 2002.” Abbey-Lane uses this as evidence to conclude that export controls “have already seriously damaged the U.S. commercial satellite industry” and are responsible for “the present sad situation” and the “near demise” of the US commercial satellite industry.

However, the report has, at the very least, misinterpreted the SIA data. (Disclosure: my employer develops these statistics for the SIA, but the analysis that follows relies only on a careful reading of the publicly-released results.) Indeed, in 2002 US companies accounted for 36% of world satellite manufacturing revenue ($4.4 billion out of $12.1 billion worldwide.) The US market share, though, has fluctuated from year to year. In 2003 the US market share went up to 47% ($4.6 out of $9.8 billion), and back down to 38% ($3.9 out of $10.2 billion) in 2004. However, the US market share averaged over 50% in the latter half of the 1990s, which does suggest a general declining trend.

If the US commercial satellite industry is “seriously damaged”, it doesn’t show up in other statistics: US manufacturers accounted for three-quarters of the 12 “firm” commercial geosynchronous satellite orders announced in 2004.

The problem is that the Abbey-Lane report considers these figures estimates for “global satellite sales.” In fact, it is overall satellite manufacturing revenues, including not just satellites sold commercially but also government satellite contracts, which tend not to cross national borders. According to the SIA data 82% of the revenues in 2004 and 84% in 2003 came from government satellite contracts. Given that only about 20% of the non-commercial satellites launched in 2004 were for the US government, it should be no surprise that the market share for the US is as low as it is. (The SIA data assumes that all revenue for a particular satellite is realized the year it is launched, although the actual distribution of revenues can be spread over several years on a case-by-case basis.) By comparison, in 1998, when the US had that 64% market share, the number of non-commercial satellites launched was about the same, but the number of US government payloads was greater, and there were also many more commercial satellites overall, including dozens of satellites for Iridium and Globalstar, all of which were US-manufactured.

If the US commercial satellite industry is “seriously damaged”, it doesn’t show up in other statistics. According to the July 2005 issue of Via Satellite, a magazine that covers the commercial satellite industry, US manufacturers—Boeing, Lockheed Martin, and Space Systems/Loral—accounted for three-quarters of the 12 “firm” commercial geosynchronous satellite orders announced in 2004. Five of those orders went to SS/Loral, despite the fact that its parent company, Loral Space & Communications, has been in Chapter 11 bankruptcy protection since mid-2003. In recent years Lockheed reportedly considered shutting down its commercial satellite business—part of a long-expected, but never-realized, consolidation of the overall satellite industry—yet has remained in business and has won a number of contracts. Boeing has struggled of late, but those problems have been primarily of its own doing, most notably on-orbit problems with its 601 and 702 series of satellites.

This is not to say that the commercial satellite industry is not hurting, but the problems are industry-wide and not just in the US. The number of commercial GEO satellite orders in 2002–2004 combined—32, according to Via Satellite—is less than the 37 satellites ordered in 2000 alone. With a lack of consolidation, either in the US or Europe, there is overcapacity in the industry, leading to downward pressure on prices, making it hard in turn for these manufacturers to make money on their own. In such a business climate the current stringent US export control requirements do not help, but they alone cannot be considered responsible for the perceived “sad state” or “near demise” of the commercial satellite manufacturing industry.

Moreover, by focusing on the perceived decimation of the commercial satellite industry in the US, the Abbey-Lane report misses out on an opportunity to describe in greater detail how export controls have inhibited international cooperation. This factor is potentially just as debilitating to the US as the effects of export controls on satellite manufacturers, but one that is less well known.

Scientists, scientists everywhere

The second barrier outlined in the Abbey-Lane report should be familiar to many readers. The US, the report claims, is facing “a projected shortfall in the science and engineering workforce.” The report cites a 2004 study by the National Science Board (NSB), which observed “a troubling decline in the number of U.S. citizens who are training to become scientists and engineers.” Abbey-Lane finds problems all around, from the increasing age of the science and engineering (S&E) workforce in the US to worries, voiced by the NSB, that unless action is taken today to encourage young students to study math and science “we could reach 2020 and find that the ability of U.S. research and education institutions to regenerate has been damaged and that their preeminence has been lost to other areas of the world.”

As hinted above, this is not the first time that a report has suggested a shortfall of scientists and engineers. Such warnings have become almost commonplace in the US in the last half-century, dating back at least to the post-Sputnik scare in the late 1950s. Somehow, during this whole time the US has managed to survive, and even prosper, despite these threatened shortages. As Daniel S. Greenberg noted in a Washington Post op-ed last May, “Obscured by the alarmist rhetoric are the repeated false alarms, erroneous forecasts and gluts of unemployed scientists—rather than shortages—that have been the reality in the scientific marketplace for decades.”

“Obscured by the alarmist rhetoric are the repeated false alarms, erroneous forecasts and gluts of unemployed scientists—rather than shortages—that have been the reality in the scientific marketplace for decades,” wrote Greenberg.

Evidence of that can be found in the same NSB report cited in Abbey-Lane. That report found that unemployment for S&E graduates reached nearly four percent in 2002, the last year data were available; that figure was the highest since at least 1983, the earliest data in the NSB report. This, despite a growth in the number of “non-academic” S&E jobs since 1980 at four times the pace of the US labor force in general. In addition, the report also notes rising enrollment in undergraduate and graduate engineering courses since 2002, after years of decline.

None of these is new to those on the front lines of S&E education and employment: graduate students and postdocs. These are people who spend years getting their doctorates, only to spend many more years in low-paying postdoctoral fellowships, building up their CVs to the point where they might, some day, land a tenure-track job, often competing with hundreds of similarly-trained people for the same position. On the message board, operated by the AAAS and used primarily by grad students and postdocs, a recent message thread talked about another report which made similar pronouncements about a scientist and engineer shortage. A sampling of responses:

It’s obvious to nearly everyone within science that there is no scientist shortage. The fact that there are legions of people with doctoral degrees and years of postgraduate experience who are basically career post-docs and barely cracking $30,000 a year should put the “shortage” myth to rest.
I don’t think that shortage is a real threat to the US scientific productivity.
Does any one also remember the myth about 3-5 yrs ago about all the faculty positions that will be open because [there] will be a massive retiring soon. It was something like 25-30% of faculty will retire over the next 5 yrs. I don’t think it ever happened.

In the face of these statistics and anecdotes, it is difficult to argue that the US commercial and government space efforts face a serious threat from a scientist and engineer shortage.

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