U.S. space industry not yet seeing economic slowdown

COLORADO SPRINGS, Colorado Tue Mar 31, 2009 7:55pm EDT

The space shuttle Discovery returns to earth at the Kennedy Space Center in Cape Canaveral, Florida March 28, 2009. REUTERS/John Raoux/Pool

The space shuttle Discovery returns to earth at the Kennedy Space Center in Cape Canaveral, Florida March 28, 2009.

Credit: Reuters/John Raoux/Pool

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COLORADO SPRINGS, Colorado (Reuters) - The U.S. economy is in recession, but the satellite industry's prospects are still flying high -- at least for now, military officials and industry executives said on Tuesday.

A report released by the Space Foundation at its annual symposium here showed that the space industry boosted revenues by $6 billion to $257 billion in 2008, up from $187 billion three years ago.

"Generally the space business has been fairly resilient," Marty Hauser, vice president of the nonprofit Space Foundation, told reporters.

"Space activity has integrated itself so thoroughly into broader business activity, with an array of services vital to communication, travel, broadcast and other industries, that the space industry is now part of the mainstream economy," the group's report concluded.

The full impact of the economic slowdown might not hit the space sector until later in 2009 or 2010, due to the existing pipeline of satellite and launch orders, the report said.

Expanding interest in space by a growing number of governments could boost spending on space programs and provide some counterbalance to the grim economy. Many aging satellites must be replaced in coming years to maintain satellite-linked services such as navigation, targeting and communications, the group said.

Robert Kehler, a four-star general who heads the Air Force Space Command, urged the industry to keep improving propulsion systems, power generators, sensors, and to make smaller, lighter-weight satellites and better launch vehicles.

Although the Pentagon faces tighter budgets, space programs are relatively insulated because they are closely tied to everything the military does, Kehler said.

The Pentagon may need to explore greater use of commercial space products to keep acquisition costs under control, Kehler said. "The sky will not be unlimited," as it was during the 1960s push to put a human on the moon, he told the conference.

The Air Force was already exploring using space radar from commercial providers instead of developing its own space-based radar satellites, Kehler said.

Cost overruns and delays in the military's space acquisition programs were largely under control, Kehler said, adding that he was still keeping a close eye on lingering software challenges in the Space-Based Infrared System (SBIRS) run by Lockheed Martin Corp.

Nevertheless, several big military space programs are on the chopping block in fiscal 2010 budget talks. They include a military communications program, Transformational Satellite TSAT), for which Lockheed and Boeing Co are bidding.

Lockheed and Boeing executives say they have drafted proposals that would take some technologies developed for the TSAT program and migrate them to existing satellite systems, which would offer expanded capabilities and save money.

Boeing also sees good prospects for the Space Based Surveillance System (SBSS) satellite it developed with Ball Aerospace.

The SBSS satellite, expected to launch at mid-year, will improve the military's ability to track satellites and other objects in space. That is considered a key capability given recent events such as a satellite launch by Iran, the collision of two satellites in space last month, and the expected launch next week of a satellite by North Korea.

Todd Citron, Boeing director of space superiority, said his company was ready to develop additional capabilities for the satellite, depending on the Air Force's needs.

(Reporting by Andrea Shalal-Esa; Editing by Gary Hill)

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