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Speech

The Space Transportation Association

Thank you Rich, and good morning everyone.

It’s always a pleasure to come out to the Monocle to meet with friends and colleagues, eat a little breakfast, and engage in some spirited discussions about our nation’s space program. Recently, the Space Transportation Association has had a number of excellent speakers give presentations on the civil space sector, specifically, on how NASA is progressing on the various aspects of the Constellation program, both at Headquarters and at the various NASA Centers.

Today though, I’d like to report on what’s going on in the commercial space sector. My office, the Office of Commercial Space Transportation in the FAA, is responsible for providing regulatory oversight for commercial launches and reentries.

We have a two-fold mission: to ensure public safety during commercial launch and reentry activities, and to encourage, facilitate and promote U.S. commercial space transportation.

Last week I had the opportunity to speak at the National Space Symposium in Colorado Springs. I talked about the fact that once the Space Shuttle is retired, a little over two years from now, things are really going to be different around here.

I mentioned that commercial space transportation would be “expanding the franchise,” both by attracting more vehicle developers and operators, and by enabling more people to be able to fly in space.

I noted that commercial space would use smaller-scale vehicles to help transform the relationship between people and space, involving you, me, and the guy next door instead of just a limited number of highly-qualified and specially-selected government employees.

And I pointed out that commercial space would allow the marketplace to govern the flight rates, rather than a mission statement and the latest set of Congressional appropriations.

All of these changes are coming, because of the impact of commercial space transportation. But today, instead of speculating about the future, I’d like to take a look back at what commercial space transportation has meant to our country, and specifically to our economy.

The Report

This morning our office is releasing a report describing “The Economic Impact of Commercial Space Transportation on the U.S. Economy.” The numbers upon which the report is based are for 2006, which are the most recent data available.

Let me begin with the vital statistics at the center of our findings.

First, in 2006, commercial space transportation and enabled industries generated over $139 billion in economic activity. That represents a significant increase from the $98 billion in 2004, and is more than double the $61 billion in 1999, the year of our first report.

Second, earnings in this same sector in 2006 totaled $35 billion, up some 40 percent over the $25 billion registered in 2004, and more than double the $16 billion in 1999.

Third, and last, the industry supported over 729,000 jobs in 2006, significantly higher than the 551,000 jobs identified in 2004 and up 47 percent over the 497,000 in 1999.

So there you have the three key economic statistics for the commercial space transportation industry as of 2006: 

• $139 billion in economic activity;
• $35 billion in earnings;
• 729,000 jobs.

As the report points out — and these numbers demonstrate — commercial space launch activity plays a very important economic role in the United States. Six industries are included in the analysis, ranging from launch vehicle manufacturing, to satellite manufacturing, ground equipment, satellite services, remote sensing, and distribution industries.

Launch vehicle manufacturing was the only sector that did not show an increase between 2004 and 2006. Satellite services, on the other hand, experienced notable growth because of the continued and increasing demand for Direct-to-Home TV services and the expansion of satellite digital audio radio services, an area included for the first time in this report.

In addition to the space-related industries, commercial space transportation also has an impact on other non-space sectors, which help to generate additional earnings and jobs.

Methodology

Let me take just a minute to zero-in on the methodology.

Like the three reports that preceded this one, today’s report on 2006 quantifies the economic impact that occurs in industries throughout the national economy as a result of commercial space transportation. Many of the impacts are direct, including purchases of the launch vehicles themselves, the rocket engines, and computers. Some of the impacts are indirect, such as the labor or purchases made by industries that supply the commercial space sector with components like composite materials, electrical wiring, or semi-conductor chips. Also accounted for are the induced impacts, which involve such things as spending on food, clothes, housing, or entertainment by a solar array design engineer or the many others engaged in the industry.

The key focus of this report is on the “economic impacts.” 

Economic impacts track the financial transactions that occur throughout the production of a good or service. They are measured in this report in terms of economic activity, earnings, and jobs.

For this study, the economic impacts were derived using a model developed by the Bureau of Economic Analysis in the Department of Commerce. The model, formally known as the Regional Input-Output Modeling System, RIMS II for short, maps the flow of goods and services within the economy and illustrates the interconnection of producers and consumers.

All of this information, along with comparisons and further detailed explanations, are in the report.

That’s why we wanted each of you to have a copy to examine for yourself. For our colleagues who are unable to be here today, we will be posting the report on the Office of Commercial Space Transportation website later on today.

The main point I want to make, and that the report makes, is that commercial space transportation is a growth industry, with trends overall on the upswing as the industry stands on the threshold of opening a whole new branch involving commercial human space flight.

Then and Now

Still, in today’s uneven economy, it’s reasonable for people to point out that this survey was based on economic conditions in 2006, while the conditions in 2008 are different. So what’s the story?

Well, let’s look back very briefly at the 2006 economy to see what things were like.

At year’s end 2006, oil was $61 a barrel.

According to the Department of Commerce, unemployment and inflation were down, while wages and salaries rose at a rate higher than in any of the previous five years. The housing downturn had already begun but, overall, the economy grew 3.4 percent.

Things were not uniformly glowing, but the pluses outweighed the minuses, and at year’s end, the economy looked good.

Based on this short summary of 2006, two questions then arise.

First, is the commercial space transportation industry doing as well in 2008 as the impressive report figures show for 2006? 

And, second, can the industry succeed in a struggling economy?

Let me address the second question first, the one about succeeding when economic times are hard.

The Economy’s Impact on Commercial Space

We have never had tougher economic times in the United States than during the Great Depression. While the worst of it was from 1929 to 1935, the 1930s generally had far more downs than ups.

Strangely enough, those same years were broadly known as the Golden Age of Aviation.

Between 1929 and 1934, Grumman, Hughes Aircraft, Eastern Airlines, American Airlines and United were either founded or incorporated. The DC-3 made its first flight and in 1936 Boeing and Pan Am got together to begin work on the B-314 Clipper.

It’s true that aviation ultimately became a full-scale commercial transportation industry but nobody would argue it was anything like that when the Depression began.

By way of contrast, commercial human space flight is clearly not part of a full-scale transportation system. In fact, today, it’s just arriving at what you might call its “off-Broadway” tryout stage, but bringing plenty of talent with it.

The reason I raise the aviation experience is to show that some good ideas go forward even during difficult times. I expect that to be the case with commercial human space flight as well as cargo-carrying space vehicles.

Real-Time Commercial Space

Let’s look now at the other question I raised, the one asking whether commercial space is doing as well now, two years after the 2006 data used in the study.

The short answer is we don’t know; the data isn’t available yet. In fact, we may have to wait until 2010 to know for sure. But since we have no 2008 numbers, let’s step back and take a look at some of what has happened in commercial space since 2006.

It’s hard to know where to begin.

SpaceX has conducted two test flights of the Falcon I and broken ground at Cape Canaveral for its launch facility. The SpaceX website shows a robust launch manifest.

SeaLaunch had a setback last year, but has come right back with a pair of successful launches this year with at least two more scheduled before year’s end.

The two COTS winners were announced. One subsequently dropped out but another, Orbital Sciences, has taken its place.

Bigelow Aerospace successfully launched two sub-scale versions of its inflatable space station modules, and offered a $760 million contract to any launch operator that is able to carry the Bigelow habitats to orbit.

Virgin Galactic has unveiled the design of its next generation space vehicles and XCOR Aerospace has done the same.

Overall since 2006, there have been 15 FAA-licensed commercial launches, including two just this week. We have also overseen 15 permitted launches, and have licensed the operation of the Oklahoma spaceport.

Last week, our office co-hosted the third Entrepreneurial Reusable Launch Vehicle summit with the Air Force, bringing together senior Air Force leadership and some of the brightest minds in the industry to discuss how the government can do a better job of taking advantage of the creativity and capabilities of some of the smaller, non-traditional aerospace companies.

As mandated by Congress, my office issued regulations governing permits for the testing of suborbital reusable launch vehicles. We also issued regulations concerning the requirements for flight crew and passengers.

There’s so much more to tell. But I think you get the idea.

This Report and Tomorrow

As I wind this up, it’s probably fair to raise a third question.

What does all this have to do with the release of our report on the economic impact of commercial space transportation on the U.S. economy?

It’s this.

Disregard for the moment all of the percentages, the pie charts, and the bar graphs, and just focus on the fact that the numbers exist at all.

That in itself is one of the two most notable messages of this study.

The numbers are real because the industry is real.

That simple fact is just beginning to sink in. It startles some people. It will startle even more before long, especially when the passengers start coming aboard.

The other compelling message is that the numbers in the report help to sketch out the pen and ink outlines of a picture that is in the process of becoming a full-color, high-definition image, an image that is attracting a lot of public notice.

This report focuses squarely on the ELV landscape of commercial space transportation, and it’s a strong portrait. But when you have the time, turn to page 21, the section on NewSpace, commercial space transportation’s tomorrow.

In the very first sentence on the page, you’ll find not only the essence of this report but the central idea of what’s to come.

“Private entrepreneurial ventures,” it says, “are reshaping the economic profile of commercial space transportation.”

That’s a fact. Now you won’t find those new things represented in this report.

But you may in the next one.

The industry is changing. It’s branching out. It has a proven, well-established ELV component. Newcomers are building on that heritage and adding the RLV factor.

Commercial space is going to have an increasing and emphatic impact on the economy and the future of the United States.

So please look over the report. It’s both a solid look at the way things are and also a rough draft of what things will look like in the years ahead.

Thank you very much.