Pentagon identifies small launch industry as one of the most impacted by pandemic

Ellen Lord: “We're looking where the greatest pain points are, and again, it's really aviation, shipbuilding and small space launch.”

WASHINGTON — Among the domestic industries that provide equipment and services to the Pentagon,  suppliers in the aviation, shipbuilding and small space launch sectors have been the most impacted by the coronavirus pandemic, top procurement official Ellen Lord told reporters April 20.

DoD continues to assess how the crisis has affected the defense industrial base, said Lord, who is undersecretary of defense for acquisition and sustainment. “We’re looking where the greatest pain points are, and again, it’s really aviation, shipbuilding and small space launch.”

The Pentagon’s concerns about the small launch sector are supported by market data pointing to an inevitable shakeout in the industry that would have happened regardless of the pandemic, analysts said.

There are currently more than 100 small launch companies, says a new report by the market research firm Quilty Analytics. “It is a risky, capital intensive segment, marked by very long development cycles. Nearly all of the contenders will fail,” says the report.

Quilty Analytics projects there will be enough demand to sustain only two or three small launch providers in the long term.

So far only one of the companies in the small launch sector, Rocket Lab, has deployed satellites to orbit. Company executives recently said the company is poised to weather the crisis because of its mixed portfolio of commercial and government business, including DoD contracts.

Another small launch company that has DoD contracts is VOX Space, a subsidiary of Virgin Orbit. The company said this month it is preparing to conduct its first orbital flight and expects to fly its first DoD mission later this year.

A new report on the venture space sector that Quilty Analytics sent to clients April 20 also lists synthetic aperture radar (SAR) constellations, weather systems, low Earth orbit broadband and space-based internet-of-things as vulnerable markets.

“We believe that the market potential for next-generation SAR systems is quite attractive. However, there are too many startup competitors, it is a capital-intensive business model, and end-markets outside of government are mostly immature today,” said Quilty Analytics. “We expect one or two major long-term winners to succeed.”

Smallsat weather data systems are still “highly immature, which will likely create challenges as civil agency budgets worldwide will face pressure in a downturn,” said Quilty.

The report says LEO broadband, as the most capital intensive segment in all of venture space, is headed for consolidation. “OneWeb and Leosat have left the field, leaving three remaining contenders (Amazon, SpaceX, and Telesat). We expect one to two total LEO broadband players to reach operational status.”

Smallsat internet-of-things services will see weakening customer demand, says the report. “Smallsat IoT is among the most crowded segments in the space industry — behind launch.”

#Space | https://sciencespies.com/space/pentagon-identifies-small-launch-industry-as-one-of-the-most-impacted-by-pandemic/