The Economic Impact of Commercial Space Transportation on the U.S. Economy May 20, 2004

1. The Economic Impact of Commercial Space Transportation on the U.S. Economy May 20, 2004 Paula Trimble Federal Aviation Administration Associate Administrator for Commercial Space Transportation

2. Overview • Presentation of FAA/AST’s report describing the economic contributions that commercial space transportation makes to our nation’s economy • Second study produced by the FAA’s Office of Commercial Space Transportation • First study published in 2001, included 1999 impacts • This study quantifies impacts for the year 2002 • Illustrates the important role of commercial space transportation in economic growth and development

3. Direct-to-home TV News gathering Fax & paging High-speed Internet Weather forecasts International telephone calls Package tracking Videoconferencing Satellites in Daily Life (((( ( ((( ( (((( ( ((((((( ( Driver aids: satellite radio & Global Positioning System Bank transaction “Pay-at-the-pump”

4. Objectives • Highlight the extent to which other industry sectors profit from activity in the commercial space transportation sector • Provide an outlook for commercial launch and the potential economic impacts of various future scenarios

5. Study Approach • Industries analyzed: launch vehicle manufacturing and services; satellite manufacturing; satellite services; ground equipment manufacturing; and remote sensing • Measured impacts using RIMS II model developed by U.S. Department of Commerce, Bureau of Economic Analysis • Measure impacts in terms of economic activity, earnings, and jobs • Satellite Industry Association (SIA) revenue data • Report includes: • Detailed industry break-outs • Comparison of 1999 and 2002 impacts • Forecast of impacts for 2010

6. 2004 Study Results Part I

7. Summary Highlights The commercial space transportation industry, along with the industries it enables, generated significant impacts on the nation’s economy in 2002 • $95.0 billion in economic activity • $23.5 billion in earnings • 576,400 jobs

8. 2002 Impacts by Industry Segment • Satellite services were the greatest contributor to economic activity and jobs impacts with a total of $49.6 billion in economic activity and 278,287 jobs • Employment data represent the total number of jobs in all affected industries, not just the industry itself

9. Distribution of Total Economic Activity Impacts • Satellite services and ground equipment manufacturing contributed the largest portions of economic activity • 80% of Satellite Services impact from DTH TV

10. Comparison of 1999 and 2002 Impacts • From 1999 to 2002, economic activity impact increased 55% • Earnings impact grew 43% • Jobs created increased about 16%

11. Comparison of 1999 and 2002 Impacts • Whiletheoverall economic impact of commercial space activities has increased, the various industry segments performed differently • Launch vehicle and satellite manufacturing impacts declined sharply since 1999, primarily due to a sharp decrease in the manufacture and launch of commercial spacecraft • Satellite services recorded a major increase in economic impact as direct-to-home television and other services attracted more customers • Gains made by satellite services and ground equipment manufacturing outweighed the decreases in launch vehicle and satellite manufacturing, resulting in a net increase in economic impact from 1999 to 2002

12. Comparison of 1999 and 2002 Impacts • Launch vehicle manufacturing and services experienced the largest decline in economic activity, earnings and jobs • Economic activity declined from $3.5 billion in 1999 to $791 million in 2002 • Declines in economic impact caused by the launch vehicle and satellite manufacturing industries are linked to a decrease in activity and a corresponding decline in revenue • In 2002, there were six FAA-licensed orbital launches, compared to 17 FAA-licensed orbital launches in 1999. In 2002, 31 U.S.-manufactured satellites were launched, compared to 89 in 1999

13. Most Affected Industries • Commercial space transportation affects all major U.S. industry sectors defined by the RIMS model • In 2002, Communications and Electronic and Other Electronic Equipment industry sectors were the two most affected sectors in terms of additional economic activity, earnings, and jobs • The communications sector includes the sale of satellite services, telephone communications, cellular service, operation of satellite Earth stations, telemetry and tracking services, and terrestrial Internet, email and fax services • The electronic and other electric equipment sector includes electrical industrial equipment, such as power transformers, motors and generators; electrical wiring equipment; communications equipment; electronic components, such as electron tubes and semiconductors; and other miscellaneous electrical supplies, such as microprocessors and integrated circuits

14. Industry Comparisons • Selected national impact studies between 1999 and 2002 for comparison • All studies used the RIMS II model, except biotechnology, which used IMPLAN (an input-output model similar to RIMS II) • Economic impact of the civil aviation industry is over 10 times larger than the impact of the commercial space transportation and enable industries, while the impact of shipbuilding industry is 8 times smaller

15. Digital Audio Radio System (DARS) • DARS segment treated separately because the economic models used in the preparation of the analysis are dependent on the revenue recorded by the various industries studied • Because XM Satellite Radio and Sirius Satellite Radio are in the early stages of their businesses and are still dependent on outside investment, the model would likely underestimate their impact

16. 2004 Study Results Part II

17. Overview • First attempt by FAA/AST to assess the future economic impact of the commercial launch industry in the United States • Analysis does not include enabled industries • Impacts only estimated for the year 2010 • 2 scenarios (constrained and robust) • Analysis can be used to guide discussions of the policies, plans, and investments that may shape the launch industry of 2010

18. Methodology • Analysis included 3 key factors: • Number of commercial launches expected worldwide in 2010 • GSO, NGSO, sounding rockets, SRLVs (i.e., public space travel) • Utilized existing forecasts to determine the potential economic impacts • U.S. market share • Constrained scenario: 10% for commercial orbital and suborbital launches • Robust scenario: 60% share for orbital, 75% for suborbital • U.S. launch revenues • RIMS II model • Same multipliers as used for launch in Part I • Multipliers change minimally over time, but can not be forecast

19. Results • Under the constrained scenario, commercial launch would generate about $496 million in economic activity in 2010, compared to $791 million in 2002 • By contrast, the robust scenario results in economic activity impacts of $3.5 billion--very similar to the actual 1999 results, when the launch industry was far more active than today

20. Economic Impact of the Launch Vehicle Manufacturing and Services Sector in 2010 (Orbital Component Only) Economic Impact of the Launch Vehicle Manufacturing and Services Sector in 2010 (Suborbital Component Only) Results • Suborbital component comprises <10% of total impacts

21. Results Economic Impact of the Launch Vehicle Manufacturing and Services Sector in 1999, 2002, and 2010 • Robust scenario results 7 times larger than constrained scenario and 4.5 times greater than 2002 actual results • Robust scenario very similar to 1999 actual results

22. Conclusion • While the overall contribution of enabled industries to the U.S. economy has grown in recent years, the role commercial space transportation itself has played has diminished • Key difference between 1999 and the robust 2010 scenario is the total number of commercial launches worldwide: 39 in 1999 versus only 25 forecast for 2010 • Bottom Line: The U.S. commercial space transportation industry must become more competitive and capture a greater fraction of the overall market in order to provide the same level of economic impact that it did in 1999