StrataSimOutcomes v6

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Sacramento January 24, 2001 California Space Infrastructure Program (CSIP) STRATEGIC SIMULATION EVENT OUTCOMES & RECOMMENDATIONS Secretary Lon Hatamiya Technology, Trade, and Commerce Agency This report is intended solely for the information and use of the client to whom it is addressed. LIMITED DISTRIBUTION - FOR USE BY CSTA SPACE COMMITTEE ONLY LIMITED DISTRIBUTION - FOR USE BY CSTA SPACE COMMITTEE ONLY

OVERVIEW: 

OVERVIEW WHY THE STRATEGIC SIMULATION CALIFORNIA’S SPACE LEGACY RECENT CONDITIONS AND TRENDS STRATEGIC SIMULATION CULMINATES CSIP PHASE I & II WHAT WE LEARNED CHALLENGES AND OPPORTUNITIES

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WHY THE STRATEGIC SIMULATION WAS CONDUCTED: IT’S ALL ABOUT: • SPACE LEADERSHIP • COMPETITIVENESS IN THE GLOBAL SPACE MARKET PLACE • ATTRACTING AND GROWING SPACE/HIGH TECH ENTERPRISES • JOBS AND REVENUE • COMMUNITIES & QUALITY OF LIFE • EDUCATION AND INTELLECTUAL CAPITAL FOR SPACE • A TECHNICAL WORK FORCE PIPELINE FOR SPACE • MODEL FOR FEDERAL-STATE-INDUSTRY SPACE PARTNERSHIPS A SPACE VISION, A PRACTICAL SPACE STRATEGY, AND AN INTEGRATED IMPLEMENTATION PLAN

CALIFORNIA’S LEGACY AEROSPACE INFRASTRUCTURE:: 

CALIFORNIA’S LEGACY AEROSPACE INFRASTRUCTURE: The Cold War and the Race to Space set the stage for forty years of ‘laissez faire’ California infrastructure development and success. 177000 Direct Jobs 442500 Indirect Jobs Major Assets 3 NASA Centers ( Ames, Dryden, JPL) Air Force Flight Test Center @ Edwards AFB Western Range @ Vandenberg AFB Space and Missile Systems Center in El Segundo Industrial Base of 40% of Global Satellites 42000 Aerospace Suppliersl World Class Research Universities

CALIFORNIA’S SPACE LEGACY: : 

CALIFORNIA’S SPACE LEGACY: 1960 1990 THE COLD WAR AND THE RACE TO SPACE SET THE COURSE: STRATEGY: National Security brought programs and dollars INFRASTRUCTURE: Aerospace enterprises leveraged existing aerospace industrial base and intellectual capital to meet Federal needs BUSINESS CLIMATE: Growth was a watchword and trend FINANCING: Investment climate was subsidized by federal funding COMPETITION: Enough work to go around, best enterprises advanced, competition with Russia, domestic/ foreign and domestic space competition not significant California was a ‘natural’ for aerospace/high technology infrastructure growth 1970 1980 Lunar Missions Strategic Defense Programs ICBM Development

A DECADE OF A CHANGING ENVIRONMENT:: 

A DECADE OF A CHANGING ENVIRONMENT: 2001 1991 STRATEGY: Cold War faded - Federal programs reshaped - Commercial programs take driver’s seat INFRASTRUCTURE: Growth in infrastructure capacity is mature, but aging and inefficient BUSINESS CLIMATE: Aerospace industry growth has become industry consolidation FINANCING: Federal budget severely constrained, commercial space sector is services oriented, profit driven COMPETITION: Strong international competition; New set of U.S. ‘space state’ players; IT industry strong competitor for high tech work force 1995 Reductions In Defense Funding Lack Of ‘Grand’ Space Missions Commercial Business Prevails-- Requires Profit Based Efficiency And Agility Incumbent complacency + changing environment= vulnerability

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THE CALIFORNIA SPACE INFRASTRUCTURE PROGRAM (CSIP): CSIP WAS CREATED TO ASSESS THE STATUS, SHORTFALLS, AND ENHANCEMENTS NEEDED FOR A COMPETITIVE CALIFORNIA SPACE INFRASTRUCTURE AND ‘BUSINESS OF SPACE’ The Strategic Simulation was the Culmination of CSIP Phases I and II and a Real-World Validation of the findings

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Strategic Simulation Phase I Phase II Post Simulation Analysis Phase III Stakeholder Analysis Market Demand Analysis Competitor Analysis Infrastructure Database Strategic Simulation Preparation Design Simulation Develop Briefing Book Prepare Players Test Simulation Data Compilation & Analysis 07/01/00 08/01/00 5-7/Dec 00 12/15 SIMP Draft 2 02/01 Phase I and II Task Summary Phase I and II Task Summary Task Complete BOD Regional Meetings 08/ 31 /00 08/ 03/ 00 10/05/ 00 Aug/Sept

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CALIFORNIA WAS A STRONG PLAYER IN ALL SEGMENTS IN 1999 1999 GLOBAL SPACE MARKET BY GEOGRAPHY AND SEGMENT TOTAL MARKET - $71.1B Source: Forecast International, Teal, company sources,NASA, USAF, Satellite Industry Association, Futron, and BA&H analysis * Excludes foreign government service expenditures. BAR WIDTH IS PROPORTIONAL TO MARKET SIZE IN $ Other $1B ; 11% Foreign $3.4B; 37% UT $.9B; 10% CA $1.6B; 17% CO $.9B; 10% FL $1.4B; 15% Launch Vehicles $9.2B Ground Equipment $20.0B Foreign $7B; 35% Other $3.8B; 25.5% CA $6.6B; 43% Other US $1.3B; 9% Spacecraft $15.3B OTHER US $3.5B; 18% Foreign $10.4B; 50 % MD $1.2B; 6% CO $1.3B; 6% CA $4.0B; 20% Gov’t O&M $6.0B Commercial Services $20.7B MARKET SHARE BY STATE US $9.0B; 45% Foreign $3.4B; 22.5% Florida 20 Launches 78 Foreign 45 California 12 Virginia 1 CA $4.3B; 20% $17.7B --- 25% of Global Market in California

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$0 $50 $100 $150 $200 $250 Satellites LV Ground Equipment Commercial Services NASA Corporate Income Tax Personal Income Tax Personal Sales Tax Users Tax TAX REVENUE ($000) Source: BEA, Census Bureau, Company annual reports, BA&H analysis Note: Tax revenue is per $1 million revenue in each market segment SPACE SEGMENTS’ TAX GENERATION PER MILLION DOLLARS REVENUE BY SOURCE

CSIP UNDERPINNING FOR THE STRATEGIC SIMULATION:: 

CSIP UNDERPINNING FOR THE STRATEGIC SIMULATION: EXAMINED INFRASTRUCTURE CONDITIONS: Infrastructure Baseline Stakeholders Market Analyses/Projections Competition Technical and Business Analyses Evolving space paradigm STRATEGIC SIM TESTED, VALIDATED, AND BROUGHT INSIGHTS Real world problems Space experts from Federal, State, Commercial, Academia Live interaction and deliberation To find the right answers, you must ask the right questions

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STRATEGIC SIMULATION SNAPSHOT Approximately 75 Participants - Federal (NASA, DoD, FAA) - State - Industry - Academia Three State Teams / Two Segment Teams - California - Federal - Florida - Industry - Colorado Three Decisions Cycles

WHAT WE LEARNED FROM THE STRATEGIC SIMULATION:: 

WHAT WE LEARNED FROM THE STRATEGIC SIMULATION: BOTTOM LINE: DIMENSIONS SPACE VISION AND LEADERSHIP COMPETITIVE ROBUSTNESS BUSINESS AND ECONOMIC GROWTH JOBS, EDUCATION, AND QUALITY OF LIFE

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SPACE VISION AND LEADERSHIP : California has taken space business for granted California previously didn’t need to seek space business -- no longer the case By and large, California has been reactionary to events - not visionary California does not have state level emphasis-- Florida - Alabama- Colorado - Alaska - Virginia do! A clear implementation schema for space strategy is not in place Need codification and commitment to put vision, policy, and resources into practice Aerospace work force issue is a national problem Education/work force development is a critical component Efforts must have continuous momentum Next 3-4 years of California’s space strategy and execution is critical Pro-active Leadership Necessary

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COMPETITIVE ROBUSTNESS: California has been a ‘one stop shop’ state in the past-- not true anymore California has not worked collaboratively well in the past Export controls affect other space states, but California has most to lose California vulnerability includes both BRAC and industry losses Other states are making better business cases than California to draw space industry Other space states have better consensus, financing, policies, advocacy, incentives,and organizational structure State must organize to operate agilely for space business The power of public-private partnerships must be leveraged RLV is important, but RLV is not the panacea to spacelift, and California does not have RLV ‘locked’ Competition is real, CALIFORNIA should leverage its Incumbency

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BUSINESS AND ECONOMIC GROWTH: U.S. space industry is no longer sheltered by national programs California is vulnerable in both federal and commercial arenas Foreign technology and competition is increasing Other ‘Space states’ increasing play in national space program arena Continuing acquisitions/consolidations in space industry Industry will always do what’s best for its shareholders Industry is not tending its own long term interests( 2 to 3 year horizon) State-industry partnerships/strategic alliances are critical to future A positive thrust required to sustain the Legacy

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JOBS, EDUCATION, AND QUALITY OF LIFE: Space is a fulcrum for many high tech areas, but viewed as unattractive as intellectual capital Continuing drain from space workforce to other high tech areas Need to fit space into other state agendas -- e.g., education, transportation, labor, etc. Need to enhance California’s space industrial base Space financing needs to use non-traditional approaches There are multiple real time issues/impacts-- e.g., current energy crisis in California Space can be a strong catalyst for workforce development

WHAT WE ARE RECOMMENDING:: 

WHAT WE ARE RECOMMENDING: DECLARE CALIFORNIA’S SPACE VISION THROUGH A SPACE POLICY Support commercial, civil, and military space INTEGRATE AND EXECUTE SPACE MASTER PLANNING ACROSS GOVERNMENT DEPARTMENTS IMPLEMENT SPACE STRATEGY WITH REALISTIC OBJECTIVES , ROADMAPS, AND NECESSARY RESOURCES (INCLUDING FUNDING) ENGAGE ON ALL FRONTS-- LOCAL, STATE, CROSS-STATE, NATIONAL, INTERNATIONAL Attain State & Federal delegation consensus Attain Federal, Industry, Cross-State partnerships/alliances EXTEND CALIFORNIA'S LEADERSHIP AND SPACE LEGACY TO INFLUENCE NEW NATIONAL AGENDA ON SPACE

WHAT WE ARE RECOMMENDING:: 

WHAT WE ARE RECOMMENDING: AND, START NOW!