Sacramento

1
LIMITED DISTRIBUTION - FOR USE BY CSTA SPACE
COMMITTEE ONLY
Secretary Lon Hatamiya Technology, Trade, and Co
mmerce Agency
California Space Infrastructure Program
(CSIP) STRATEGIC SIMULATION EVENT OUTCOMES REC
OMMENDATIONS
Sacramento January 24, 2001
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
2
OVERVIEW

• WHY THE STRATEGIC SIMULATION
• CALIFORNIAS SPACE LEGACY
• RECENT CONDITIONS AND TRENDS
• STRATEGIC SIMULATION CULMINATES CSIP PHASE I
  II
  
• WHAT WE LEARNED
• CHALLENGES AND OPPORTUNITIES

3
WHY THE STRATEGIC SIMULATION WAS CONDUCTED
ITS 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
4
CALIFORNIAS 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 _at_ Edwards AFB
• Western Range _at_ Vandenberg AFB
• Space and Missile Systems Center in El Segundo
• Industrial Base of 40 of Global Satellites
• 42000 Aerospace Suppliersl
• World Class Research Universities

5
CALIFORNIAS SPACE LEGACY
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

Strategic Defense Programs
Lunar Missions
ICBM Development
1960
1970
1980
1990
California was a natural for aerospace/high
technology infrastructure growth
6
A DECADE OF A CHANGING ENVIRONMENT
Reductions In Defense Funding
Lack Of Grand Space Missions
Commercial Business Prevails--
Requires Profit Based Efficiency
And Agility

• STRATEGY Cold War faded - Federal programs
  reshaped -
  
• Commercial programs take drivers 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

2001
1991
1995
Incumbent complacency changing environment
vulnerability
7
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
8
Phase I and II Task Summary
Phase I and II Task Summary
Phase II
Phase I
Stakeholder
Strategic
Analysis
Simulation
Preparation
Market
Design Simulation
Demand
Post
Data
Analysis
Strategic
Simulation
Phase III
Compilation
Simulation
Develop Briefing
Analysis
Analysis
Book
Competitor
Analysis
Prepare Players
Test Simulation
Infrastructure
Database
07/01/00
08/01/00
5-7/Dec
12/15
SIMP Draft 2
08/
31
/00
00
02/01
Task Complete
BOD
08/
03/
00
Aug/Sept
10/05/
00
Regional Meetings
9
CALIFORNIA WAS A STRONG PLAYER IN ALL SEGMENTS IN
1999
1999 GLOBAL SPACE MARKET BY
GEOGRAPHY AND SEGMENT
TOTAL MARKET - 71.1B
Other 1B 11
Other 3.8B 25.5
Foreign 7B
35
Foreign
Foreign
Foreign
Other US 1.3B 9
45
3.4B
10.4B 50

37
Foreign 3.4B
MARKET SHARE BY STATE
22.5
UT .9B 10
Virginia 1
US 9.0B 45
OTHER US 3.5B
FL 1.4B
18
Florida 20
15
MD 1.2B 6
CO .9B
CO 1.3B 6
10
CA 6.6B 43
CA
CA 4.0B 20
CA 4.3B 20
California
1.6B
12
17
Launch
Ground
Spacecraft
Commercial
Govt OM
Launches
Vehicles
Equipment
15.3B
Services
6.0B
78
9.2B
20.0B
20.7B
BAR WIDTH IS PROPORTIONAL TO MARKET SIZE IN
Source Forecast International, Teal, company
sources,NASA, USAF, Satellite Industry
Association, Futron, and BAH analysis

Excludes
foreign government service expenditures.
17.7B --- 25 of Global Market in California
10
SPACE SEGMENTS TAX GENERATION PER
MILLION DOLLARS REVENUE BY SOURCE
250
200
150
TAX REVENUE (000)
Corporate Income Tax
100
Personal Income Tax
Personal Sales Tax
50
Users Tax
0
Satellites
LV
Ground Equipment
Commercial
NASA
Services
Source BEA, Census Bureau, Company annual
reports, BAH analysis
Note
Tax revenue is per 1 million revenue in each
market segment
11
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
12
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

13
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

14

• SPACE VISION AND LEADERSHIP
• California has taken space business for
  granted
  
• California previously didnt 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
  

Pro-active Leadership Necessary
15

• 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
  

Competition is real, CALIFORNIA should leverage
its Incumbency
16

• 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 whats 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
17

• 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 Californias 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
18
WHAT WE ARE RECOMMENDING

• DECLARE CALIFORNIAS 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
  

19
WHAT WE ARE RECOMMENDING
AND, START NOW!