Closing Bell - Manifest Space: Valuing Space at $570 Billion with Space Foundation CEO Heather Pringle 7/18/24

Episode Date: July 18, 2024

The Space Foundation, a nonprofit organization covering the global space industry, is out with its annual Space Report. Forecasting that the worldwide space economy is worth $570 billion, the group forecasts it’ll be worth $1 trillion. CEO Heather Pringle joins Morgan Brennan to discuss what’s propelling the growth, the challenges, and digs into the numbers in the report.

$570 billion. That's how much the global space economy is now worth, according to a new report from the Space Foundation. The number, a record, represents growth of more than 7% in 2023 compared to the prior year. Space Foundation CEO Heather Pringle says it's being driven by commercial space as well as more spending by international governments. So if you're taking a 7% growth year over year, and frankly, that's been consistent for some time now, it's going to take about 10 years to get to that $1 trillion market. And what it's going to

take is continued investment, continued demand for space services, space products, normalizing space in our everyday lives. But also there's an important thing we have to keep in mind is that the growth of the space economy seems to be outpacing the workforce that's available to sustain it. The nonprofit organization, which compiles the report annually, drew on more than 50 sources of data across private and public sectors, ranging from dozens of countries. On this episode, Pringle lays out what's propelling the space economy, what's holding it back, and what has been the most surprising finding in the Space Foundation's annual space report. I'm Morgan Brennan, and this is Manifest Space. Joining me now, Heather Pringle, CEO of the

Space Foundation. It's so great to have you on. You just came out with your annual space report, and this is the Space Foundation's look at the global space economy. What's the headline here? So the headline is that we are now at a $570 billion global space economy. This is really a big endeavor, Morgan. It's the highest that we've seen in our 20 years of assessing the global space economy. This represents both commercial as well as national security and international endeavors, international government endeavors. And we take a fairly rigorous approach. We use over 50 data sources from the commercial side as well as international governments. And it's a reliable estimate that has been showing the change in the global space economy over time. So we're talking about basically a 7.4%

increase to that 570 billion number in 2023. Are we seeing an acceleration in growth? We are seeing a consistent level of growth, Morgan. So on the commercial side, it's at $445 billion. And on the international government side, $125 billion. So that 7% that you're seeing, that's been consistent for the past several years. And frankly, the space economy was even resilient during COVID, during other types of downturns that other markets saw, the space economy remained resilient throughout. Okay. So the commercial piece of the puzzle, I mean, it's so much bigger than the government piece. Is that, I guess, when did we see that shift? And how is that growing versus the government piece,

which we do talk about so much, especially when you start to think about things like national security space, which is getting a lot of attention. So let me break down the commercial sector that we look at, Morgan. This $445 billion is divided into 11 subsectors that we look at. This does include launch, satellite manufacturing, and insurance even. And when you take a look at that, I get two takeaways. The first is that the biggest subsector is position, navigation, and timing. This represents a $200 billion portion of the commercial sector, and it's been receiving growth for the third consecutive year. And the reason for this, of course, is because there are more and more devices, your watch, your phone, your car, that are receiving that geolocation data right at our fingertips. The other key takeaway

that I have is the biggest subsector with the largest change. It showed a 300% change from, it was space situation awareness. And it went from $60 million. So it's a smaller market to $200 million. And this also makes sense because as there are more and more entrants to the space ecosystem, more and more operators in space, you need to know what's going on around you for safe operation. So space situation awareness and its remarkable growth makes perfect sense to me. Definitely. I mean, I have so many more conversations about space situational awareness and of course we're seeing quite a number of both startups and established players begin to

enter that market in a more meaningful way too. And to your point, governments putting more dollars towards this. How much of this is U.S. driven? How much of this is international since you do have that access to all of that rich global data? So the U.S. is a major player, both on the national security side as well as the civil side. But we're seeing amazing interest by our international partners around the world. So with over 90 countries operating in space, here's the really interesting thing about it, Morgan. Our analysis shows that 80% of them are either increasing or maintaining

their investment in space. This is when governments have a lot of competing interests to consider their choosing space. And seven of the nations that we looked at are doing double digit increases. I'd point out France, South Korea, and Japan as a couple that have made announcements that they're going to make some major increases to their space investments. China is the other sort of key piece of this. And I've had a number of executives and guests who sat down and spoke with me and they say, listen, we're in a space race with China, the US and allies versus China right now. We're seeing an uptick in the amount of money that China is putting to work on its space capabilities,

as well as its own homegrown commercial space industry. How does that translate into this report? What are you seeing? So there are a couple things that we can pull on, Morgan. The first, I would point to the U.S. investments. So if you've ever heard the old adage, don't tell me your strategy, show me your budget, and I'll tell you what your strategy is. What we see on the U.S. side is their request for national security space exceeds that of civil space. So let me kind of tell you a little bit more about that. On the national security side, the Space Force, which was only created in 2019, its budget request has historically been lower than that of NASA's. NASA shows a steady pace

in their budget requests, and it continues to make small increases. But on the Space Force side, for the first time ever, we're seeing that it's higher than what NASA's is. So that suggests that the U.S. is paying more attention to national security, putting its money where its mouth is, so that it is investing in national security and really kind of doubling down on that, if you will. The other thing that I'd say about the international aspect, the rich tapestry of countries that are involved in the space ecosystem, Morgan, is that with 90 countries and hundreds of companies, there's a lot more going on than just what two governments are investing. And I think you saw this firsthand at the symposium

when you were walking around the exhibit floor and seeing all the new companies there on the ground and the international partners who are coming into the fold. How does that speak to the investment we are seeing into this commercial space industry, especially as you do see these flows from a government standpoint? I mean, I think about Artemis as an example, but national security is another high profile example. What does it mean in terms of the private sector role in this? So the private sector and the public sector, especially in the space ecosystem, are becoming more and more integrated. And to your point that national security and the Space Force itself has really even come out with its own commercial space strategy. And they see it as advantageous to national security to connect with and partner with commercial more strongly.

This increases both the speed at which national security can innovate new systems. It helps them be more resilient. It offers new opportunities for architectures in multiple orbits, multiple constellations, as well as interoperability. So we're seeing a high degree of connectedness across both the commercial side as well as the national security side. But ultimately, if we're going to be a $1 trillion market in the space industry, which I see as a viable future for us, it's really the commercial sector which is going to drive that trend. When do you think we hit a trillion dollars? And I guess what is that and how does that speak to what you're seeing for growth that's materializing in 2024?

So if you're taking a 7% growth year over year, and frankly, that's been consistent for some time now, it's going to take about 10 years to get to that $1 trillion market. And what it's going to take is continued investment, continued demand for space services, space products, normalizing space in our everyday lives. But also, there's an important thing we have to keep in mind is that the growth of the space economy seems to be outpacing the workforce that's available to sustain it. So what has to happen for that to change? So what we're seeing on the workforce side. Right now, the space workforce consists of about 220,000 workers. And this is on both the commercial as well as the government side. And that was about a 10% increase from the year prior.

But the workforce that is feeding it isn't keeping pace. And estimates vary, but it seems to be lagging by about 5%. So what we've been doing at Space Foundation, we've partnered with Aerospace and the Space Workforce 2030 Initiative, which is pledging to inspire, prepare, and employ the future workforce so that we have a sustainable, ready, skilled, and trained pipeline of workers, especially in the STEM fields for achieving that economy for the future. How much does all of this, especially when you talk about the growth landscape, how much does all of this hinge on the likes of a SpaceX, which just dominates the launch industry, had an issue with the upper stage

of one of its rockets just a few days ago, and is at least for now grounded while that investigation plays out? So we've seen numerous challenges across the space industry since it even began in the 1960s, right? This is an industry where we don't shy from the challenges. In fact, it's a bunch of problem solvers and doers who turn any challenge into an opportunity. And we, of course, were able to reach the moon and challenges are a part of this landscape. And we don't let that slow us down because space is a really difficult domain and it requires a lot of innovation and partnership to buy down the risks that we see and to make it a more viable future for us.

What innovations are you most excited about? Well, I love the disruption that artificial intelligence is having in the space ecosystem. It's really exciting because space is an area where we're collecting so many sources of data. And if you look at NASA's Earth Science Archive, for example, can you imagine 72 petabytes of data are stored in their archives? What do you do with that volume of data? Well, artificial intelligence is really a technology that can harness it and use it to pinpoint where humans need to work, where humans need to look at, and it can aid our decision making. AI being applied across the entire spectrum of activities in space, from design of novel spacecraft to more efficient orbits, more efficient maneuvering, more efficient space traffic management, but also how we better understand space weather. And I love what NOAA is doing to harness artificial intelligence to make space

weather less of an issue for our operations in space. How do you think, how do you, I mean, we talk so much about on CNBC, we talk so much about AI on a daily basis and all the applications here on earth, but how great is the opportunity either from, to your point, all the data that can be accessed and analyzed and utilized to even just the build out of infrastructure since AI takes connectivity and it takes a certain amount of energy. I feel like I'm having an increasing number of conversations about the role that space will play, not just in applications, AI applications for space, but from space to earth. Absolutely. And we're even seeing things where certain AI chips are being embedded in satellites and payloads that make it more

efficient in data transmission back to earth, right? So you want to transmit only what makes the most sense and is of the greatest utility to us here on Earth. So in thinking about the potential of AI, Morgan, I would say we're at the very beginning of really leveraging it throughout the industry. All companies are thinking about it. I interact with hundreds of companies, Morgan, and just like you, AI comes up again and again and again. But it can also enhance things like how we manage our talent across the board, how we design systems, and there's a lot more that we can do. Whether it's the report, whether it's those interactions that you do have with hundreds of companies, is there anything that surprises you about what's emerging right now from the

space economy? Well, I would say that the biggest surprise is the growth that we've been seeing in space situation awareness. And again, that makes perfect sense because of the congestion. But a 300% growth is one that would be difficult to anticipate. anticipate, but it's an important one because it continues the safety of operations. It helps us navigate debris and it's really going to enable space to be a viable domain for the long-term future. And finally, because we are in election year here in the U.S., but also we've seen quite a historic number of people go to the polls this year in general and democracies across the globe. How crucial is policy to the future growth of the space economy, the U.S. or otherwise? And does one political party versus another change that dynamic? The beautiful thing about space, Morgan, is that it unites us even as other issues might divide us. I have a really good example of that. National Space Day was celebrated on the first Friday this past May. And this was a resolution that was passed through Congress, bipartisan and bicameral.

That is, both parties support National Space Day and both houses. There are very few issues other than space that would bring all these diverse entities together. And when you're looking at important space programs like Artemis program, or even the existence of the Space Force, right? Those stand the test of time because of their high importance to both national security and economic prosperity. Heather Pringle of the Space Foundation. thank you so much for joining me. Thanks for having me, Morgan. It's been a real pleasure. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan

Brennan.