Colorado’s space industry ranks among the most diverse in the nation — and that diversity could lead to an even stronger global position as the aerospace industry enters what many are calling the “new Space Age.”
While the state ranks No. 2 nationally in number of aerospace jobs behind California, the industry sector in Colorado is far more varied than competing states. Colorado is home to headquarters for nearly every sector of the industry — commercial uses from Dish Network and DigitalGlobe; space vehicle research at Sierra Nevada; and next-generation satellites and lasers at Ball Aerospace.
But it’s a sleeping giant.
Even the states that compete with Colorado for aerospace jobs and corporations didn’t list Colorado as the top aerospace industry cluster that it has become.
That highlights just one of the problems — the state hasn’t branded itself as an aerospace industry cluster. That lack of aggressive marketing is among the concerns uncovered in a report created by the Brookings Institution that focuses on the future of aerospace in Colorado.
“No matter how you slice it, Colorado has the most well-rounded industry cluster,” said Mark Muro, senior fellow and policy director for Brookings’ metropolitan policy program. “Its depth, its size and the density in Colorado cannot be matched anywhere else. But they’ll have to fight to keep that, given the sheer challenge of disruptive trends in the global space market.”
The state Office of Economic Development and International Trade participated in a study, “Launch! Taking Colorado’s Space Economy to the Next Level,” which focused on developing strategies to meet the growing competition in the space marketplace. Researchers spent six months in the state — their first stop was Colorado Springs — to fully examine the industry and the problems it faces. They released their findings earlier this week to a packed house at the History Colorado Center in Denver.
The overall message: Colorado and its industries must move aggressively to maintain its aerospace cluster, or risk losing it.
“There used to be only two nations that could have manned missions in space,” Space Foundation Executive Director Elliot Pulham of Colorado Springs told the crowd. “There still are. Only now, it’s Russia and China. The United States is now third is satellite launches, behind Russia and China — and the gap is growing.”
Flat government spending, increased global competition and an aging workforce are the challenges faced by the industry, the report found. At Tuesday’s forum in Denver, the group added a fourth — a collapsing venture capital market.
“The venture capital market was never really interested in aerospace, despite the fact that the industry has one of the highest returns in the world,” said Dan Schmitt, co-founder, president and CEO of The Incubation Factory in St. Louis, a business incubator focused on opportunities in technology transfer. “Increasingly, they only want to invest in proven middle-market companies, and they want a shorter and shorter return. Given the length of time it takes to get something from idea to market in aerospace, they were never really interested.”
Angel investors can’t really manage it either.
“They’re a drop in the bucket,” Schmitt said. “What we need is a really creative, public-private partnership to get some of these technologies out there.”
The same level of partnerships — even between companies that are normally competitors — is needed to address workforce needs, said Stein Sture, vice chancellor for research and professor in the College of Engineering and Applied Science at the University of Colorado Boulder.
“We need to get these students involved in actual projects very early on,” he said. “We’re getting a different breed these days. They have very little life experience. Their whole life, they’re in front of a screen.”
And while there’s diversity in the work that the space industry performs, the people doing the work tend to look the same: white, male, middle-aged.
“We need to create STEM (science, technology, engineering and math) programs to reach every student in the state,” Sture said. “That’s the way to create more diversity in the workforce.”
As far as government spending, “flat is the new normal,” said Mark Sirangelo, corporate vice president of the Sierra Nevada Corp. And since that’s not changing, it’s up to the industry itself to find funding.
Sierra Nevada is partnering with Lockheed Martin’s space systems program — also in Colorado — to build the Dream Chaser, a spacecraft that will take people to the International Space Station. Sierra Nevada is one of only three companies left competing to build the next-generation space shuttle.
More partnerships like that are needed, Sirangelo said. He moved Sierra Nevada to Colorado eight years ago when the company started developing the Dream Chaser. Today, he has more than 1,000 workers.
“It was the best thing we ever did,” he said. “We moved specifically to be next to Ball (Aerospace). Partnerships are going to be important in the future.”
State governments must become more creative in finding ways to leverage the economic drivers found in aerospace, said Ken Lund, executive director of the Office of Economic Development and International Trade.
“This is where the rubber hits the road,” he said. “We have the facts before us; now it’s time for the execution. That’s my job — and it’s the hard part. Execution is the hard part.”
The state’s industries should be focused not only on aerospace, but on what Muro calls “adjacencies,” meaning those industries that benefit from space technology but aren’t technically space companies.
“Everywhere I went in the state, people knew there were adjacent markets,” he said. “But it was sort of the last thing on the agenda.”
Colorado firms need to move into those new markets — and become less dependent on federal money, experts at the forum said. However, the state hasn’t been very aggressive in recruiting those companies, Muro said.
“It’s sort of like an old shoe,” said Tom Clark, CEO at the Metro Denver Economic Development Corp. “We didn’t even look at it before 2003. And then we realized that there were jobs, important jobs, tied up in this segment of the economy. We started paying attention. We need to do more.”
And that means “defending the base,” Muro said. Even as government budgets grow smaller, the industries have to prove they can do more with less money; they need to provide value and prove their capability to remain strong globally. They need to seize new commercial opportunities, he said.
The state also must commit to innovation — an idea embraced by the crowd of industry insiders. Lund said the Advanced Industries Accelerator Act, currently being considered in the state House of Representatives, is proof that Colorado is committed to technology and innovation. The bill gives matching grants to companies to navigate the difficult waters of technology transfer.
“There’s a cap on the money available for individual money,” Lund said. “There’s no cap for companies that partner across sectors or with universities. We want to incentivize innovation and new technology.”
But the government can’t — and shouldn’t — do all the heavy lifting, Muro said. The private sector must lead the way.
“These problems are not insurmountable,” he said. “The state is well positioned because of its diversity. It has a toehold in commercial areas, [and] has had success in many areas. Just look at Braxton Technologies in the Springs — that’s a company that’s very successful in the satellite field.
“Colorado is in a good spot — it just needs to be more aggressive.”
$8.7 billion in economic output
3.8 percent of state’s GDP
$16 billion in sales
3,500 jobs added from 2008 to 2011
$92,500 average annual income
Source: Brookings Institution