Colorado’s space economy, long underpinned by government space spending and facing an unprecedented challenge amid fiscal uncertainty, should focus on expanding commercial space services, innovation, and new public/private collaborations, according to a Brookings Institution study.

At the same time, the findings outlined in “Launch: Taking Colorado’s Space Economy to the Next Level,” emphasize the importance of mobilizing political support to protect long-standing federal activities like those of the U.S. Air Force Space Command/U.S. Air Force Academy research complex in Colorado Springs, NOAA’s Earth System Research Laboratory and the University Corporation for Atmospheric Research in Boulder.

“In competition, you defend your base, right?,” explained Mark Muro in a Feb. 1 phone interview. Muro is senior policy director for Brookings’ Metropolitan Policy Program and director of the study prepared for Gov. John Hickenlooper and Colorado’s other space stakeholders. “But it’s vulnerable to budget stagnation, even convulsion and likely cuts. We are projecting continued turbulence and pullback [in federal spending], with more competitors from other nations jumping in.”

The stakes for the Centennial State are high.

Direct employment

Colorado’s space economy provides direct employment to nearly 67,000 workers across the military, civil and private sectors. Private sector players, which include Lockheed Martin, Ball Aerospace & Technologies, DISH Network and DigitalGlobe, accounted for 70% of the employment total and generated an estimated $16 billion in sales in 2011.

Even in recession and early recovery, the state’s private space sector added 3,500 jobs between 2008 and 2011.

The  private sector’s satellite-based services group, the most vibrant component, is growing by 8% annually and now accounts for more than one-third of Colorado’s private space employment, according to Brookings. The component offers consumer services ranging from telecommunication such as satellite television and radio to navigation and geolocation.

Yet the Brookings study found that Colorado must become more aggressive quickly to overcome some significant vulnerability, now most evident in the industry’s traditional core.

The space systems manufacturing and operations core is represented by satellite and space vehicle manufacturing, launch vehicle manufacturing and operations, and network ground equipment. Across the state, space systems manufacturing and operations has fallen behind supply and support as well as the leading satellite-based services component.

The shift in customer base away from big government to the smaller consumer is bringing another change. Small consumers of satellite-based services expect a responsive business module focused on product reliability and competitive, fixed prices, according to Brookings.

At the same time, the state’s space industry is facing wider domestic issues of a looming skills gap as an aging workforce nears retirement in the next five years, along with pressure to innovate to sustain competitiveness.

If it is to respond effectively, Colorado’s space industry must pivot toward new domestic and global commercial markets by fostering collaborations among its companies and with its research institutions, breaking down institutional barriers where necessary to spur innovation, Brookings says.

The strategy should encourage closer ties between the industry and venture capitalists, while developing a technically competent and flexible workforce, according to the report.

Industry changes

Changes along those lines seemed evident as January came to a close with the merging of DigitalGlobe Inc., of Longmont, Colo., and GeoEye, Inc., of Boulder, providers of Earth imagery and geospatial analysis. Also, Sierra Nevada Corp. (SNC) of Sparks, Nev., turned to Lockheed Martin Space Systems Co., of Littleton, Colo.,  to human rate SNC’s entrant in NASA’s financially constrained commercial crew transportation initiative.

Though tailored to Colorado’s unusual space diversity, the Brookings’ assessments and recommendations are likely to find resonance among the state’s rivals in the national arena: Alabama, Arizona, California, Florida, Maryland, New Mexico, Texas and Virginia.

“This is a national issue, clearly,” said study participant Michael Parks in a Feb. 1 phone interview. Parks is a consultant with McKinsey & Co., global management consultants. “The urgency is just as true for California, Alabama,  Florida, Texas and so on,” he said.