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“Off the Dole” and “Out of the Box:”Colorado’s New Space Strategy and Takeaways for
Other States
Aerospace States Association Annual Meeting / April 12, 2013Metropolitan Policy Programat BROOKINGS
Brookings and the state joined forces to develop an action plan to boost the competitiveness of Colorado’s space economy
Brookings provided fresh analytics, a new framing of challenges and opportunities, and private-sector, state, and federal strategies. McKinsey & Co. provided private-sector intelligence
Brookings worked closely with OEDIT, the Metro DenverEDC, and the Colorado Space Coalition to bring increased firepower to the governor’s Aerospace Key Industry Process
All of this fell under Brookings’ national advanced industries (AI) initiative that seeks to highlight the importance of America’s top regional advanced industry clusters and strategies to grow them
2
What we developed reflects novel analytics and extensive listening
3
What we did: analytics
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✓Classification of establishments into a vetted industry segmentation scheme
✓Global market trends and “forces at work” analysis informed by McKinsey
✓Industry-specific competitiveness assessment and 50-state SWOT analysis
✓Bottom-up identification of business establishments in the space economy
✓Jobs, growth, revenues, wages, and location analyses by industry segment
Local
Global
✓Preliminary listening session with select leaders from industry, workforce training, academia, economic development, and government
What we did: listening
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✓One-on-one interviews with key stakeholders
✓Formal listening sessions held in coordination with the state’s Key Industry Networks Process Steering Committee and Tactical Team meetings
✓Interim webinar with key stakeholders
✓Draft review by an extensive network of experts and stakeholders
1st month
6th month
What we found:
Colorado possesses an exceptionally diversified, multidimensional, and high potential space economy
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However, amidst significant opportunity, disruptive forces have exposed a number of competitive challenges
Given these challenges and its many strengths, Colorado should commit itself to preeminence in space
The space economy is an outsized driver of Colorado’s economy
Private sector space jobs
Average private sector space wage
Private sector space GDP
47,700
$8.7b $92,500
66,900Total space
economy jobs
The private space economy is multidimensional and polycentric
Private
Military: 15,500 jobs
Civil: 3,700 jobs
Space systems manufacturing and operationsSatellite and space vehicle manufacturing
Satellite and space systems operations Launch manufacturing and services
Network ground equipment
Satellite-based servicesConsumer
Navigation and geo-location Remote sensing and earth observation
Telecommunications Consumer ground equipment
Supply and supportIT, engineering, and professional services
Component suppliers
5,800 jobs
5,000 jobs1,000 jobs850 jobs
7,300 jobs
4,000 jobs3,900 jobs
1,600 jobs250 jobs
10,700 jobs
6,100 jobs
7.9 percent CAGR*Satellite-based services
75
100
125
150
175
200
2002 2008 2011
Colorado’s private space economy is increasingly services-oriented
Jobs2002 = 100
20112008
*Compound or average annual growth rates. Job numbers reflect the jobs history of establishments currently in business and do not incorporate job losses from establishments that may have closed before 2011
1.9 percent CAGR
0.2 percent CAGR
Supply and support
Space systems manufacturingand operations
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2002
Colorado’s space economy spans multiple metro areas and rural counties but is heavily clustered along the Front Range
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The geographic concentration of the industry in Colorado signals the presence of a classic industry and innovation cluster
What we found:
Colorado possesses an exceptionally diversified, multidimensional, and high potential space economy
11
However, amidst significant opportunity, disruptive forces have exposed a number of competitive challenges
Given these challenges and its many strengths, Colorado should commit itself to preeminence in space
A number of disruptive forces are making this a critical moment for Colorado’s space economy
✓The customer base is changing
✓The industry’s competitive underpinnings are under stress
✓Customers are driving a new industry emphasis on value, service, and capability
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For one, government spending is becoming an ever smaller and more contested portion of the market
For example, government demand for commercial solutions—i.e. fixed-cost, “off-the-shelf” offerings—is giving rise to new lower-cost competitors
Innovation matters more and more and greater collaboration is required to achieve it; at the same time, the aging of the existing innovation workforce threatens to undermine advances
What we found:
Colorado possesses an exceptionally diversified, multidimensional, and high potential space economy
13
However, amidst significant opportunity, disruptive forces have exposed a number of competitive challenges
Given these challenges and its many strengths, Colorado should commit itself to preeminence in space
To avoid being left behind at a moment of opportunity, Colorado needs a bold new vision for its space economy
✓Consolidate and maximize position in the space economy even as “government space” shrinks
✓Improve the availability of risk capital
✓Commit to innovation and owning the next great space technologies
✓Intensify cluster dynamics
✓Seize commercial opportunities in emerging new space, adjacent markets, and global markets
✓Bolster the workforce pipeline to secure Colorado’s human capital advantage
Vision:“Colorado becomes
the center of innovation for the
global space economy”
Strategies
The private sector must lead the way in making Colorado the undisputed center of innovation in the global space economy
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Focus on affordability to secure competitive positions in core marketsCONSOLIDATE:position
Increase internal R&D investment in next-generation technologiesSEIZE:opportunities
Reinvigorate corporate venture capitalIMPROVE:access to capital
Engage in state efforts to improve how the space cluster functionsINTENSIFY:cluster dynamics
COMMIT:to innovation
BOLSTER:workforce pipeline
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CONSOLIDATE: Brand and market / Convene delegation; states / Name sector championposition
SEIZE: Position the state to lead on next platforms / Create prize for new spaceopportunities
COMMIT: Create AI commercialization grants / Establish AI innovation hubto innovation
Establish investor’s conference / Improve existing state VC fundIMPROVE:access to capital
The public sector must create a supportive environment in which space firms can innovate, compete, and flourish
BOLSTER:workforce pipeline
cluster dynamicsINTENSIFY:
And the federal government must do its part to support state space economy excellence
Immediately resolve sequestrationCONSOLIDATE:position
Scale up a national network of AI hubsCOMMIT:to innovation
Defend SBIR/STTR program fundingIMPROVE:access to capital
Expand bottom-up grant programsINTENSIFY:cluster dynamics
BOLSTER:workforce pipeline
opportunitiesSEIZE:
Takeaways for states
✓Challenging times require a new look
✓Novel analytics can open up new avenues
✓Convening your industry and resetting strategy can be powerful
For more information
Mark MuroSenior Fellow and Policy Director
Metropolitan Policy Program at [email protected]
@markmuro119