In the Absence of Government Leadership Canada's Space Sector Faces Uncertain Future

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Canada in Space.

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In the Absence of Government Leadership Canada's Space Sector Faces Uncertain Future, by Marc Boucher

It should not have come as a surprise, after all everyone had been warned since the last budget that this budget would contain significant cuts. Yet when the budget was released, one of Canada's leading space companies, MacDonald Dettwiler and Associates (MDA), issued a press release the following day saying it was going to have to restructure its workforce.

Why did MDA issue such an extraordinary press release?

The reason as it turns out had everything to do with what was not in the budget. Not a single mention of Canada's current flagship space project, the RADARSAT Constellation Mission.

The RADARSAT Constellation Mission (RCM) is the product of nearly two decades of investment in synthetic aperture radar (SAR) technology by Canada. RADARSAT I was launched in 1995 and RADARSAT II was launched in 2007. Both of these satellites have been highly successful and continue to operate. The RCM builds on these two previous projects and consists of three new SAR satellites which will be used for Maritime surveillance, disaster management, environment monitoring and communications for northern Canada. In other words, these satellites are critical to a stable, healthy Canadian future.

For MDA, which was expecting in the early new year to be issued a contract for the next phase - the build phase - of the RCM project, the budget forced them to react publicly. With the current design phase ending in August and no contract in place for the build phase, MDA was faced with having to move personnel to other projects and to let go of critical engineers needed for RCM. Recently, MDA has stated that it had let go of 100 people from its Brampton facility and now has 2,200 people in its workforce. And the cuts aren't ending there. MDA told Space Quarterly it expects to lose another 50 people this year as a result of the cuts to funding in space robotics. As well, MDA could cut another 100 jobs from its Richmond and Montreal operations if RCM "does not continue". Should those additional cuts go ahead, MDA will have cut its workforce in 2012 by 11%, a significant reduction.

This incident though is just one in a series of recent issues that have crept up from the government which brings into question its commitment to the space sector. While the government has said that it has been steadfast in its support to the space sector, its actions appear to be overshadowing its words.

What the budget did contain is mention that Canada was committed to working on the International Space Station (ISS). That commitment, of working beyond 2015, was previously announced by Minister of Industry Christian Paradis on February 29th in Quebec City at the ISS Heads of Agency meeting. While Canada has said it would renew the commitment, negotiations continue and Canada has yet to ratify a deal and is currently the last partner to do so.

Another deal Canada has committed to renewing is Canada's cooperation agreement with the European Space Agency (ESA) which allows Canada to participate in some of ESA's programs. The announcement of the ESA deal was made in mid-December 2010 and would extend our cooperation for another 10 years. SpaceRef has learned though, that the deal has yet to be ratified, this almost a year and half later. What's more, the previous agreement ended on March 31, 2011, and while Canada will honor its commitments made during the previous agreement it cannot make any new contributions to ESA.

Going back four years ago to 2008 when Steve MacLean was appointed President of the CSA, the government made his first priority to create a new Long Term Space Plan Canada (LTSP). The LTSP is critical for setting Canada's direction in the space sector and is considered an important document internationally and for the business sector.

Jim Prentice, then the Minister of Industry said "...as one of Steve MacLean's first acts as new President, the CSA will begin consultations with stakeholders that will lead to a new Long-Term Space Plan. I expect this plan--the fourth in the series--to be as influential for our generation of exploration and development as any plan that Canada has produced for charting our future in space. That's a tall order. I know that Steve is capable of bringing together the stakeholders. Time is of the essence, and I look forward to the plan in the coming months."

The LTSP that MacLean presented the government never saw the light of day. This, after all of Canada's stakeholders participated to make up the plan. While it is incumbent for the Minister of Industry to co-ordinate space policies and programs for the government through the CSA, the LTSP it is presented usually forms the basis of these policies and programs and is then enacted by the government. In a surprise move, with no public explanation provided to stakeholders, the government shelved the LTSP.

To complicate matters, the government announced in Budget 2011 that it was going to form an independent review panel to look into the Aerospace and Space sectors. That review, now known has the Aerospace Review, began in January and will provide the government its report in mid-December. Exactly what the conclusions and recommendations of the review will be is anybody's guess at this time, but one would think with respect to the Space sector the content wouldn't be too much different than what was in the LTSP. What's more, once the Review tables its report, the government has no obligation to enact any of the recommendations.

MacLean is in his fourth year of a five year term and according to the Canadian Space Agency Act, can not serve another term*. This is a shame, as MacLean, a former astronaut and a scientist by training, has, by all accounts, brought stability and some vision to the CSA. He's reorganized the CSA in preparation for the future and an eventual LTSP. But like past Presidents, he has been hampered by the bureaucratic machine of Industry Canada - where certain senior officials appear to be meddlesome and lack not only vision, but it would seem, basic business sense.

Budget 2012 may be remembered as a turning point for the space sector in Canada, and for all the wrong reasons.

The current budget paints a path forward that could be very bleak for the space sector. The government, in its zeal to cut the deficit swiftly and deeply, is leveraging current assets hoping to stretch them out further. And while many, if not most Canadians, will agree with some budget cuts to bring the deficit under control, I don't think many would agree that we should be taking the risks the government is embarking on.

ENVISAT, a critical European earth observation satellite, recently went offline. All efforts to reestablish contact have failed and the satellite is now considered dead. A recent Economist headline on Envisat said "wilful blindness". Why? Because not only is there no other European satellite ready to take Envisat's place, but infighting on how the distribution of operating cost will be borne by the European Union members hasn't been resolved and so no replacement satellite is being built. As an interim measure, Europe is looking to Canada for help. With Canada's cooperative agreement with ESA, they plan on using data from RADARSAT I and RADATSAT II to fill the gaps where they can. The agreement for RADARSAT I is straightforward but an agreement with MDA for data on RADARSAT II still needs to be hammered out. But wait, RADARSAT I has lived well beyond its estimated lifespan. The reality is, it could die as ENVISAT did at any time.

Budget 2012 not only cut 10% from the CSA, but other departments with space assets weren't spared either, including the Department of Defence. Between the CSA, DND and other government departments, Canada's space budget was approximately $1 billion. After all the cuts come into effect, it could be lowered to approximately $900 million.

In 1999, the government set the CSA A-Base funding at $300 million per year, though it can fluctuate slightly year to year. The CSA's A-Base funding is about to plunge though to an estimated $256.2 million or a 14.6% decrease for the fiscal year 2014-2015 as shown in the chart below. Take inflation into account and the impact is that much greater. Planned spending for 2014-15 is currently projected at $284.3 million.

Canadian Space Agency Funding

Strategically important flagship projects like RCM not only benefit all Canadians, they also train students and create jobs including the highly coveted Highly Qualified Personnel (HQP) category of jobs. Losing those skills to other sectors, or worse, through migration to other countries can have a long term impact on the country. While this might not be as comparable as the job loss when the then Conservative government shut down the Avro program in 1959, the loss of HQP jobs to the U.S. is very real.

NASA's John Shannon made the following statement about a year and half ago on the retirement of the shuttle in context of job movement at that time to another historical moment, that of the cancellation of the Avro program in Canada.

"When that program (Avro) was cancelled in Canada in 1959, probably the biggest beneficiary of that cancellation was the Space Task Group at Langley which eventually came to the Manned Spacecraft Center which is now the Johnson Space Center to execute the Apollo program."

We all know what happened in the sixties with the U.S. space program. Canadians played a critical role, but not in Canada. This is exactly the kind of scenario that could happen again, though this time the Highly Qualified Personnel will be going not to just NASA but competing U.S. commercial space companies like SpaceX, Boeing, Lockheed Martin etc.

How is Canada's space sector doing?

Well, according to the CSA 2010 State of the Canadian Space Sector report, not too bad. The report, compiled annually through voluntary submission by Canadian companies provides a snap-shot of the sector .

The 2010 data showed total revenues were $3.493 billion, up 14% over the year before, roughly divided between domestic and export markets. Of the $3.493 billion, 79% or $2.729 billion was directly related to Satellite Communications. Of the 79%, 76% was for applications and services such as satellite tv, telephone services etc. A good chunk of that revenue, over $800 million was from one company, Telesat. We've yet to see the 2011 report, which won't come out until November. Early data from public companies would indicate 2011 will show slower growth and stagnating revenues.

It should be noted that in 2010 of the domestic revenues, only 18% came from government sources according to the report. So why does it matter what the government funds and signals with space policy?

The answer is two fold. Canadian businesses rely to some extent on the government moving forward not only with flagship programs, but smaller programs as well, to encourage students to train for careers in the space sector and to retain HQP. This in turn allows these companies to compete for export markets of which the government also has role. You need a certain size domestic market to be able to retain the right kind of jobs to compete for those export markets. So even though the government, at least in 2010, only provided 18% of the domestic revenues, it does play a critical role.

The second part of the answer is that it is the government that sets space policy. And as I mentioned earlier, foreign companies and partners look to the government policy as a signal for the direction the country is headed. This has a direct bearing on the companies in the sector.

There is clear evidence that space is no longer the domain of the few. Emerging space nations number in the dozens now. Canada can choose to remain a leader or become a bit player relying on others for space applications and technology. The decision though is not something to put off until tomorrow, it is a decision that needs to be made now.

The Aerospace Review appears to be one last opportunity for Canadian stakeholders to make it clear what the space sector means for Canada. After that, it's up to the government to decide on what to do.

One suggestion I would make to the Aerospace Review is that considering the importance space plays in Canadians every day lives perhaps it's time the CSA, the natural government agency leader, was unshackled from the bonds of Industry Canada and elevated to its rightful place as an independent agency within the government as all the stakeholders had envisioned** when the CSA was being created.

Canada will celebrate its 50th year in space in September with the anniversary of the Alouette satellite. We were the third nation in the world to domestically design and build our own satellite that then made it to space. We're still considered a top 10 space nation, though our position is falling. There's still time to remain a leader. But it takes leadership, something we seem to be missing right now.

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* Correction to the original article: The Canadian Space Act was amended March 16th and updated May 14th of this year. The President can be reappointed for another term.

** Michael M. Atkinson, William D. Coleman, Obstacles to organizational change: the creation of the Canadian Space Agency (1.6MB PDF), Canadian Public Administration / Administration Publique du Canada, Volume 36, NO. 2 (Summer/Ete), pp. 129-152.