Europeans aren’t known for airing their dirty laundry in public, but let them speak anonymously and the clotheslines will fill up quickly.
ASD Eurospace, the trade association for Europe’s space industry, released a report this week built on anonymized interviews with 15 space industry CEOs—leaders of both A&D primes and newer scaleups. The results showed many industry leaders are disgruntled with the current setup of the region’s space sector.
In the report—titled GALAXY—the CEOs highlighted structural issues limiting the growth of Europe’s space industry, stifling its competitiveness on a global scale. But these leaders were also aligned in proposing changes that could right the ship.
“We need strong and determined European institutional customers to anchor a strong European market, with stable and predictable institutional demand. We need demanding and creative space agencies to challenge industry to innovate, to be efficient, and to deliver real value for European missions,” ASD Eurospace President Marco Fuchs summarized in the report. “We also need strong European member states backing the European efforts, rather than focusing only on growing national competences in a market that cannot sustain them.”
Problem statement: ASD Eurospace’s GALAXY report highlighted a few problems with the setup of the European space economy that are stunting growth.
First and foremost, CEOs told ASD Eurospace that the region’s space sector is too fragmented to remain competitive on a global scale.
ESA and its 23 member states each have their own national priorities. Procurement decisions are often made to protect local industrial capacity, instead of promoting market efficiencies.
Policies like geo-return—where countries get back what they put into ESA—exacerbate these inefficiencies, causing the duplication of capabilities, and resulting in the creation of smaller scale systems that don’t work together.
While there’s ample evidence that Europe can come together on big projects—including Galileo, Copernicus, and dozens of ESA missions—these large programs are often overly expensive, and slow to develop.
This fragmentation has also caused the market to move toward consolidation. Project Bromo—the proposed merger of the space units of Leonardo, Airbus, and Thales—is an attempt to create a unified structure in Europe’s space ecosystem, the report argues. But CEOs told ASD Aerospace that—without a rise in demand—the merger could compound the problem by putting the majority of Europe’s space development in the hands of a single organization.
“While companies collectively call for greater European coordination, in practice they often abide to national priorities when opportunities arise; this is a reminder of the strong influence of national funding and highlights the difficulty moving from state ambitions to coordinated action,” the report says.
Top down: Europe’s space sector is driven largely by institutional demand. This isn’t unique to the region, as civil space and defense contracts underpin much of the global space sector, but the GALAXY report highlighted ways in which Europe’s unique procurement mechanisms are standing in the way of progress.
The root of the problem, according to the report, is that institutional buyers aren’t creating contracts with predictable revenue. The European space industry has landed an abundance of one-off contracts, but without a guarantee of longer-term demand, suppliers have limited ability to build quickly and at scale, and startups often fail to raise sufficient capital to support long-term growth.
The fix: The GALAXY report wasn’t all doom-and-gloom, however. It concluded with several recommendations, directly from CEOs, to remake the European space economy for the future, including:
- Aggregate demand: The report says a region-wide pact is required to define long-term priorities, use already demonstrated subsystems, and commit to minimum volume orders to support supply chain efficiency.
- Ensure European preference: Leaders urged public buyers to select European systems wherever possible, to protect local industry from international competition.
- Create continuity: Leaders also called for a change in institutional contracts, demanding deals that create the scale and longevity of demand that can support a growing sector.
- Focus on performance: The report argued institutional buyers should focus on rewarding performance to speed up delivery times, and reduce top-down micromanagement that has stifled programs in the past.
- Accelerate investment: Lastly, the report highlighted the need for European leaders to lubricate capital to support new entrants, and strategic consolidation. CEOs who contributed to the report urged political leaders to create new initiatives to reorganize the region’s space sector for greater market efficiency, by linking cooperation to capital.
“Europe has the capabilities, but not the industrial model to exploit them,” one CEO told Eurospace.
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NASA’s goal is to further scientific research, accomplish the impossible, and inspire humanity. Its prime role is not to generate new commercial industries, according to NASA Administrator Jared Isaacman.
“If the objective is to force an economy out of every NASA endeavor, then NASA should probably sit inside the Department of Commerce,” Isaacman wrote in a lengthy post on X late Wednesday night. “But NASA is an independent agency with a broader mission.”
The right stuff: NASA has had some success helping to grow robust industries by becoming an anchor customer of commercial services. The most high-profile examples are the commercial crew and cargo programs, in which the agency helped fund development of transport to orbit that now (in some cases) operates commercially, though Isaacman said commercial procurements also work well for EO and comms capabilities.
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