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Virus grounds space industry

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South Australia’s emerging space industry faces a period of uncertainty as investors lock down their cash amid a coronavirus induced economic slump.

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This investment halt is putting pressure on a lot of the industry’s startups and scale-ups that may not have the size or the cashflow through existing projects to weather the storm.

The University of South Australia ran a space industry workshop last month involving 10 stakeholders including SMEs and representatives from the SA Space Industry Centre and the SmartSat CRC.

UniSA Defence and Space Director Matt Opie said unlike the defence industry in Australia, which is characterised by a number of global defence primes and major Department of Defence projects, space lacked the large primes that brought a level of stability and resilience to the industry.

“The space sector in Australia is characterised by very few if any primes like the defence industry, a few SMEs and then dozens more startups and scale-ups,” he said.

“Many of them are in their pre-revenue phase so they don’t have the size and they don’t have the cashflow through existing projects.

“A young, growing industry like the space industry in Australia is heavily reliant on investors and if they are spending less then that will have an immediate effect on the seed investment stage of those space companies.

“It’s definitely been affected because it’s hit an industry that’s characterised by small companies who lack that buffer the bigger ones have.”

Adelaide is a significant player in the nation’s space industry and is home to the Australian Space Agency and the $245 million Cooperative Research Centre for Smart Satellite Technologies and Analytics (SmartSat CRC), which was announced last year and will play a crucial role in the Federal Government’s goal of tripling Australia’s space economy to $12 billion and create up to 20,000 jobs by 2030.

A $6 million Mission Control Centre for small satellite missions and an educational Discovery Centre are also being added to the Space Agency’s offices at the Lot Fourteen innovation neighbourhood.

The Australian Space Agency last week publicly released its first State of Space report, covering the period from January 2018 to June 2019.

The report, dated September 30, 2019, showed that the Australian sector grew 15.6 per cent in the three years from July 2016 to June 2019 to employ 13,200 people across 766 space businesses.

It also showed that as at June 30 last year there was a $2 billion pipeline of capital projects in all states and territories from July 2018 through to June 2028 including 88 projects across all states and territories.

However, the report was completed well in advance of the coronavirus pandemic, which is stalling momentum.

Opie said it was too early to say what the long-term ramifications would be for the industry or if the coronavirus slowdown would jeopardise the Federal Government’s industry growth goal.

He said although it was important investor funds began flowing again soon, the general mood of the recent space workshop was positive.

“What these companies have in their favour is they are small, agile and entrepreneurial whereas a larger company doesn’t have those traits. A small company can pivot quickly and can be agile to change its technology and its market,” Opie said.

“The other positive thing is that entrepreneurship is often triggered in times of need. If a smart engineer or a smart entrepreneur all of a sudden has time on their hands then that’s when you often see these small smart companies being further developed.”

UniSA has run a space industry incubator through its Innovation and Collaboration Centre since 2018. The programs second cohort has been moved online with some participants returning to their home countries while the start of the third instalment has been pushed back from June to summer.

Opie said the representatives at the recent workshop were divided as to whether struggling space companies should be given additional government support during this difficult period or if natural market forces should be allowed to prevail.

“That might apply in general industries – and we’ve seen that with the government choosing not to bail out Virgin Airlines – but there is another argument that says in an immature startup industry like space in Australia at the moment you can’t just let these startups that are already struggling to survive fall over before they’ve taken their first few steps,” he said.

However, Opie said although the space industry did not have major projects like the $35 billion frigate build that would keep the Defence industry afloat, investments from the Australian Space Agency’s innovation fund and contracts awarded for SmartSat CRC projects through its research streams would be important to keep the industry moving.

The space industry has not fully ground to a halt though, with SA company Southern Launch last week announcing Singapore-based launcher company Equatorial Space Systems had signed a memorandum of understanding to use its facilities for its upcoming suborbital mission program.

Adelaide-based electronic warfare company DEWC Systems was also awarded a $3.1 million contract to advance its space tactical sensor system for the Australian Defence Force in April.

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