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  • 1. “Off the Dole” and “Out of the Box:”Colorado’s New Space Strategy and Takeaways forOther StatesAerospace States Association Annual Meeting / April 12, 2013Metropolitan Policy Programat BROOKINGS
  • 2. Brookings and the state joined forces to develop an action planto boost the competitiveness of Colorado’s space economyBrookings provided fresh analytics, a new framing of challengesand opportunities, and private-sector, state, and federalstrategies. McKinsey & Co. provided private-sector intelligenceBrookings worked closely with OEDIT, the Metro DenverEDC, and the Colorado Space Coalition to bring increasedfirepower to the governor’s Aerospace Key Industry ProcessAll of this fell under Brookings’ national advanced industries (AI)initiative that seeks to highlight the importance of America’s topregional advanced industry clusters and strategies to grow them2
  • 3. What we developed reflects novel analytics and extensivelistening3
  • 4. What we did: analytics4✓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 segmentLocalGlobal
  • 5. ✓Preliminary listening session with select leaders from industry, workforcetraining, academia, economic development, and governmentWhat we did: listening5✓One-on-one interviews with key stakeholders✓Formal listening sessions held in coordination with the state’s Key IndustryNetworks Process Steering Committee and Tactical Team meetings✓Interim webinar with key stakeholders✓Draft review by an extensive network of experts and stakeholders1stmonth6thmonth
  • 6. What we found:Colorado possesses an exceptionally diversified,multidimensional, and high potential space economy6However, amidst significant opportunity, disruptive forceshave exposed a number of competitive challengesGiven these challenges and its many strengths, Coloradoshould commit itself to preeminence in space
  • 7. The space economy is an outsized driver of Colorado’seconomyPrivate sectorspace jobsAverage privatesector space wagePrivate sectorspace GDP47,700$8.7b $92,50066,900Total spaceeconomy jobs
  • 8. The private space economy is multidimensional and polycentricPrivateMilitary:15,500 jobsCivil:3,700 jobsSpace systems manufacturing and operationsSatellite and space vehicle manufacturingSatellite and space systems operationsLaunch manufacturing and servicesNetwork ground equipmentSatellite-based servicesConsumerNavigation and geo-locationRemote sensing and earth observationTelecommunicationsConsumer ground equipmentSupply and supportIT, engineering, and professional servicesComponent suppliers5,800 jobs5,000 jobs1,000 jobs850 jobs7,300 jobs4,000 jobs3,900 jobs1,600 jobs250 jobs10,700 jobs6,100 jobs
  • 9. 7.9 percent CAGR*Satellite-based services751001251501752002002 2008 2011Colorado’s private space economy is increasingly services-orientedJobs2002 = 10020112008*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 20111.9 percent CAGR0.2 percent CAGRSupply and supportSpace systems manufacturingand operations92002
  • 10. Colorado’s space economy spans multiple metro areas andrural counties but is heavily clustered along the Front Range10The geographic concentration of theindustry in Colorado signals thepresence of a classic industryand innovation cluster
  • 11. What we found:Colorado possesses an exceptionally diversified,multidimensional, and high potential space economy11However, amidst significant opportunity, disruptive forceshave exposed a number of competitive challengesGiven these challenges and its many strengths, Coloradoshould commit itself to preeminence in space
  • 12. A number of disruptive forces are making this a criticalmoment 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 capability12For one, government spending is becoming an ever smaller and more contested portionof the marketFor example, government demand for commercial solutions—i.e. fixed-cost,“off-the-shelf”offerings—is giving rise to new lower-cost competitorsInnovation matters more and more and greater collaboration is required to achieve it; at thesame time, the aging of the existing innovation workforce threatens to undermine advances
  • 13. What we found:Colorado possesses an exceptionally diversified,multidimensional, and high potential space economy13However, amidst significant opportunity, disruptive forceshave exposed a number of competitive challengesGiven these challenges and its many strengths, Coloradoshould commit itself to preeminence in space
  • 14. 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 spaceeconomy even as “government space” shrinks✓Improve the availability of risk capital✓Commit to innovation and owning the next greatspace technologies✓Intensify cluster dynamics✓Seize commercial opportunities in emerging newspace, adjacent markets, and global markets✓Bolster the workforce pipeline to secureColorado’s human capital advantageVision:“Colorado becomesthe center ofinnovation for theglobal spaceeconomy”Strategies
  • 15. The private sector must lead the way in making Colorado theundisputed center of innovation in the global space economy15Focus on affordability to secure competitive positions in core marketsCONSOLIDATE:positionIncrease internal R&D investment in next-generation technologiesSEIZE:opportunitiesReinvigorate corporate venture capitalIMPROVE:access to capitalEngage in state efforts to improve how the space cluster functionsINTENSIFY:cluster dynamicsCOMMIT:to innovationBOLSTER:workforce pipeline
  • 16. 16CONSOLIDATE: Brand and market / Convene delegation; states / Name sector championpositionSEIZE: Position the state to lead on next platforms / Create prize for new spaceopportunitiesCOMMIT: Create AI commercialization grants / Establish AI innovation hubto innovationEstablish investor’s conference / Improve existing stateVC fundIMPROVE:access to capitalThe public sector must create a supportive environment inwhich space firms can innovate, compete, and flourishBOLSTER:workforce pipelinecluster dynamicsINTENSIFY:
  • 17. And the federal government must do its part to support statespace economy excellenceImmediately resolve sequestrationCONSOLIDATE:positionScale up a national network of AI hubsCOMMIT:to innovationDefend SBIR/STTR program fundingIMPROVE:access to capitalExpand bottom-up grant programsINTENSIFY:cluster dynamicsBOLSTER:workforce pipelineopportunitiesSEIZE:
  • 18. Takeaways for states✓Challenging times require a new look✓Novel analytics can open up newavenues✓Convening your industry and resettingstrategy can be powerful
  • 19. For more informationMark MuroSenior Fellow and Policy DirectorMetropolitan Policy Program at Brookingsmmuro@brookings.edu@markmuro119