Exports: an imperative for the European Space Industry? - A first ECSECO White Paper [Sep/2024]
The recently published ECSECO white paper focuses on the commercial and financial hurdles the European space sector faces, particularly the need for organic growth and international market expansion. It highlights the critical role of exports and the need to increase overseas commerce to sustain Europe's competitiveness in the global space market.
While Institutional demand continues to dominate as the largest customer segment for the European space industry, the commercial landscape is facing big challenges. The financing of the sector’s employment faces a precarious dynamic with “10% of the European space upstream workforce paid out of equity rather than revenue”.
In a scenario characterised by a general feeling of lack of confidence among investors, the paper highlights the necessity for start-ups and SMEs to focus on organic growth strategies to ensure stability in the financing processes of fixed term employment. Among the proposed strategies, pursuing competitiveness for the European Space Sector in Global Markets with institutional support to private exports is indicated as key.
The report therefore stresses the commercial opportunity on international markets. An analysis of the most relevant and recent events in the US and Middle East (Saudi Arabia and United Arab Emirates) highlights respectively the new and old opportunities of investing abroad for Europe.
These new opportunities, though, are characterised by a shortage of skilled and localised workforce and limited regional capacity. Hence, European SMEs will need to take the opportunity and develop specific support structures that ensure both economic and organisational viability of such penetration in external markets. Additionally, the paper underlines the possible challenges that Europeans would face embarking in such a journey: first, limited resources, with scarcity of investors and limited availability of commercial loans; secondly, entry barriers represented by foreign government-backed companies; and finally geo-political tensions and European Market limitations. Specifically, the absence of international trade agreements for space goods and the lack of shared technical standards hinders cooperation. Therefore, the white paper stresses the importance of bodies such as Export Credit Agencies and their strategic role in facilitating export and access to foreign markets. It also puts forward how a possible collaboration with European institutional authorities like the European Innovation Council and the European Commission could help with assurance and derisking processes, market entry and investment.
Finally, the paper suggests the creation of a European Export Hub for Space to help companies in their overseas exports journey and a greater collaboration with European external action services and Embassies. It also illustrates a possible partnership with the European defence agencies and the promotion of Joint Ventures, as well as the collaboration with development banks and the design of customised financing solutions to further strengthen exports outside Europe.
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