State of the Canadian Space Sector Report 2015

Objective

The State of the Canadian Space Sector Report provides factual information about features of the Canadian space sector. The Report has been published since 1996 based on a questionnaire sent to organizations involved in space activities across Canada, including companies, not-for-profit organizations, research centres and universities. This year's report is based on data from 160 organizations.

The baseline data in the Report include the number of organizations active in the sector and their composition (e.g. share of small and medium-sized enterprises (SMEs), share of universities), the sectors of activity (Satellite Communication, Earth Observation, Space Exploration, Science, and Navigation), the Canadian space workforce and composition (e.g. share of highly qualified personnel (HQP), regional distribution, and types of jobs), research and development (R&D) and innovation. In this edition, data are reported for the 2005–2015 period. Readers should consult previous editions (available on the Canadian Space Agency website) for information regarding results prior to 2005.

The organization-specific information used to compile this report remains strictly confidential and will not be released in any manner other than aggregate form. Consequently, in certain circumstances, a detailed explanation or in-depth reporting of the results cannot be provided in order to protect the confidentiality of the respondents.

About the Authors

For More Information

For more information about the Canadian space sector, or for an electronic copy of this report, please go to www.asc-csa.gc.ca/eng/publications.

Acknowledgments

The CSA wishes to acknowledge all those who responded to the questionnaire. Without them, this report would not have been possible.

Questionnaire

In order to measure the changes taking place in Canada's space sector each year, the CSA uses a questionnaire to collect baseline data. Questionnaires are sent to private sector enterprises, not-for-profit organizations, research organizations and universities in Canada that engage in space activities. The questionnaire follows a census model and therefore aims to be as inclusive and exhaustive as possible.

Most organizations that responded to the 2015 questionnaire reported on a calendar year from January 1 to December 31, 2015, with the remainder reporting on a fiscal year, generally ending March 31, 2016. As in previous years, the questionnaire had a high response rate covering 160 organizations, including all major space players.

Additionally, the CSA performs quality control measures on the survey data to ensure the accuracy of the findings.

Economic Impact Analysis

As described in the OECD's Handbook on Measuring the Space Economy, measuring economic impacts in the space sector is a challenging task, as there is no single industrial classification for space activities. In order to overcome this difficulty, a model was developed jointly by the CSA and Innovation, Science and Economic Development Canada (ISED) to calculate the space sector's contribution to gross domestic product (GDP) or value added. This process involved taking into account the various industrial classifications, weighing them and categorizing them using a value-chain approach, in order to develop a set of multipliers based on Statistics Canada's Input-Output tables. These multipliers are used to determine the impacts on GDP and employment of the space sector, the suppliers to the space sector, and the consumer spending by employees associated with both the space sector and its supply industry.

A detailed explanation of the Economic Impact Model follows:

1. North American Industry Classification System (NAICS) codes were retrieved for each space company through Statistics Canada's Business Register. This exercise generated a list of nine separate industrial classifications that covered all active Canadian space sector companies.
2. Canadian space companies were categorized into a value-chain model based on the goods and services they provide: Research, Engineering and Consulting Services; Manufacturing; Satellite Operations; Value-added Service Providers; and Broadcasting Services.
3. Universities, research centres and associations were grouped together under Research, Engineering and Consulting, as in most cases their space sector activities are related to R&D.
4. The grouping of NAICS codes in each of the value-chain categories were then weighted for their relative importance within that particular category. Weighting was established on the basis of workforce tied to each NAICS code. The more workforce associated with organizations in a particular NAICS code, the heavier that NAICS code was weighted relative to the grouping of NAICS codes in that value-chain category.
5. Customized economic multipliers were then built for each value-chain category based on Statistics Canada's input-output accounts for existing NAICS codes. These multipliers are at three levels: space sector, supply industry and consumer spending by associated employees.
6. The multipliers were adjusted to account for supply-chain linkages within the space sector itself, as multiple companies supply each other with intermediate goods and services which would otherwise lead to an overestimation of the sector's impact.
7. Employment levels for each value-chain segment of the space sector (collected directly from companies through the questionnaire) are entered in the Economic Impact Model. The customized economic multipliers are then applied to generate the space sector's total GDP and workforce impact numbers.

The "multiplier effect" refers to the total impacts (space sector, supply industry and consumer spending by associated employees) divided by the initial space sector impact. This gives the reader an idea of the impact that one job or one dollar in the space sector has on the wider economy.

Note: Two types of primary inputs can be used in an input-output model: revenues or employment. Employment has been chosen here as it provides a more accurate portrait of the true level of economic activity being performed within Canada's borders. The results of this analysis can be considered a conservative estimate of Canada's space sector impact, particularly when compared to third-party studies or comparative international reports, which may use different methodologies.

Definition of Canada's Space Sector

The Canadian space sector is defined as organizations (private, public and academic) whose activities include the development and use of space assets and/or space data.

Definition of Space Value-Chain Categories

This report uses a methodology developed by the Organisation for Economic Co-operation and Development's Space Forum, of which the CSA is a Steering Committee member, to characterize Canadian space activities on the basis of a value-chain approach. The definitions of space sector categories were updated in the 2014 edition of this report as per the value-chain approach, with findings presented on the basis of upstream and downstream segment activities. This re-categorization is intended to improve the measurement of the space sector and enable international comparisons.

Under this value-chain approach, data have been organized into categories that align with the stages of producing space goods and services: Research, Engineering and Consulting; Space Segment Manufacturing; Ground Segment Manufacturing; Satellite Operations; Products and Applications; and Services. This approach replaces the space categories used in the annual State of the Canadian Space Sector Reports from 1996–2013.

Note: Data and trend analysis are reported using the new methodology unless specifically stated otherwise. Any results that have been impacted by methodological changes have been identified in this report.

Downstream Segment

The downstream segment refers to the effort required for the day-to-day operation of space assets, manufacturing of products and software applications that transform space data and signals into useful end products, and services provided to end-users.

• Satellite Operations: Day-to-day management of satellites and spacecraft once they are in space, e.g. telemetry, tracking and command; monitoring, recovery operations and collision avoidance; mission planning for satellite passes; uplinks and downlinks for signal processing to reception facility; lease or sale of satellite capacity.
• Products and Applications: Manufacturing/development of software or hardware that enable the transformation of space-derived resources into a usable/useful format, e.g. computer software applications, chipsets, Very Small Aperture Terminals and other terminals, antennas, satellite phones, video and audio receivers-decoders, and GPS devices. This category also includes publishing digital or print books, atlases and maps using space-based data.
• Services: Provision of services which are dependent on space-based signals or data to various end-users (individual consumers, government departments, or businesses), e.g. subscriptions to satellite radio, phone, television or Internet services; engineering, architectural and environmental consulting based on the processing and analysis of Positioning, Navigation and Timing (PNT) or Earth Observation (EO) data; support services provided to users of space-based products and applications, such as provision of computer consulting and facilities management, data processing, Web hosting and portals, and streaming services.

Definition of Sectors of Activity

The activities of space organizations can also be broken down, as has been done in previous reports, according to the ultimate use or purpose of the research carried out or the goods and services produced. Space sector activities can serve commercial, civil or military purposes, and refer to activities across the value chain:

• Navigation: The development and use of satellites for localization, positioning and timing services. Navigation is used for air, maritime and land transport, or the localization of individuals and vehicles. It also provides a universal referential time and location standard for a number of systems.
• Satellite Communication: The development and use of satellites to send signals to Earth for the purpose of fixed or mobile telecommunications services (voice, data, Internet, and multimedia) and broadcasting (TV and radio services, video services, Internet content).
• Earth Observation (EO): The development and use of satellites to measure and monitor the Earth (including its climate, environment and people) for a number of purposes such as resource management, mineral exploration, disaster assessment, security and defence.
• Space Exploration: The development and use of manned and unmanned spacecraft (space stations, rovers and probes) to investigate the reaches of the universe beyond Earth's atmosphere (e.g. the Moon, other planets, asteroids). The International Space Station and astronaut-related activities are considered in this sector.
• Space Science: The various science fields that relate to space flight or any phenomena occurring in space or on other planets (e.g. astrophysics, planetary science, space-related life science).
• Other: Generic technologies or components that are not destined for use on a specific space system or for a specific space application. This could be the case for early phase research, small off-the-shelf components used in various systems, or services based on integrated applications.

Total Revenues

In 2015, total revenues in the Canadian space sector totalled $5.3B, representing a slight decrease overall of 1.6%, or $85M, year-over-year. The average annual growth rate of the space sector over the last five years (2010–2015) is relatively flat at 0.4%. ^{Footnote 3} A detailed analysis of the source of this growth can be found in the Markets section of this report.

Revenues of Canada's Leading Space Organizations

In 2015, the top 30 Canadian space organizations generated 98% of total space revenues and 84% of space employment, a pattern consistent with previous years despite changes in the composition and rank of the top 30 space organizations. Most of the top 30 organizations are companies; however, several academic organizations are also represented. Fourteen of the top 30 are downstream segment companies.

By comparison, the top 10 organizations accounted for 91% of total space revenues and 65% of employment. Revenue and workforce concentration in the top 10 organizations is virtually the same as last year, when those organizations accounted for 90% of revenues and 65% of workforce. Seven of the top 10 are downstream segment companies.

Large companies, classified as having 500 employees or more, are rare in the space sector. Only 7% of the company survey population were classified as large enterprises.

Seventy-two organizations reported space revenues in excess of $1M during 2015, ten more than in 2014.

Small and Medium-Sized Enterprises (SMEs)

Ninety-three percent of Canadian space companies are SMEs, and indeed many of Canada's top space companies are SMEs (defined as employing 1 to 499 workers). SMEs are concentrated most heavily in research, engineering and consulting activities in the upstream segment and in the production of value-added products, applications and services in the downstream segment: 63% of SMEs in the space sector survey population are upstream segment companies, while 37% are downstream segment companies. Together SMEs account for 39% of Canadian space sector revenues and 26% of all employees.

Space SMEs are highly innovative, corresponding to 61% of all space business expenditures on R&D (BERD), and export-driven with 57% of SME sales reaching customers abroad. Upstream segment space SMEs are responsible for 17% of total BERD, while downstream segment SMEs account for 44% of total BERD in the space sector. The Downstream segment is significantly more export oriented, accounting for 87% of SMEs revenues from clients abroad, compared to 13% in the upstream segment.

The SME workforce is highly skilled and specialized with 56% of its workforce classified as HQP (compared to 32% of the workforce in large firms).

Universities and Research Centres

University and research centre revenues amounted to $125M in 2015, representing 2.4% of total revenue, with six universities making it into Canada's top 30 space organizations. Universities and research centres received $115.6M in domestic funds, mostly from government: $91.6M from the federal government and $14.7M from provincial governments. The remainder came from private foundations or companies.

In addition, universities and research centres continued to access foreign sources of funding, totalling $9M. American organizations were an important source of support for space-related activities in Canadian universities and research centres, with funds totalling $2.8M. Nearly as much funding, $2.4M, came from European sources. The remaining funding came from other world regions.

Academic organizations contribute 20% of the total space sector workforce with 1,997 full-time equivalents, of which 55% are highly qualified personnel (HQP) such as engineers, scientists and technicians. An additional 40% of the university and research centre workforce is comprised of students, mostly at the graduate level, who are in receipt of wages or a stipend from their university for work as research assistants, teaching assistants, or other employee-type situations.   

Regarding regional distribution, Ontario organizations capture 44% of space-related funding in this category and 47% of the workforce. Quebec and the Prairies account for similar amounts of space-related funding, 22% and 28% respectively, and workforce, 23% and 20% respectively, at universities and research centres. B.C. and Atlantic regions are also at similar rates of space research funding and workforce, capturing 3% each of funding and 5% and 4% of workforce, respectively. The pie charts below illustrate the regional distribution trends. 

Of the 36 university and research centre respondents, 10 reported coming up with at least one space-related invention in 2015, five of which filed for one or more patents.

For the purposes of this report, funding for space-related activities performed at universities and research centres is consolidated with company revenues and reported as total space sector revenues for the year, which is $5.3B in 2015. Because of the general nature of activities undertaken at universities and research centres, these organizations are categorized as part of the upstream segment of the value chain. It is important to note, however, that while universities and research centres are mostly engaged in research and engineering, some also participate in downstream segment activities, such as satellite operations and the development of software and algorithms to transform space data into space solutions.

Regional Distribution and Trends

While the proportional share of total revenues by region has remained relatively stable from year to year, the inclusion of new downstream segment space sector firms in the previous edition of this report (2014) resulted in a shift in regional distribution in favour of Quebec. This impacts the five-year trend analysis only and not the changes reported year-over-year from 2014 to 2015.

Market Share by Value-Chain Category

Revenues accruing to space organizations can be broken down into value-chain categories. The categories relate to the type of work that the organization is carrying out in order to produce goods and services and are broadly divided into upstream and downstream segment activities. The upstream segment in Canada—comprised of R&D, engineering, consulting, space and ground segment manufacturing—was worth roughly $0.9B in 2015. The downstream segment—comprised of satellite operations, manufacturing of products (e.g. terminals), development of software applications, and the provision of services (e.g. broadcasting)—was worth $4.4B in 2015. A detailed description of the value-chain categorization is provided in the Methodology section of this report. A breakdown of revenues in each category is as follows:

• Research, Engineering and Consulting amounted to $205M in 2015 and account for 4% of total revenues.
• Ground Segment Manufacturing amounted to $126M in 2015 and accounts for 2% of total revenues.
• Space Segment Manufacturing amounted to $541M in 2015 and accounts for 10% of total revenues.
• Satellite Operations amounted to $985M in 2015 and account for 19% of total revenues.
• Products and Applications amounted to $624M in 2015 and account for 12% of total revenues.
• Services amounted to $2.8B in 2015 and account for 53% of total revenues.

Market Share by Sector of Activity

In terms of sectors of activity, revenue growth occurred in Navigation, Space Science and General Technologies in 2015. Decreased revenues were felt in Satellite Communication, Space Exploration and Earth Observation. Trends for the 2010–2015 period are detailed below using Compound Annual Growth Rate (CAGR). As with findings presented throughout this report, the breakdown is provided at current market prices, in other words unadjusted for inflation.

Note that methodological changes have had an impact on the five-year trend analysis for the Satellite Communication sector; however, other sectors of activity remain unaffected.

Market Share by Customer Location

Market Share by Customer Type

Customers are classified as either government or non-government. Government customers include domestic government (municipal, provincial, federal civil, federal defence) and foreign government (foreign civil and foreign defence). Non-government customers include businesses, individual consumers and non-profit organizations or foundations (both domestic and foreign).

Overall, 11% of the space revenues in 2015 were derived from government sources and 89% from non-government sources. It is important to note that government customers make up the majority of market share in some sectors, such as Space Exploration and Science, whereas Satellite Communication customers are primarily non-government.

When comparing upstream and downstream segments, upstream segment organizations are much more reliant on government funding than downstream segment organizations, which derive their revenues almost exclusively from non-government clients. The upstream segment derives 52% of revenues from non-government clients, whereas the downstream segment derives 97% of revenues from non-government clients. It is worth noting that there are a number of downstream segment SMEs that are also heavily reliant on government as an anchor client, such as value-adding players in the Earth Observation sector. In that respect, they face similar drivers and challenges to SMEs in the upstream segment.

Workforce Groups

In 2015, engineers and scientists comprised the largest category of employment with 2,953 FTEs, representing 30% of the total space workforce. Employees in the administration category made up the second largest group with 2,911 FTEs and 29% of the total workforce. Technicians came third with 1,311 FTEs and 13% of the total workforce. Management, marketing and sales, and other employees made up the remainder.

The charts and graphs below provide a breakdown of the space sector workforce in 2015.

Workforce by Region

• British Columbia: 6% (590 FTEs) of Canada's space workforce, a decrease of 4%, or 23 employees, over last year.
• Prairies: 9% (867 FTEs), an increase of 1% (9 employees).
• Ontario: 46% (4,581 FTEs), a decrease of 5% (239 employees).
• Quebec: 33% (3,298 FTEs), an increase of 6% (172 employees).
• Atlantic Canada: 6% (591 FTEs), a decrease of 1% (4 employees).

Highly Qualified Personnel (HQP)

The HQP measurement tracks the number of engineers, scientists and technicians employed in the space sector. In 2015, HQP positions were stable, increasing by less than 1%, totalling 4,264 FTEs. HQP represent 43% of the total Canadian space workforce. In terms of upstream and downstream segments, the share of HQP is an important indicator that differentiates the profile of the workforce. In the upstream segment, 59% of the workforce are HQP, while in the downstream segment 25% of the workforce are HQP.

• 39% of Canada's total space HQP work in Ontario while 36% of Ontario's space workforce are HQP;
• 29% of Canada's total space HQP work in Quebec while 38% of Quebec's space workforce are HQP;
• 16% of Canada's total space HQP work in the Prairies while 79% of the Prairies' space workforce are HQP;
• 10% of Canada's total space HQP work in B.C. while 71% of B.C.'s space workforce are HQP;
• 6% of Canada's total space HQP work in Atlantic Canada while 43% of Atlantic Canada's space workforce are HQP.

Business Expenditures on R&D (BERD) (Companies Only)

In 2015, there were 67 companies engaged in R&D activities. Total spending was $256M, a significant increase over R&D spending reported in 2014 ($146M). Upstream organizations were more R&D intensive, spending 55% of total space sector BERD.

R&D spending was financed through internal sources (e.g. company profits reinvested in R&D) or through external funding sources (e.g. government grants and contributions). Internally company-funded R&D represented the larger portion of spending at $139M or 54% of BERD in 2015. Externally funded R&D represented 46%, or $117M, of BERD in 2015.

R&D Intensity Level (Companies Only)

R&D intensity is the proportion of BERD compared to the GDP contribution of the space sector. It serves as an indicator of the level of effort and investment by a company (or by an industry as a whole in this case) in innovative activities, for example, to create new products, services or technologies, or to improve business functions, such as production techniques. Overall, space sector R&D intensity is 19%. If we consider only the manufacturing segment, R&D intensity is 32%. This is nine times higher than the average for manufacturing in Canada.

Commercialization of Externally Funded R&D Projects (All Organizations)

Organizations report on the level of commercialization of projects that were initially funded by public monies (externally funded R&D). In 2015, revenues derived through commercialization of externally funded R&D projects were $56M. The vast majority of commercialization takes place through companies (99%), with the remainder of commercialization taking place through universities and research centres.

Inventions and Patents (All Organizations)

In 2015, 62 organizations reported having made an invention and 33 organizations registered a patent. Upstream organizations account for the majority of inventions and patents, with 71% of all inventions reported and 70% of patents filed. This is a reflection of the composition of survey respondents, with almost three-quarters of respondents in the upstream segment. Upstream and downstream organizations are otherwise inventing and patenting at very similar rates: 38% of organizations in both segments have claimed an invention in the past year; 21% of upstream organizations registered a patent and 20% of downstream organizations registered a patent.

The rate of patents and inventions has remained relatively the same over the past 10 years. Most organizations involved in inventing and patenting make on average 1 to 5 inventions per year and file for 1 to 5 patents per year.

Economic Impact – Gross Domestic Product

In 2015, the space sector contributed $2.7B to Canada's GDP, which represents the value of all final goods and services produced by the space sector within Canada. Total GDP contribution was broken down into the following:

• $1.48B in space sector impacts;
• $0.67B in supply industry impacts; and
• $0.6B in impacts related to consumer spending by associated employees.

The space sector creates benefits in the larger economy with a GDP multiplier of 1.86 (Total GDP Impact / Space Sector GDP Impact). In other words, every dollar that the space sector contributes to the GDP generates another $0.86 in GDP contribution from other organizations in the economy.

Economic Impact – Jobs Created

In 2015, the space sector supported a total of 24,217 jobs in Canada. The total workforce contribution was broken down into the following:

• 9,927 space sector jobs;
• 7,489.5 supply industry jobs; and
• 6,800.5 jobs created and supported as a result of consumer spending by associated employees.

The space sector therefore creates jobs in the larger economy with a workforce multiplier of 2.44 (Total Workforce Impact / Space Sector Workforce Impact). In other words, every job in the space sector supports another 1.44 jobs in the economy.