From Galileo to the Lunar Gateway: Mapping Italy’s Growing Space Industry

From Galileo to the Lunar Gateway: Mapping?Italy’s Growing Space Industry

Shelli Brunswick

April 19, 2023

More than 400 years ago, Italian astronomer Galileo Galilei peered at Jupiter through his telescope, inspecting what he thought were three stars. In looking, he realized they were not stars but, in fact, objects orbiting the gas giant, what are today known as the Galilean moons. Centuries later, spacefaring nations are about to launch a sophisticated spacecraft, the?Jupiter Icy Moons Explorer , to study these alluring celestial bodies. It is fitting that many of the instruments on this spacecraft were built and will be commanded by Italians.

Today, Italy plays a vital role in space missions and activities worldwide, far more so than is often acknowledged. In 1964, Italy was only the third nation (after the United States and the USSR) to build a satellite and manage its launch. Much of the International Space Station was built by Italian companies under the direction of the Italian Space Agency (ASI), and Italian astronauts were the first Europeans to join an ISS mission. Italy also manufactures much of the Cygnus spacecraft, which is a major part of the ISS commercial resupply program.

Today, Italy boasts the?second-greatest number of assets in orbit ?among European nations, and it is an essential contributor to European Space Agency (ESA) and NASA missions. This global space leadership is the result of decades of intense and thoughtful development of the Italian space ecosystem and its relationships with the rest of the world. The country’s space maturity and economic activity signal that Italy is heading into an exciting new era of its space story.

To understand its potential and where it may be headed next, we need to understand the country’s domestic space ecosystem, the state of its private sector development, and the implications for workforce development.

Civil Space on a Trajectory to the Moon and Beyond

European space efforts are often presented only through the lens of the European Space Agency (ESA), with less attention given to the individual European space agencies?and companies?that make ESA missions possible. Unlike space programs in places like Canada, Japan, and the United States, in Europe, each member country contributes to the continent’s space program and receives contracts whose value is ideally commensurate with the contribution. This ESA policy of geographical return (aka geo-return) is intended to have a 1:1 ratio of contribution to contract awards, and while ESA Director General Josef?Aschbacher? wrote in March 2023 ?that there is room for improvement in geo-return to catalyze greater competition in Europe, Italy is actually exceeding the ideal ratio.

In 2022, Italy contributed €680.2 billion to ESA, the third largest contribution after France and Germany. At the ESA Industrial Policy Committee meeting,?Italy won contracts totaling €1.6 billion , with expected net revenue of about €800 million. The contracts include: the development of two Earth observation satellites for ESA’s Copernicus program; the development of the?International Habitation Module for the Lunar Gateway; and the creation of contributing technologies to the Earth Return Orbiter, which will someday carry back to Earth the rocky samples being collected by NASA’s Perseverance rover.

These are major contributions to global space missions, and Italy’s track record inspires confidence that it will succeed with its many contracts and activities. ASI runs the satellite constellation COSMO-SkyMed, with satellites in polar orbits observing the Mediterranean basin. Italian aerospace contractors built or contributed to building four modules for the ISS, as well as the iconic Cupola. And Italy has contributed to breakthrough space missions, including the Mercury-bound?BepiColombospacecraft, which will study the innermost planet and whose design has important elements for the Earth Return Orbiter.

Outside of ESA spending, Italy’s space budget is modest, rising to €400 million in 2021, according to?The Space Report . With this level of funding, it might be expected that Italy would specialize its space economy and supply chain, focusing on a few areas of excellence rather than trying to compete and succeed across every space arena. We have seen this approach from other nations,?such as Canada . Yet, that may not be the case in Italy.

“There is a theory of comparative advantage by David Ricardo according to which each country should compete on what it can do best,” said Mattia Pianorsi, researcher at the?Space Economy Evolution (SEE) Lab ?of the SDA Bocconi School of Management. “When European-level space programs are mirrored by national agencies, innovations brought by high specialization are limited. For instance, in Italy, while the space value chain is complete, more leverage on specialized capabilities could create even more powerful bargaining power at the global level, as per a capital budgeting, whereby public resources are carefully addressed in programs that create sustained growth. Rather, a ‘helicopter view’ of disbursing financial resources to support (and sometimes, maintain) the entire value chain seems to be taking place. It is clear that the financial reasoning works at the commercial level, but space is still a matter of strategic interests. ”?

This points to one product of Italy’s long history in space activities and the maturity of its space economy. It has a complete value chain, and it is anchored in the private sector.

Transitioning Private Sector Space for New Markets

There are some?200 companies in the Italian space sector , and as in other spacefaring nations, the private sector is made up of a small number of prime contractors and a larger number of small and medium-sized enterprises. The larger aerospace businesses in the value chain can be categorized as “upstream” and “downstream.”

The upstream sector includes Thales?Alenia?Space, a joint French-Italian venture focused on technology development and construction, as well as the Italian aerospace company?Avio, which provides ESA’s Vega launch system. The downstream sector is focused on the management and use of space assets (e.g., satellites), and includes companies like Telespazio (co-owned by French and Italian enterprises) and ALTEC (a venture between Thales?Alenia?Space and ASI).?It also includes companies focused on?space-to-Earth applications. An exampleis?Planetek?Italia ,?which provides geospatial data management and analysis for things like environmental monitoring and defense and security.

This upstream and downstream maturity is part of what allows Italy to not only make significant contributions to space missions but also capitalize on the benefits for domestic industry. The emerging story is the growth of small and medium-sized businesses, which constitute some 80% of companies in Italy’s space economy. These organizations are encountering some of the same headwinds challenging?space?companies worldwide, notably access to funding and the challenge of retaining talent.

“The risk appetite has slowed down” among venture capital, said Elias Montanari, an angel investor and the founder of?SpaceBrainx. “Suddenly, people are realizing that not everything is shining. Space is much more long-term. But you are cutting the dead branches, the weaker companies that did not develop sufficient cash flows. There will be strong consolidation, but the?underlying strategic need [for space access] is not going to go away.”

Part of the challenge, as Pianorsi said, is for companies to transition from delivering products for public missions to selling general services in commercial markets.?

“We have several entrepreneurs,” he said. “We have financial resources from public expenditure (less from private capital) and technological capabilities, but the European environment does not give the sense of competition (to achieve progressive innovation and efficiency). Therefore, there is the need to scale up by looking into global markets and partners to sell specialized capabilities and to strategically position European companies worldwide. Most of all, there is the need to transform the value created under the strategic directions of governments to an economic value for commercial markets.”

Recent geopolitical?events may serve to expand investment, in Italy and across the European continent. Montanari noted how the Russian invasion of Ukraine put on display the strategic value of space capabilities, including the clarity of U.S. intelligence (owing to Earth-observation satellites) and the strategic importance of secure connectivity, as seen in the case of SpaceX’s delivery of?Starlink?services in Ukraine.

“Suddenly, more people are starting to awaken to how strategic space is,” said Montanari. “I think the government will put a lot of funding for next-gen Earth observation and secure satellite connectivity. We will see a big amount of money poured into that, and that will spin the wheel…Italy is like a wheel that keeps spinning, slower or faster, but it doesn’t stop.”

As those in the global space community know, funding and access to new markets are not enough. Success in space requires talent, and in that area, Italy faces both opportunities and challenges.

Collaborating for Space Workforce Development

Among OECD countries,?Italy has the largest share of teachers older than 50, and the lowest share of teachers 25-34 years old. As such, Italy will require many more teachers nationwide in the years ahead. What is more, at the collegiate level, earning a bachelor’s degree in Italy can take longer than in other nations, and on average, about 50% of graduates take nearly six years to begin working after graduation. On top of that,?about a quarter of Italians ?aged 15-29 are not?employed, studying, or in training at all.

Looking more closely at the curriculum, there are also questions about the balance of education in the humanities and the science, technology, engineering, and mathematics (STEM) fields.

“Italy has a great primary school system,” said?Dr.?Gioia Rau, an astrophysicist?as well as a research scientist at NASA. “In particular, the public high school system I have attended is focused on classical studies, which gives a 360-degree view on ancient Greek, ancient Latin, and the humanities, broadening and deepening the capacity for critical thinking. Italy enriches the person at the most receptive point in their life.?However, Italy will need to develop a stronger STEM-oriented curriculum, while also keeping the?humanity curriculum.”

Meanwhile, there is also the persistent need to retain the?highly skilled talent that is available. Italy faces similar challenges to other spacefaring nations, in that if there is not enough professional or business opportunity in the domestic space economy, skilled talent will go where those opportunities do exist, which in many instances means the United States.

Dr.?Rau herself left Italy after earning?her?Master’s in Physics and Astrophysics, going on to Austria to earn?her?Ph.D. in astrophysics, to the European Southern Observatory to continue her research and finally?to NASA’s Goddard Space Flight Center. She said, “After getting a higher degree, people are attracted to what a system can give them in terms of personal and professional development. Many jobs are still abroad, and many people leave after?an excellent?education.?This is a huge loss for the system, which should do more to retain these talents and also?to attract new ones from abroad.”

The path ahead may lay in domestic education?efforts.?Montanari’s?organization,?SpaceBrainx, for example, raises funds and invests them in STEM education and funding for students, as well as?investment in space companies. Workforce?development?is also?about ensuring?next-gen capabilities are developed and?that?the companies creating them are supported in their goals.?Indeed, beyond a skilled workforce, established companies also need capabilities from smaller and agile companies to partner to maintain a competitive edge.

To help foster this, in December 2022, Space Foundation’s Space Commerce Institute partnered with the Italian Embassy in Washington, D.C. and?the Italian Trade Agency?for the first U.S.-based Italian National Space Day.?Bringing space companies and organizations together to explore opportunities?helps?forge valuable relationships and highlights current and aspiring space businesses.

Even with talent and funding challenges, the Italian space ecosystem enjoys everything it needs to continue its leadership in space. Where it goes from here – and where Italy takes all of us – will be exciting to watch, on Earth, on the Moon, and soon enough, around the moons Galileo spotted centuries ago.