The European space industry
a need for restructuring

You are the Côte d'Azur representative for the competitiveness cluster dedicated to the aeronautics, space, security and defence sectors. What is your view of the main challenges facing the sector today? And are we well equipped to meet them?

At French and European level, it's clear that we need to regain our rightful place in the global arena. We have everything we need to be and remain a major player in the global space industry. However, the loss of competitiveness and influence for both France and Europe over the last fifteen years is very real.

From my point of view, the main challenge is to restructure and become much more market-oriented. One reality we need to consider is that the importance of the space sector is increasing in all countries. Until relatively recently, 5 or 6 countries were in the driving seat. Today, everyone has their own agency and everyone is developing applications based on geospatial data or even launching their own satellites. Competition is becoming more organised and there are real positioning issues at two levels: on the one hand, in the most buoyant strategic markets, and on the other, in the relationships between the historic players and the new entrants, and between the major historic players and the new entrants, who are often smaller.

It is essential for the industry to reinvent itself in light of this new context. The European demand remains very traditional. Why do we engage in space activities in France and Europe? Essentially for two reasons.

The first is a matter of sovereignty and strategic and operational independence. We developed Galileo to avoid dependence on GPS, Copernicus to have our own environmental data sets, and we are launching IRIS2 to reduce reliance on Starlink. The second reason is linked to the needs of scientific missions. While both objectives are legitimate and relevant, they were initially only loosely connected to market dynamics and macroeconomic development.

We are reaching the limit of this system. The whole structure of the European space industry has been built vertically. These are supported by a chain of excellent subcontractors, but they remain dependent on the contracts generated by the former. The principal/subcontractor relationship remains a dominant culture at this time. But when the sector is in flux and the rules of the game change, it's important to know how to reorganise in a more relevant way. In my view, we would do well to reorganise along technology/business cluster lines, in a collaborative way, focusing on shared objectives from the outset, and in particular on commercial objectives. We need to move away from a subcontracting model towards one of commercial partnerships.

In terms of markets, how are we positioned?

I don't think we need to worry about the activities of Thales Alenia Space and Airbus DS in their traditional institutional markets. This business remains relatively sustainable, given that it is based on the imperative of sovereignty and the needs of defence systems. If we add to this the development of new European and international scientific missions, this order book is not really in doubt.

The concern stems more from the private share of markets addressed by French and European industry. This has started to decline sharply. The number of competitors from outside Europe is growing exponentially, and their ability to raise large amounts of private capital is severely limiting the competitiveness of European players in the sector.

One of the challenges for Europe, in terms of positioning, is to find our own model and a new identity within the global industry, without systematically trying to copy the competition. The Americans, the Chinese, the Israelis and the other rising powers are relying on assets other than our own. We need our own programmes and our own ranges of innovative products. The ASCEND project is a good example of what Europe can achieve. The aim of the project is to deploy space-based data centres in orbit around the Earth, with the dual objective of facilitating the processing of data from satellites and limiting the environmental impact of the massive development of Artificial Intelligence. When it comes to digital sovereignty, the stakes are high. We're talking about deploying 1 gigawatt of capacity in orbit before 2050. It's innovative, it's not copying anyone else and if we get it right, we can create a whole new range of products and services that will be developed and distributed by major European manufacturers and also by non-space operators. That's where the challenge lies. Thinking about European flagship programmes, anchored in realistic, profitable, original and structuring business models.

What room for manoeuvre do the smaller players in the sector have?

It is important and strategic for the entire ecosystem. In the past, the number of satellite buyers was limited, and everything was done exclusively by invitation to tender, based on technical specifications. The space industry didn't think too much about the end use of the satellite or its social and economic impact on end users (or only very indirectly). It should be noted in passing that the space industry was an exception compared with other sectors. But the situation has changed. Today, as in other more traditional economic sectors, we have to look for the customer much further down the value chain. Customers are now also users, and we need to be able to understand their most basic functional and operational needs.

This approach is not deeply rooted in our European ecosystem, and the traditional players are not used to this new culture. Smaller players, on the other hand, are the most exposed to the market. And the current challenge is to reshuffle the deck by playing on the complementary nature of the players. The major contractors are being encouraged to listen to the new, smaller players, and to support the business they are able to address. The reverse is often no longer viable, for reasons of responsiveness, agility or microeconomic knowledge of increasingly fragmented markets. It is this radical change of culture that is complex to implement. It requires mutual trust and new ways of working together.

In financial terms, the room for manoeuvre for the smaller players is theoretically significant. As part of the France 2030 programme, 860 million of the 1.3 billion budget allocated to space has been earmarked for new players (SMEs). That said, it would be interesting to know how much of this budget has actually been allocated to them... if only to ensure that this strategy was the right one.

Beyond the question of integrating new players, for many people today, a pragmatic objective is to preserve the know-how of the historic players and ensure their long-term survival in the face of competition. Before trying to create jobs with the new players, let's safeguard the 10,000 jobs and skills in the existing French industry. The argument is valid, but finding the right balance is not easy. Are the incumbent players capable of restructuring sufficiently internally to integrate the new players? This is the only way for the European and French industry to regain its place in a global competition where the rules have clearly changed.

Question 3+... Where does the science park fit into all this?

Sophia Antipolis has a crucial role to play in the development of the space sector. The local urban community has even made it a strategic industry.

Historically built around digital technologies, earning the nickname « Telecom Valley, » Sophia later evolved into an « Automotive Valley. » Today, becoming a « NewSpace Valley » is well within reach. The same skills, key technologies, and value propositions are at play: innovation, AI, microelectronics, mechatronics, optics/photonics, software… even the same application domains. The South region, particularly the CAP AZUR metropolitan cluster - that includes the Sophia Antipolis technology park, the Cannes Lérins urban community, and the Pays de Grasse - has been one of the French territories that has benefited most from the paradigm shift of NewSpace over the past decade. It is no coincidence that the French Space Agency (CNES) and the Space Command are closely interested in this region. In just a few years, Sophia Antipolis has gone from having a minor presence in the NewSpace sector, supported by a few key players like ACRI-ST, to becoming an area where many local stakeholders now see a major opportunity for growth.