Panel Urges Government, Industry Action to Improve Battered Space Supply Chain

by Douglas Messier
Managing Editor

LONG BEACH, Calif. — The question of how to strengthen the U.S. space industry’s weakened supply chain, which has been battered over the past two years by the global COVID-19 pandemic, was the subject of a panel discussion at the Space Tech Expo last week. The answers boiled down to the Pentagon adopting an agile approach to developing and acquiring technology, and reversing a decades-old trend by industry of outsourcing manufacturing abroad.

Ron Faith, president and chief operating officer of RBC Signals, said there have been significant supply chain disruptions due to the pandemic. The lead times for antennas and components have lengthened from weeks to months. Instead of using cargo ships, RBC Signals has shifted to much faster air freight, he added. The change has resulted in new approaches to breaking down antennas and packaging them for shipment.

Faith recounted how COVID-19 restrictions stretched out an antenna installation in South Korea that would normally take 1.5 weeks to 5 weeks. The team needed to quarantine for two weeks after arriving at its destination, and another week upon returning to the United States.

Lockheed Martin’s Chris Winslett said that while obtaining what are known as Tier 1 and 2 components has not been overly difficult, Tier 3 and 4 have been in shorter supply. The shortages have made for a couple of challenging years at the defense contractor.

Winslett said a key challenge is to reverse a decades-long trend of outsourcing the manufacturing of key technologies such as electronics and computer memory to low-wage countries. The trend has left U.S. companies and the military open to supply chain disruptions from abroad.

Jordan Noone, co-founder and general partner of the venture capital firm Embedded Ventures, noted that a lot of manufacturing has been outsourced to countries like China, which have a vested interest in seeing the United States decline as a world power. The outsourcing has built up not only commercial competitors but also the Chinese military.

Noone cautioned companies about taking investment from overseas because some of the investment firms are controlled by foreign governments. This is an area in which founders of startups need guidance, he added.

Brig. Gen. Steve “Bucky” Butow, director of the space portfolio for the Defense Innovation Unit (DIU), said there are horror stories of U.S. companies that made solar panels that took foreign investment only to have the investors drive the companies into bankruptcy. The investors then moved manufacturing offshore, and relaunched the bankrupt companies as American even though none of the products were made in the United States.

Butow said the Pentagon is trying to improve the supply chain by bringing its acquisition model out of the 1960’s. The military needs to embrace the commercially driven “New Space” industry, with a willingness to take more risks, innovate and iterate new technologies, and to rapidly adopt new systems.

DIU is helping to build up the supply chain by awarding multiple contracts, and funding research and development that raises the technology readiness level (TRL) of new systems, Butow said.

The U.S. military needs unfettered access to space at reduced cost, as well as frequent launches to prove out new technologies, he added. Modular, sustainable spacecraft that can serviced and upgraded is another key to success.

Winslett said the recently created Space Development Agency (SDA) is trying to streamline development and acquisition. He praised the military’s move to incrementally introduce new technologies.

Jeffrey Smith, who is overseeing logistics for NASA’s Gateway program, said the space agency is awarding fixed-priced contracts to multiple vendors as it attempts to create a robust supply chain for deep space exploration. He noted that having U.S. manufacturers provides NASA with greater insight into technology and the risks involved.

Noone said that U.S. companies need to become more agile by embracing digital engineering that allows engineers to modify designs and manufacturing on the fly. Many companies are still relying on archaic software whose origins date back to the 1980’s.

Part of Embedded Ventures investment portfolio is focused in digital engineering. Noone was co-founder of Relativity Space, which has embraced both digital engineering and additive (3D) manufacturing methods to develop a line of launch vehicles.

Noone said the investment climate has been hurt by multiple space companies becoming publicly traded through mergers with special purpose acquisition companies (SPACs). Known as “blank check” companies, SPACs are already traded on the stock market; their sole purpose is to find another company with which to merger. The targeted company then goes public under its own name.

Many of the space companies that have gone public via SPAC mergers in recent years are currently trading much lower than the prices at which they debuted. Noone believes the experience will haunt the investment community for the next decade, and that much work will be required to overcome the reluctance of some investors to put money into the space sector.