Illustration: Aïda Amer/Axios
The economic downturn caused by the coronavirus pandemic could spell major trouble for dozens of small companies working to break into the space industry.
The big picture: SpaceX, United Launch Alliance and other companies are well-established with strong customer bases and robust portfolios, but the prospects for the industry's growth hinge on smaller companies.
- Many of those companies are launched with venture capital funding that will likely dry up as the crisis continues.
What's happening: Some space companies are already facing major problems in the wake of the pandemic.
- OneWeb — which planned to build a constellation of internet-beaming satellites — filed for Chapter 11 bankruptcy at the end of March, largely blaming the decision on the economic situation created by the coronavirus.
- Astra, a small rocket launch company, has cut some of its staff in order to try to make it through the crisis.
- Private space station designer Bigelow Aerospace laid off its workforce after nonessential businesses were closed in Nevada.
- Satellite manufacturer Maxar has also warned that supply chain issues could disrupt orders, causing delays in delivering spacecraft for customers in the coming months.
What to watch: The coronavirus crisis will likely accelerate shakeouts in already crowded or overly speculative parts of the space market, experts say.
- Dozens of small rocket companies were expected to come online in the next few years, but the economic situation now could force many of them to fold before launching.
- Other parts of the industry built on speculative, far future endeavors like mining the Moon for resources could also face headwinds when trying to raise funds in the current market.
Between the lines: Larger companies like SpaceX or ULA likely have the reserves to make it through the economic downturn, but the failures of smaller companies will still affect their bottom lines.
- Relatively small satellite companies hold contracts with larger launchers to send their wares to orbit. If those companies fold, it will shrink the base of customers for these larger companies.
- "It's a tightly interdependent industry, so when you see a company like OneWeb filing for bankruptcy, the launch manifest that was associated with them is now gone," Todd Harrison, an analyst at the Center for Strategic and International Studies, told Axios.
Yes, but: Parts of the U.S. government are already working to help the space industry counter the ill effects of the health crisis.
- NASA recently awarded SpaceX a contract to fly cargo to its yet-to-be-built small Gateway space station around the Moon.
- Experts also expect to see future contracts awarded from governments to help keep companies they rely on for national security and other launches stay afloat.
The bottom line: The space industry will likely emerge from the coronavirus crisis smaller, leaner and with a long way to rebuild.
Go deeper: The coronavirus pandemic, as seen from space