CEO AVIO Spa
by Giulio Ranzo, CEO Avio Spa
The US and Italy share a uniquely long history of cooperation in Space. Since the very early days of the Space Race in the 1960s, when the US and Russia began to think that the sky was not the limit, the exploration of Space saw Italy and the US cooperate for new technology and solutions. In 1961 the first Italy-US partnership in Space took shape under the so-called San Marco project, an initiative aiming at launching some among the first artificial satellites to measure and understand the earth’s atmosphere and its composition. Italy acquired a number of Scout rockets from the US and jointly developed with the US a new Space launch base off the coast of Malindi, Kenya. In parallel, Italy developed its own satellite manufacturing technology on a “learn by doing” mode. An incredible endeavor at the time, with limited resources and limited knowledge in an infrastructure-lacking environment. The American technology and know-how met first time in this sector with the Italian ability to defeat technical difficulties and intermittent government support. The two different cultures blended into an explosive force, pushing over 30 rockets successfully to Space in the following 20 years, developing new technologies and capabilities at an unprecedented rate in an otherwise distant and under-developed land. A remarkable experience linking two countries fascinated by exploration, discovery, hard work and passion for ingenious solutions to overcome the many inevitable challenges. But also a visionary and concrete approach to partnership at a time when Europe was non-existing as a political and economic entity and major countries were still debating how to approach a joint Space initiative with balanced participation of all parties involved. Italy and the US were faster to the objective, concrete and forward-looking in understanding the geopolitical relevance of such discoveries and development of new capabilities.
Over 60 years later, Space is a rapidly growing sector worth over 350 billion dollars annually around the world and set to reach a value of more than a trillion in the next 20 years. In the 1980s we started watching satellite TV channels, in the 1990s speaking on satellite-enabled mobile phones and watching weather forecasts through more and more accurate satellite photos while in the 2000s we became familiar with GPS navigators in cars, boats, airplanes, bikes, etc. Today a 12% growth in the demand for satellite services is occurring and such services are becoming part of our daily life while we do not even realize it. We now measure greenhouse gas emissions from selected industrial plants, monitor temperature and composition of the oceans, measure level of pollution in urban areas, track the movement of containers in major ports worldwide, track illegal fishing in protected areas, improve farming output through satellite-driven precision irrigation, follow the movements of massive human migrations and the presence in refugee camps. Soon we will be able to be online anywhere around the planet with a broadband-like planetary service, thus enabling voice and data communication also in rural areas, oceans, deserts and any remote location. OneWeb, with over 4 billion dollars of venture capital financing, is building a constellation of over 600 satellites to provide internet access while Blue Origin has just announced one made of 3236 satellites for the same purpose. Such environment will support the development of the Internet of Things to reach a dimension we cannot even imagine today. Thousands of interconnected satellites will support our life tomorrow with a much wider spectrum of services that we have so far experienced.
But how do we make this happen? How do we plan to put in place and maintain over time such infrastructure in Space? The bridge between where we are today and where we will be tomorrow is represented by the new generation rockets being developed all around the world. Lowering by 50% the cost of access to Space will be a driving force for the development of a wealth of new services (the only one thing that has not changed in so many years is that we need to defeat gravity to get there!). Again, the US leads the way with a powerful wave of visionary innovators, entrepreneurs who have had the courage to dream, work hard and deliver to make this happen. The cases of Elon Musk with Space X and Jeff Bezos with Blue Origin speak for themselves, ventures that have pushed the American dream to access Space efficiently one step further with respect to the time of the Space Shuttle program.
Private initiatives with venture capital backing exceeding 3.5 billion dollars annually, a 10x difference with respect to venture capital funding in the sector only 5 years ago. In Italy, Avio – a small yet experienced rocket manufacturer – became the first ever public company listed on a regulated market to develop, manufacture and launch rockets to Space (350 million dollar market cap, 440 million dollar revenues growing at a 15% CAGR over the last five years, delivering over 20% return on capital employed). Avio also reached a number of other “first” with its flagship product Vega, such as becoming the fastest rocket ever to reach the highest reliability record (94% probability of success for the next flight) following 14 successful launches in-a-raw since the maiden flight in 2012. Avio was also the first manufacturer to develop the world’s largest monolithic solid rocket motor (142 tons of propellant) in lightweight carbon fiber, with the lowest inert mass ever. To achieve this Avio experimented a new operating model to involve its people and engage them with a single purpose: 70 managers decided to jointly acquire a 4% stake in the company and list the rest in the stock market in the format of a public company to support faster growth. Such approach allows leveraging significant financial resources supporting accelerated investment (exceeding 50% of annual cash generation).
The latest-generation Google maps images are taken every day from Skybox satellites, which were launched on a Vega rocket (Italy-US again together in Space!). Avio, through its partnership with Arianespace, has also recently conquered presence in new markets such as South Korea, Thailand, Japan, and the United Arab Emirates thanks to the performance of its products. More and more countries such as Morocco and Peru have been recently “transported” into Space for the first time with Vega, broadening the number of sovereign countries now having access to such an important resource for their future. One important step in democratizing the global economy and fostering innovation.
Will the US and Italy restore the unique and strategic nature of cooperation in Space for the future? No doubt the countries, 60 years down the road of discovering Space, maintain the same passion for exploration and discovery they used to have and continue to field uniquely competent human capital to make it happen. Stay tuned…