By Harrison Schreiber*
On October 7, the Space Economics class (Econ 390 – Prof. Zanalda) welcomed Ernie Chung, Managing Director at FTI Consulting – an expert in the space value chain – to share his professional journey and insights on the state of the space industry.
Mr. Chung’s career in the space industry began on Capitol Hill providing him with a backstage pass to the political intricacies of space policy. He explained, “I watched how the federal government was allocating its budget towards NASA.” Subsequently, he embarked on a corporate career at Booz Allen in 2004, where he contributed significantly to the ambitious CosmoskyMed project.
Chung later found himself working with space startups in Boulder, Colorado, a hotbed of innovation in the space industry before consulting for AlixPartners and FTI. At FTI he has “had the privilege of working in various roles” including financing, dispute advisory, and developing growth strategies related to the space economy.
Reflecting on his journey, Mr. Chung highlighted the significant transformation in the space industry since 2004. “Space technology has come a long way since the early 2000s. The advancements we’ve witnessed are simply astounding.” During this time, space technology has advanced exponentially, creating new possibilities and market segmentation.
“Today, space is experiencing a renaissance driven by both government and commercial entities. Private space companies are now major players,” said Chung. He emphasized the importance of understanding the true cost of operationalizing space technology, a crucial factor in sustaining the industry’s growth.
According to Chung, there are three primary challenges confronting companies aspiring to make their mark on the cosmos – customers, technology, and financing. Delving deeper into the financing challenge, Chung highlighted the important role venture capitalists, private equity firms, and lenders play in supporting the space renaissance. “Financing in the space sector can be a complex puzzle,” he explained, “with venture capitalists, private equity firms, and lenders each having their perspectives and expectations.” The delicate balance between debt and equity financing is a critical aspect of the space business.
As the commercial space industry matures, there is increasing pressure to reduce the industry’s level of fragmentation. Mr. Chung emphasized the need for consolidation in various sectors of the space industry, saying, “Consolidation can be beneficial, particularly among hardware suppliers, as it brings key capabilities tailored for specific customer segments.”.
No discussion about the contemporary space industry is complete without addressing SpaceX. Chung underscored the significance of SpaceX in reshaping the dynamics of space technology and exploration, saying, “SpaceX has been a game-changer. They’ve revolutionized space launch with innovations like reusable rockets, and Elon Musk’s aspirations for Mars are nothing short of groundbreaking.” Reusable rocket technology is significantly reducing the cost of accessing space and fundamentally altering the economics of satellite launches.
Despite SpaceX’s dominance, competition remains fierce, with players like Blue Origin and established firms vying for market share. This competitive environment is driving innovation, benefiting satellite operators seeking affordable and efficient access to space. It remains to be seen whether the current trend towards consolidation will negatively impact the pace of innovation in the commercial space realm.
*Harrison Schreiber is a graduate fellow with the Rethinking Diplomacy Program
