Economy, No.2  Sept. 25, 2010


Japan’s satellite launch business is set to enter a new stage in 2011, when Mitsubishi Heavy Industries uses its H-IIA, a mainstay rocket produced in Japan, to launch the Korea Multipurpose Satellite-3, or Kompsat-3, of the Korea Aerospace Research Institute. This will mark the first time for a Japanese rocket to launch a non-Japanese commercial satellite.

Japan’s satellite launch vehicles have been developed with an eye to having 100% of their key technologies produced in Japan. The N-I rocket, first launched in 1975, relied completely on imported technologies, but in advancing to the N-II in 1981 and the H-I in 1986, the levels of Japanese technologies used rose to 20% and 50%, respectively. By 1994, with the first flight of the H-II rocket, the goal of producing all of the key components and technologies in Japan had become a reality. An advanced version of that rocket, the H-IIA, was first launched in 2001. And its technologies remain 100% Japanese, even though it uses some overseas parts to reduce costs.

In 2007 the Japanese government privatized the handling of the H-IIA rocket as a way of lowering costs and improving quality. Starting with flight 13, Mitsubishi Heavy Industries has been put in charge of all operations for the rocket–from production through to launches.

Mitsubishi, together with the Japan Aerospace Exploration Agency (JAXA), successfully launched the first of the new large-scale H-IIB rockets in September 2009, with a payload that included the H-II Transfer Vehicle designed by JAXA to supply the International Space Station.

Need to Enhance Trust

The upcoming launch of the Kompsat-3 will not easily serve as a springboard to more launches for overseas clients, however.

First of all, the business of launching satellites is a transportation service, involving the use of rockets to take satellites into space. The launch of a single satellite, according to informed opinion, can cost upwards of ¥10 billion–in addition to the already high price of the satellite itself, which runs into tens of billions of yen. Clients attach the greatest importance to “track record and reliability,” says a Mitsubishi Heavy Industries representative, because errors are simply unacceptable, as they would result in delays. Those involved in the satellite launch business have no choice, then, but to carry out numerous launches in order to post a successful track record and accumulate the necessary know-how.

But Japan has introduced a succession of new rockets, over a short period of time, in pursuit of its goal of producing 100% made-in-Japan rockets, so even its most frequently launched rocket, the H-IIA, has only been used 17 times. In this respect, Japanese rockets lag far behind such rivals as Russia’s Proton, which has been launched over 300 times, or Europe’s Ariane 5, which has a track record of 50 launches.

Mitsubishi Heavy Industries holds the view that a stable pace of over three launch orders per year is essential for maintaining personnel and equipment and winning the trust of clients. But the annual pace of Japan’s space missions from fiscal 2007 through 2009 has only been one or two launches. In fiscal 2010 (year beginning April 1), flight 17 of the H-IIA was launched in May, carrying into space the Akatsuki orbiter for exploring Venus. And plans call for flight 18 to transport the first quasi-zenith satellite, called the Michibiki. The launch of the H-IIB rocket is also planned, but there is no guarantee that this pace can be sustained into fiscal 2011. Around 60 to 70 satellites are launched worldwide each year. Just under half of these are commercial satellites, which constitute a market on the scale of around ¥200 billion. Given this, there is naturally a trend toward seeking to supplement business by winning orders for commercial satellite launches.

The Japanese government is backing such efforts. It has reached an agreement with the Japanese fishing industry to allow for year-round rocket launches, starting in fiscal 2011, by eliminating the current restriction of launches to a total of 190 days in summer and winter. Fishing organizations in five coastal prefectures located in the vicinity of the Tanegashima Space Center finalized the agreement with the government on July 29. The move can be said to pave the way for a full-fledged entry into the commercial market, given the fact that restricted launch dates had been seen as the biggest barrier to winning orders.

Cutting Launch Costs
But success in this sector is not likely to be easy. First, there is the issue of launch costs. Japan’s costs are relatively high, and the recent strength of the yen against the euro and Russian ruble has only put the country at a further disadvantage. Some observers have noted that the order for the launch of the Kompsat-3 was received primarily because South Korea was offered a bargain launch fee. This was made possible by adding the Kompsat-3 to an already scheduled launch vehicle carrying a Japanese government satellite. For this reason the order will not be counted as a new launch.

Meanwhile, the private US-based firm Space Exploration Technologies Corporation successfully launched its experimental Falcon 9 rocket in June. If the rocket is commercialized, its launch price–said to be under half that of the market average–would swiftly spur further price slashing.

Another problem Japan confronts is that the Tanegashima Space Center, where the H-IIA is launched, has a short runway, which makes it impossible for large cargo planes to land there. The transportation of a large satellite from a distant location can only be accomplished by first flying it to Kagoshima Airport and then loading the satellite on a ship to Tanegashima. Given these transportation costs, apart from Asian countries that can directly ship a satellite to the launch area, there is essentially no prospect for orders from such regions as North America or Europe.

Japan’s satellite launch business, which is finally ready for lift off, seems likely to face many obstacles in its future.

Translated from “Ugokihajimeta Nihon no eisei uchiage bijinesu,” Ekonomisuto, August 24, 2010, pp. 90-92. (Courtesy of the Mainichi Newspapers) [September 2010]