The Space Industry Can Grow Faster With Urban Factories

Manufacturing dozens of satellites per year in the heart of San Francisco, with its tight urban confines and infamously high rents, might seem like an odd choice. But for Astranis, builder of small geostationary communications satellites, the choice was obvious.

“San Francisco is the best city to start a company like ours—it has the highest density of hardware and software engineers,” says Christian Keil, vice president of external relations. “We only need light industrial space. Nothing crazy. We’re not smelting, just assembling, integrating, testing and doing R&D lab work.”

Astranis is at the leading edge of an emerging trend in the space industry: manufacturing spacecraft in cities. A similar geographic shift in the tech industry, from Silicon Valley to San Francisco in the 2000s and 2010s, helped accelerate the sector’s growth by giving startups greater access to concentrations of engineering talent and venture capital.

It is not just San Francisco that is hosting spacecraft manufacturing. Japan’s economic engine, Greater Tokyo, is home to 37.4 million people and hosts the bulk of the country’s space startups, including Astroscale and Ispace. Even Monaco—best known as a tax haven, a mooring spot for megayachts and a casino destination—has budding space startups.

Companies are finding they can manufacture in the nooks and crannies of the urban core because shrinking component sizes have reduced satellites to just a few hundred pounds from thousands. The industry has also shifted satellite construction to digits from widgets, removing mechanical hardware in favor of software.

Still, building even small satellites weighing less than 1,000 lb. may require reinforced floors, higher ceilings to accommodate cranes or large test equipment as well as wide column spacing. Yet “there’s actually a surprising amount of industrial space in San Francisco,” Keil says.

Astranis’ facility, in the Dogpatch neighborhood, was used to build ships during the world wars and was later refurbished by Uber’s now-defunct self-driving unit, Keil says.

The e-commerce industry is also fueling the construction of multistory warehouses to facilitate last-mile deliveries in cities, a development that might benefit light industry. At the Prologis Georgetown Crossroads warehouse in Seattle, opened in 2018, the third floor is designed to host light manufacturers.

Multistory urban factories were once common. In Detroit, Ford’s four-story Highland Park factory churned out a million Model Ts, each of which was bigger and heavier than a modern satellite. Facilities then were multistory because their steam-engine power had to be transmitted mechanically via a system of belts, pulleys and gears to run manufacturing equipment.

“They built the factory so that nothing was too far from the power source,” says David Nye, a historian of U.S. technology and a professor emeritus at the University of Southern Denmark.

Factories were also located in cities to hire workers who could not travel far by walking, biking or riding trains; economists refer to such locations as labor catchment areas. At Highland Park, Ford’s engineers and managers launched the moving assembly line in 1913 using electric motors to power conveyor belts and overhead trolleys that moved parts through assembly stations. Those motors made rearranging and optimizing production flow easier and enabled machine tools to make precision parts, Nye says. The Model T assembly time dropped to 93 min. from 12 hr.

In time, Ford realized that single-level flow production in a sprawling factory would be even more efficient, and it moved production to the suburbs and rural areas where land was cheaper. The falling cost of the automobile enabled by the moving assembly line also allowed workers to afford cars and travel greater distances to work—breaking the labor market advantage of the city. Detroit fell into ruin.

But cities are making a comeback. Some 55% of the world’s population lives in urban areas, and that demographic is expected to increase to 68% by 2050, according to the United Nations. Companies and people move to cities for more lucrative opportunities in the job market, which the tech industry discovered decades ago.

As people and companies urbanize, they learn from one another, a phenomenon economists call “knowledge spillover.” Early-20th-century Ford engineers benefited from visiting nearby industries, such as slaughterhouses in Chicago, where they saw a “disassembly line”—a trolley system that carried carcasses past a line of workers, each performing a specific butchering task. “If they can kill pigs and cows that way, we can build cars that way and build motors that way,” one engineer declared.

Here, the space industry picks up where the automotive industry left off. As the space sector digitizes, it increasingly recruits software engineers without traditional aerospace backgrounds who bring new expertise in artificial intelligence, batteries and robotics. To find and hire these rare recruits, expect to see more space companies setting up shop in cities.