Europe is investing billions in space. Can Glasgow’s satellite sector keep pace?

In 2005, a young space engineer named Craig Clark returned to his hometown of Glasgow. He had finished university a little more than ten years earlier, but the only work he could find was south of the border. Clark now wanted to launch his own business, and he named it Clyde Space.

I grew up not far from the River Clyde, where the city’s shipbuilding legacy was created, and I knew Glasgow had once been an industrial giant. As a child, “Clyde-built” carried real weight: it stood for craftsmanship and engineering excellence. One phrase I heard often was: “The Clyde made Glasgow and Glasgow made the Clyde.”

What I did not fully appreciate until recently was that, in another form, that tradition is still very much alive. Twenty years on, Glasgow is a European leader in the construction of small satellites.

Many of the satellites made here are CubeSats. Their basic unit is just 10cm by 10cm by 10cm — roughly the size of a Rubik’s Cube. They are far smaller, cheaper and faster to develop than the giant machines most people imagine when they think of satellites.

CubeSats — like the one pictured in the Glasgow offices of Spire Global — can be used for everything from weather forecasting to global positioning.

Just as importantly, they are modular and can be combined, then fitted with cameras, sensors, communications gear or other technology depending on what they are meant to do.

And despite their small size, they matter enormously. Data gathered by satellites of all kinds is increasingly part of daily life. It helps people communicate and navigate, track ships and move goods, monitor forests and crops, manage energy systems and understand climate change.

For governments, that information can guide decisions and help them respond to emergencies. As satellites have become more capable, space has become more important.

More than 20 years after the first satellite company was founded there, the Scottish Government says Glasgow now builds more small satellites than anywhere else in Europe.

Across Scotland, the wider space sector generated £335m in income in 2022-23 — up 69% in five years. Excluding traditional satellite television broadcasting, it employed 2,811 people, an increase of 81% over the same period.

But elsewhere in Europe, governments are putting large sums into their own satellite industries.

Could that pull investment and jobs away from Glasgow? And if so, what, if anything, should the Scottish and UK governments do? More broadly, what role should the state play in supporting strategically important industries?

Perhaps the most unexpected thing about Glasgow’s rise in space is that it was not planned.

One of the key triggers was Craig Clark’s Clyde Space. The company focused on CubeSats at exactly the right time, a few years after it began, as smaller and cheaper spacecraft were taking off, and it would later build Scotland’s first satellite, UKube-1.

Crucially, the technology was developed in partnership with the University of Strathclyde, which supplied expertise and research, as well as a steady flow of engineers.

Other firms followed, including Craft Prospect and Alba Orbital. Knowledge expanded and a new space cluster started to take shape. American satellite company Spire selected Glasgow for its European base in 2015. Smaller firms emerged, while established engineering and technology companies became part of the supply chain.

Glasgow has reinvented itself as Europe’s biggest producer of small satellites — but some of the sector’s leading figures say its position is no longer guaranteed.

“Companies started moving to Glasgow because they could see that it was possible to do it here, and there was an ecosystem that was starting to grow,” says Andrew Strain, chief technology officer at AAC Clyde Space — the company created after Clyde Space was bought by Swedish firm AAC Microtec, although Glasgow remains the group’s main satellite manufacturing site.

Soon Glasgow was home to an “entire small satellite value chain”, from components and satellite manufacturing to launch, spaceports and ground stations, according to Daniel Smith, founder of space marketing firm AstroAgency and the Scottish Government’s trade and investment envoy for space.

There are broader gains too. A review commissioned by Space Scotland found that space manufacturing alone accounted for more than 1,000 Scottish jobs in 2022-23. The wider industry generated £202m for the Scottish economy.

As the sector expanded, so did the knowledge base. More than 100 people now work across space-related activity at the University of Strathclyde, and the subject is now one of the institution’s strategic priorities, according to Prof Malcolm Macdonald, chair of applied space technology. The university works directly with commercial space firms on research and technology development.

Macdonald says that when he graduated, there was essentially no local space industry for him to join. Now, “when our graduates leave the university, they will go and work in the local space sector because it is now here in Glasgow for them”, he says.

But what matters, Macdonald says, is that Glasgow’s satellite industry was not something the government deliberately created. Instead, the process was “largely organic”, Smith says.

By any standard, it is a success story. But there are concerns about competition from abroad.

“It’s not necessarily that we’re going backwards,” Macdonald tells me. “But other people are catching up.”

Bavaria is becoming a major European centre for aerospace and defence technology. Germany’s Defence Ministry says it intends to spend about €35bn (£30bn) on military space capabilities in the coming years, including more than 100 encrypted communications satellites.

For Macdonald, that level of spending is reshaping Europe’s space industry. Against the backdrop of the war in Ukraine and broader geopolitical uncertainty, governments are no longer just backing research and innovation. More and more, they are becoming major customers rather than simply investors.

He says UK public space funding lags well behind countries such as France and Germany.

“It’s certainly a risk to Glasgow and the wider UK space sector that investment will follow the money and lead to longer term competitive disadvantage as activity flows elsewhere,” he says.

The Scottish space company Skyrora is celebrating after it says it successfully tested a “hot fire” of its rocket last month.

Meanwhile, Finnish aerospace company ICEYE specialises in synthetic aperture radar (SAR) satellites, which can create images of the Earth’s surface through cloud and darkness. Macdonald says these have been used in the war in Ukraine, where satellite imagery can provide intelligence — for example, identifying a Russian vessel in a Crimean port — when ordinary optical cameras cannot.

In June, ICEYE announced a funding round worth more than €1bn, valuing the company at more than €10bn. The Finnish state has also raised its stake and now owns around 12% of the company.

Finland’s Minister for European Affairs, Joakim Strand, said the geopolitical situation had underlined the importance of domestic ownership in what he called a “key strategic sector”.

Governments want assured access to satellite communications, especially when their country is in crisis. Some want the satellites — and the ability to build them — within their own borders.

That can have implications for Glasgow.

“The recent increases in space spending elsewhere in Europe matter,” says Gabriele Piazza, an economist at the London School of Economics who studies government procurement of advanced technology.

Space is not a normal market. Where contracts are awarded can shape where companies invest, where engineers work and where expertise develops.

“Since capabilities build on themselves, firms with a large customer at home gain an advantage that lasts,” Piazza adds.

At the same time, alongside Clyde Space’s 2018 acquisition by AAC Microtec, Glasgow-founded Alba Orbital has shifted its headquarters to the US, while keeping a Scottish base and team. Spire has expanded its manufacturing operation into Munich.

The Scottish government says Glasgow still produces more small satellites than anywhere else in Europe. So this is not a sector in decline.

But the bigger challenge, Smith says, is helping companies that begin in Scotland to scale there.

“I wouldn’t want it to be overly negative,” says Macdonald. “It’s more just like there are warning lights flashing that other parts of Europe are investing much more aggressively, and moving much more quickly, than we have.”

Satellite camera maker Simera Sense announced this year that it was opening a new production facility in the city, creating 20 highly skilled jobs. The company, which has sites in South Africa, Belgium and France, will open a high-value electronics assembly lab and office at EastWorks in Dalmarnock.

That points to something more complex than an exodus. Glasgow’s concentration of universities, engineers and specialist suppliers, built over two decades, would be hard to recreate elsewhere.

And some comparisons with overseas rivals are not exact. Spire’s expansion in Munich does not necessarily mean it is pulling back from Glasgow.

Smith does not believe the answer is simply to outspend competitors: “We can grow alongside them,” he says.

Instead, he argues Scotland should concentrate on what the industry actually needs — filling gaps and helping space firms find customers in sectors such as energy, transport and healthcare.

With a strong domestic industry facing foreign competition, you might expect calls for government financial support.

But Lecky warns against that. He argues Glasgow’s small satellite industry originally grew partly because there was little government support, as part of the commercially driven “newspace” revolution.

“We shouldn’t jump to government support as being the answer - it’s critical to keep this commercial-minded attitude,” he says.

“If you offered most entrepreneurs a choice between a grant, with significant paperwork, milestone payments and continuous scrutiny, or a paying customer, I suspect they would always choose the customer,” he says.

And increasingly, governments are becoming that customer anyway.

For Smith, government contracts can do what grants cannot — give young companies revenue, a customer and a track record they can use to win business abroad.

Piazza says there is also an economic argument for thinking about procurement. Building satellites creates knowledge that can spread well beyond the company itself. Engineers move between employers. Suppliers gain new skills. Ideas turn into new products — sometimes in completely different industries.

“Often, tomorrow’s industries grow out of today’s,” he says. “The teams and suppliers building satellites now are the ones able to develop the next generation of a related technology, and once they disperse, they are very hard to reassemble.”

But there is a cost.

Piazza notes that money spent supporting one industry cannot be spent on hospitals or schools. Governments can be poor at choosing industries. And if everyone subsidises, nobody necessarily gains an edge.

That is one reason procurement can make sense. The government buys something it needs anyway. The company gets a customer. Not just a grant.

But that raises a larger question, made even more urgent by the war in Ukraine: what does the UK actually need to be able to do for itself?

Satellites provide communications, navigation and intelligence in wartime. Beyond defence, satellite services support parts of transport, energy, telecommunications and emergency response. Governments therefore have to decide which capabilities they are willing to buy from overseas providers or allies.

Piazza says there can be a strategic case for retaining capabilities that are critical and hard to replace. He describes it as a kind of insurance. But keeping those capabilities at home can mean higher costs, smaller production runs and duplicating what allies already do.

There is evidence that some public investment in space delivers substantial economic returns. An independent evaluation commissioned by the UK Space Agency estimated that every £1 of UK investment through the European Space Agency generated £7.49 in direct economic benefit.

The UK Space Agency also says its work helped trigger £2.2bn in investment and revenue for the UK space sector in 2024-25. But those figures cover the UK as a whole, not Glasgow alone.

The more important issue may be where the valuable parts of the industry — its people, intellectual property, research and manufacturing — ultimately end up.

“The risk is not closure,” says Piazza. “It is that the next phase of growth follows the contracts elsewhere.”

Scotland also has another possible addition on the horizon: SaxaVord Spaceport in Shetland.

The idea of a fully integrated, “end-to-end” space sector is moving closer to reality. Although the infrastructure is ready, actual launch campaigns have faced technical delays.

So success is not assured.

“We are in a great position right now,” says Strain. “But if we get complacent, then we can fall behind again because it’s moving very, very fast.”

Glasgow’s shipyards once made the city synonymous with building things for the world. Its space industry has done something similar — almost by accident.

The question now is not whether Glasgow can build a successful satellite industry. It already has.

It is whether the next stage of that success is built here too.