The final frontier: MHI’s expanding space business

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There are one million parts in a modern rocket. If just one of these malfunctions, the whole rocket can fail. This is what happened in March 2023, when a problem with its second-stage engine forced Japan’s national space agency (JAXA) to cut short the first launch of Japan’s new flagship H3 rocket.

It was a bitter setback for Mitsubishi Heavy Industries (MHI) and our customer and partner JAXA. We had spent a decade jointly developing this new launch vehicle.

But after almost a year of forensic investigation, evaluation and testing we modified some components, achieved ‘Return to Flight’ status for them, successfully launching an H3 in February 2024 – with MHI and JAXA engineers in the control center hugging each other with joy. We have since carried out two more smooth launches and the H3 is fully operational. And I would argue that by honestly and openly facing up to this failure, we have learned important new lessons and even strengthened our relationship with JAXA and our other partners.

The timing is auspicious. Space is a growing business for MHI. Simply put, there are more satellites waiting to be launched than rockets available to send them into orbit. Demand is being driven by new applications like autonomous driving, increasingly sophisticated mapping and monitoring and a growing appetite for space exploration and defense needs. More and more countries regard space as a dimension they need to understand and control as much as the land, sea and air.

It is rocket science

This is leading satellite operators of all kinds, from legacy telecoms companies to startups like Elon Musk’s Starlink, to upgrade and expand their satellite networks. The space launch services market is set to grow rapidly as the global space industry expands to over $1trillion by 2040, according to estimate by Morgan Stanley.

MHI has been involved in Japan’s space exploration efforts from the beginning, building on its prowess in developing aircraft and engines and has been a leader in rocket technology for many years. In 2007, it officially took over the operation of H-IIA launches from government.

The way it works is that JAXA directly funds MHI’s development of each new rocket model with us being responsible for design, manufacturing and testing. MHI then secures individual launch contracts from either the Japanese government, a foreign government like the United Arab Emirates, or private operators like Telesat and Inmarsat (now Viasat), and now for the H3 also Eutelsat.

Each contract covers the construction of a rocket, customized to carry a specific payload, as well as comprehensive launch services, using JAXA’s site on Tanegashima island in southern Japan – with JAXA managing overall flight safety.

We have built a world-class track record, with a 98% success rate for the 58 launches of our H-IIA/H-IIB rocket since 2001 and an 80%--plus reliability rating (launches within a week of the original date) over the past decade, which is well ahead of the competition.

The new H3, which was conceived in 2014, will build on that success. It is larger, with a new more powerful engine, allowing it to carry heavier payloads. At the same time, it is cheaper to build and to customize, as we took advantage of the latest design and manufacturing technologies, including 3D molding and automation, to reduce the number of components by 20%.

Simpler does not mean simple – the main structure is held together by 30,000 rivets – but it means we can halve the time from order to launch to one year, allowing us to increase the cadence of launches from six per annum today to eight and then hopefully more in future.

Of course, our peers are not standing still. The fact that Musk’s SpaceX pioneered a reusable Falcon rocket truly surprised us, but we are working to catch up by turning the H3 into a reusable rocket by the 2030s. Meanwhile, positive customer feedback and growing orders suggest the existing H3 is an attractive and competitive product in the current market.

To the Moon and beyond

Meanwhile, MHI also builds the HTV (and the future HTV-X) transfer vehicles that ferry cargo to the International Space Station and are launched via our rockets. And we are participating in the development of Gateway, a manned space station orbiting the Moon; as well as manned and unmanned rovers to explore the Moon’s surface. Finally, we are interested in building mixed-use business parks in low-Earth orbit.

In terms of revenues, the Space division is a relatively small part of MHI. However, I believe it contributes to the group by boosting its name recognition and brand value; by developing technologies that find applications elsewhere in the group – just think of hydrogen, which was first used in our rocket engines; and by inculcating high design and manufacturing standards across MHI – with a zero tolerance for failure.

Most importantly, perhaps, by working in and on space means MHI and its senior executives are forced to broaden their thinking. We need to think about how to eliminate the growing volume of space debris, to which each rocket launch contributes, and more importantly, how to collaboratively harness space as our common resource. But we also envision a future where men can live safely on the Moon, on Mars and eventually among the stars. When you work in Space, thinking deeply about the future of humanity is part of the job.