Bringing outer-space business down to earth

Deere & Co., the Moline, Ill., maker of olive-green tractors and other earthbound farm equipment, is looking at investing in space. A tractor company in space?

For some time now, the big farm-implement producer has been examining the effects of zero gravity in processing iron. The hope is that some kernel of knowledge might be gleaned from working with materials in weightless space that could yield better combines and tractors on Earth. So the company, among other things, is considering running experiments on a future space-shuttle flight.

''We're not planning on manufacturing any tractors up there,'' says Norman Lillybeck, Deere's manager of metals processing research. ''We're looking at space as a unique laboratory environment.''

Deere isn't alone. A quarter-century into the space age, American businesses appear poised to see if money can be made in the ''high frontier.''

Commercial satellites drew private companies into the arena more than a decade ago. Now a broad range of other commercial space ventures - from manufacturing to private transportation services - is moving forward. They are being pushed by the potential for developing new products and technologies in a weightless environment, an emerging federal policy governing space commerce, and regular rides (in theory) via the space shuttle.

But industrializing the heavens won't be easy. It's costly, risky, and won't yield profits for years. This was underlined last week with the aborted voyage of the space shuttle Discovery. The craft was to carry aloft the world's first corporate spaceman, an engineer with McDonnell Douglas, to test equipment for producing ultrapure drugs in space. But a hitch with one of the shuttle's engines grounded it indefinitely. This was another setback for the shuttle program, throwing into doubt its viability for commercial space use.

Companies are nevertheless lining up with stars in their eyes. Some 40 to 50 are now exploring manufacturing goods in space or carrying out long-term basic research. These include the traditional aerospace companies, a new crop of entrepreneurs, and a few big corporations. Another group is developing private launchers or other transport services. Dozens of others are watching from the sidelines.

''It (space commerce) is a wave about to crest,'' says Mark Oderman, vice-president of the Center for Space Policy Inc., a Cambridge, Mass., consulting firm specializing in commercial space ventures. ''It has been building for 25 years. The real question is how large of a wave it is and how many waves are there behind.''

Venture capitalists, meanwhile, wary of unfamiliar space technologies, are cautiously loosening purse strings. Between 1980 and 1983 the dollars put into nontelecommunication ventures in space rose from $10 million to $100 million. By 1988, that may top half a billion. Less perceptibly, fewer corporate chieftains these days seem to reject space investment out of hand as Buck Rogers exotica. The ''psychological hazards are beginning to break down,'' says Dr. Robert Frosch, a former NASA administrator and now vice-president of General Motors in charge of GM research laboratories. Behind the budding interest in space enterprise lie several factors:

* First is a push to maintain the US lead in space in the face of mounting competition from the Europeans and Japanese. The argument is that the United States has been thumped by foreigners in stereos and steel. Let's not add space to the list. Related to this is concern about the nation's technological ability. Space is seen as one arena where new technologies could be developed. ''Space will be the driving force in the innovation process,'' said Dr. Klaus Heiss, chairman of the Sparx Corporation, a New York-based company developing commercial remote-sensing services, at a recent symposium.

* Second is the growing perception among some businesses that space is not just a place where unusual products might be made in an unusual environment (zero gravity, vacuums, extreme temperatures). It is also a unique lab where know-how may be gleaned for terrestial use. This is what lies behind Deere's work. Others are beginning to follow. General Motors, for example, is considering orbital experiments to learn about combustion, pollution-control devices, and new materials. Minnesota Minning & Manufacturing Company is pursuing space research to come up with new films, coatings, and electronics materials. This may lead to manufacturing in orbit. But even if it doesn't, 3M thinks it could save on R&D time on earth.

* Third is the economic potential of creating new products in space. Later this year the first space-produced commercial goods - microscopic plastic spheres for use in calibrating microscopes and other instruments - will go on sale. They were produced on a recent shuttle flight.

But two of the biggest - and most lucrative - areas will be in making drugs and processing materials. With pharmaceuticals, the hope is that weightlessness will create purer drugs as well as develop fundamentally new elixirs. On previous shuttle flights, for instance, the equipment the McDonnell Douglas engineer was to test on the Discovery has produced substances in quantities 700 times as large and purity five times as great as any produced on earth.

The aerospace company and a partner, Johnson & Johnson, want to put a commercial product on the shelves by 1987. Rockwell International has forecast a guarantee that earth-based research - particularly genetic engineering - won't eclipse some of the drug processing in orbit. Ultimately, no one is sure of what can be made or sold from such efforts. ''We're making things that haven't been made before,'' said John Yardley, president of McDonnell Douglas Astronautics Company, at a recent space symposium. ''How many people are going to want them?''

In materials, much of the hand-rubbing is over the possibility of producing new computer chip materials. By one estimate, the intake from space-produced gallium-arsenide devices alone might hit $3.1 billion by the year 2000. But again, market dimensions are unknown. One of the first to find out will be Microgravity Research Associates, a Florida start-up. It has seven shuttle flights planned to produce the crystals. Its first commercial product may be hatched by 1989. ''Within the next decade or two, people will look back and say, 'How could we have gotten along before without making crystals in space,' '' says company president Richard Randolph.

Flawless glasses, superstrong metal alloys, and tough plastics are also potential space products. Add to this the dollars expected from new commercial satellite ventures, the sale of remote-sensing data, and launch vehicles and in-orbit transport services (private shuttles, for instance), and some analysts envision a $65 billion-a-year commercial space industry by the turn of the century.

Yet dollars will not just tumble from the heavens. Most of these commercial space ventures remain in the idea stage only. Returns on investment are years - if not a decade or two - away. Many companies are expected to fail before any ''bonanzas'' come.

How quickly they come hinges partly on the role government will play in promoting space commerce. Both the White House and the National Aeronautics and Space Administration are putting the finishing touches on a national space commercialization policy. NASA's blueprint is expected to include some financial aids and incentives for new space businesses, such as R&D tax credits and federal seed money. The government could also buy some products resulting from the ventures.

But any package faces congressional approval. And even if most elements surface intact, there are other harsh realties facing space pioneers. Besides the long payback periods and high capital costs - it may take $25 million to $50 million in development outlays for one project - there is continuing concern about insurance. The loss of three US-launched satellites this year hasn't lowered rates any.

There are also new legal obstacles, such as the proprietary rights of companies involved in work with government and whether space products should be taxed as imports. Government red tape is invariably a concern. So is whether there will be any consistent support for space endeavors - such as a space station - under successive administrations. A new space policy will address some , but not all, of these concerns. Ultimately, in many board rooms, there is a lingering doubt about whether space will make money and sense - as well as a fear of voyaging in the unfamiliar.

Yet analysts contend that a new space industry will develop - and slowly, as it should. ''The sex appeal of space is enormous,'' says James Connor, managing director of First Boston Corporation, a securities firm. ''But there is no reason it shouldn't develop like any other industry has developed. Ultimately there has to be a hard economic reason to do it. Otherwise it's just a toy.''

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