Canada has ongoing obligations to projects such as the Canadian Space Station. Therefore, Canadian Aeronautics and Space Institute predicts the biggest impact of the cuts will be on the space agency's ability to start new projects. (NASA)

Federal budget cuts could be felt far, far away — up in outer space.

Industry leaders are worried that cuts to the Canadian Space Agency announced in the recent budget might hurt critical programs.

There are fears of possible layoffs among employees, engineers and scientists who work at the space agency. They are expected to get a much clearer idea in the coming days of what the future holds.

Finance Minister Jim Flaherty's budget has called on the CSA to reduce spending — like a number of other departments and agencies — by 10 per cent over three years.

Budget documents indicate that the space agency has been told to cut $29.5 million by 2014-15, with smaller reduction targets in each of the two previous years.

Ron Holdway, the president of the Canadian Aeronautics and Space Institute, says the reductions will hurt "because the space agency hasn't had a pay raise, so to speak, in 12 years now."

The CSA's annual basic budget has generally remained around $300 million in recent years, before this budget. Holdway now says he expects there will be layoffs in the coming months, although it's not yet clear what projects they will affect.

"My understanding is that the government's direction to all departments has been that the focus needs to be on reducing overhead, rather than reducing operations," he said in an interview.

The CSA comes under the umbrella of Industry Canada. In an email, the department said federal employees and their unions would be informed about specific changes, "over the coming weeks and months."

It also suggested the cuts should come as no surprise to anyone paying attention since last year's federal election: "We received a strong mandate to manage the economy and we're working to deliver effective space programs in a cost effective way."

Holdway predicted the biggest impact from the budget would not be on existing programs, but he said the space agency is going to run out of money to start new projects in the next several years.

"They still have ongoing obligations to the (International) Space Station. They still have the RADARSAT Constellation Mission that's working its way through the system, and the James Webb Space Telescope is still ongoing," he said.

Private contractor plans layoffs

Meantime, MacDonald, Dettwiler and Associates Ltd. (MDA), which has been working on the RADARSAT satellite mission, has already indicated the federal budget will force it to lay off some staff.

But it hasn't said publicly how many workers might be affected.

MDA has developed space and satellite technology for many missions, including the Canadarm on the space station.

The Vancouver-area company said a preliminary assessment has suggested the budget doesn't include the money required to continue RADARSAT as it's currently envisioned.

The RADARSAT Constellation Mission is a three-satellite program that began in 2005; the CSA's website says the satellites are expected to be launched in 2014 and 2015.

But MDA says it's uncertain how the program will move forward and says it will have to discuss that with the space agency in the coming weeks.

In an email to The Canadian Press, MDA said the original launch dates were contingent on a January 2012 start date of production. It added that the production phase is worth $100 million a year of work for MDA and its subcontractors.

The satellites would be used for maritime surveillance, disaster management and monitoring of environmental change.

The Aerospace Industries Association of Canada (AIAC) said in a news release that the announced CSA budget cuts could impact programs that are critical government priorities.

No new funding for space station renewal

The AIAC, which represents 400 aerospace companies across Canada, also added that it was concerned about the government's commitment to the International Space Station.

"Although we support the commitment, we are concerned that no new resources were allocated to the renewal," it said.

Industry Minister Christian Paradis recently announced that Canada was committed to the space station until 2020, the end of its current projected lifespan. But at the Feb. 29 announcement he also said that details of the arrangement still needed to be worked out.

Canada's aerospace manufacturing and services sector generates more than $22 billion and employs 80,000 Canadians.

The retirement of the U.S. space shuttle program in July 2011 has added another challenge for Canadian space companies.

Chuck Black, the treasurer of the Canadian Space Commerce Association, points out that firms like Neptec and COM DEV, a satellite equipment manufacturer, had sold parts to the shuttle fleet.

"There's only one Canadarm on the space station, rather than four, which were on the (station) and the three shuttles, so the revenue for supporting and maintaining those has certainly gone down," he said.

Ottawa-based Neptec made the laser-camera system that was used to inspect for damage on the exterior of the space orbiters.

"They don't sell those things anymore. They're all looking for new markets," Black said in an interview. "Right now, we've got no one to sell our stuff to."

But he downplayed some of the talk about corporate layoffs.

"This is just a negotiating ploy," Black said.