TOKYO, March 24 (Reuters) - Not so long ago, the biggest challenge for Japan's space program was turning dreams into profits in a coldly competitive world.
But now, with two failed launches in four months giving cost-conscious bureaucrats a good excuse to withdraw funds, parts of the program are fighting not to be grounded permanently.
Even worse are humiliating signs Japan may be falling behind less advanced neighbors in the race for the stars. In November, China launched a rocket capable of carrying a person into orbit.
"We must overcome this difficult period, or there's no future," said Yoshihisa Tsuda, president of Rocket System Corporation, Japan's only commercial satellite launch company.
"No matter how hard it is, we must persevere."
High-tech Achilles heel
Japan's space program is facing more problems than ever. An unprecedented spate of costly mishaps has added to perennial woes such as sky-high costs and tough overseas competition.
In February an M 5 rocket, previously Japan's most reliable launch vehicle, failed to put a satellite into orbit, costing more than $175 million (18.4 billion yen).
Last November, scientists had to blow up a flagship H 2 rocket eight minutes after launch when it failed to follow its proper path. A 10 billion-yen satellite was also lost. In February 1998, an unsuccessful H 2 launch cost 60 billion yen.
Critics had long assailed the program's high price tag -- an H 2 launch costs close to 19 billion yen, about double the European Space Agency's Ariane rocket, not to mention development costs.
But until last year it had remained immune to cost cuts, despite reports advising reorganization and fewer projects.
"Given the budget and number of people we had, we were probably trying to do too many things," said Yuichi Yamaura, policy division manager at the National Space Development Agency of Japan (NASDA), the quasi-governmental space agency.
Government patience began to wear thin in 1999 as calls grew to spend the money on reviving the faltering economy instead.
Delaying flagship rocket, cutbacks
The first prominent victim, in August, was the J 1 rocket, developed for launches into low orbit.
More shocking was last December's decision to abandon the H 2 rocket, and delay the maiden launch of the next-generation H 2-A rocket, which will carry a much cheaper 8.5 million-yen-per-launch price tag, by at least a year.
The government soft-pedaled this, saying it wanted to take the time to ensure the H 2-A was glitch-free.
But the decision hit Rocket Systems hard. "After all, an actual rocket launch is the only thing we can sell," said Tsuda. About 25 of the firm's 80 staff members are scheduled to lose their jobs.
NASDA's draft budget for the fiscal year from April was trimmed by some 10 billion yen from the previous year to 170 billion yen -- one of the first times Yamaura said he could remember it being reduced.
The cuts will not affect Japan's participation in projects such as the International Space Station, a NASDA spokesman said.
Even before its current troubles, Japan often paid foreign firms hefty sums to send up its satellites. Ariane has launched 13 of Japan's satellites since 1989, the latest in February.
Ariane captured 12 of the 14 international launch contracts awarded in 1999. Contracts to put commercial satellites into geostationary orbit -- where their orbiting speed matches that of the earth's rotation, keeping them above the same spot on the surface -- were worth an estimated $45 billion dollars in 1998.
Divided they fall
Observers say the Japanese space program's ills are due more to poor management and bureaucracy --responsibility for it is divided among five ministries -- than a lack of know-how.
Japan is also supporting two separate programs: NASDA, and one at the Institute of Space and Astronautical Sciences (ISAS); each with its own rocket development program and launch center.
Feuding over territory and budgets had kept them mostly apart, but recently the two finally agreed some cooperation was needed.
"What's really the problem is the rockets, and there are many things we have to master,'' said Yasunori Matogawa at ISAS. "The age of doing things separately is past. We are friends now."
There is talk of combining the programs, but the catch phrase for their current operating mode -- "jointly but separately" -- hints at lingering tensions.
Cost pressures and carelessness
The program also suffers from many of the problems dogging corporate Japan, such as restructuring and pressure to keep costs down even as the amount of work remains the same or grows.
"This is reducing morale throughout the industry," Takanori Maema, an author who often writes about science, said in the daily Asahi Shimbun.
NASDA's Yamaura said quality control also had to be improved by the manufacturers of rocket parts, and by NASDA itself.
"This is something we definitely must improve. The range of projects we're doing has increased. It's a fact that we can't watch everything as closely as we used to."
China moving ahead?
One of the more embarrassing results of this may be signs that Japan is lagging in the international space race.
Just six days after November's failed H 2 launch, China became only the third nation to send up a rocket capable of carrying a person into space and bring it back. Its commercial launch program is believed to be solidly booked well into 2001.
Japan publicly applauded China's achievement but privately many Japanese say the pressure is on to succeed.
"These things come in waves. Until 5 or 6 years ago, China had one of the biggest failure rates around," said Matogawa at ISAS.
"We in Japan need to overcome our indecisiveness and keep on fighting. In space research you don't look back," he said.
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