Sweden’s minority government and political opposition Alliance bloc have agreed to a new defense deal that will provide SEK8.1 billion ($1 billion) in additional funding for the country’s broad security needs over the upcoming three-year period through 2020. The agreement bolsters spending on the Swedish military (which will receive SEK6.8 billion – or $841 million – worth of the additional funding) and civil defense (SEK1.3 billion, or $160 million). Continue reading
On the eve of the opening of the 2015 Paris Air Show, Sweden’s defense procurement head Lena Erixon announced that the country would receive its first anti-submarine warfare (ASW) NH90 helicopter in the fall. Erixon made the announcement at the Swedish Air Force fan club event in Paris on June 14, while Swedish air chief Maj. Gen. Micael Byden noted that what had originally been pitched as a turnkey program in 2007 remains under development and has raised concerns within the service. Continue reading
With worries about Russia percolating, Sweden’s center-left coalition government – in agreement with three of the four parties in the opposition Alliance coalition – has opted to raise the country’s defense spending by SEK10.2 billion ($1.18 billion) over the five-year period between 2016 and 2020. Upon coming to power in October 2014, the left-leaning minority government of Prime Minister Stefan Lofven had proposed a military allocation totaling SEK4.16 billion ($480 million) over a four-year period beginning in 2015
As it faces an austere and highly competitive global defense market, Saab is building its strategy to increase revenues and profits. Under this effort, the company plans to reduce costs and focus on successful niche markets and opportunities abroad.
While cost reductions have been ongoing throughout its operations, the company has so far maintained a high level of R&D. Much of this funding will be targeted to niche areas, especially the growth market of unmanned vehicles.
Around the globe, Saab has been quite successful in building its presence. Through a series of acquisitions and joint ventures, Saab has been aggressively penetrating new markets in India, Brazil, and most interestingly, the U.S.
Though not without risk in this downturn/recovery, the push into the world’s largest defense market does make sense. However, with U.S. defense spending set to be reduced, Saab may face some difficulty in penetrating the market. The pressure from the U.S. government to buy local will be high in the face of budget cuts and the resulting layoffs at manufacturers.
A big part of this drive will entail Saab establishing partnerships with U.S. aerospace and defense firms. Such teaming would make the acceptance of Saab products for military consumption all the more palatable if it is perceived as supporting a local firm as well. True to this strategy, the company teamed with Boeing in late 2013 to offer a new, clean-sheet aircraft design for the USAF T-X trainer program.
Saab’s operations in the U.S. have also been consolidated under a new organizational umbrella, Saab Defense and Security USA (SDAS). This new organization includes Saab Training USA, Saab Barracuda, Saab Support and Services, and the defense-related operations of Saab Sensis. SDAS will focus its energies on providing defense and homeland security systems and services to the U.S. market.
In South America, Saab scored a major coup when its JAS 39E Gripen NG was selected to fulfill the needs of Brazil’s FX-2 fighter competition. The Gripen beat the Dassault Rafale and Boeing F/A-18E/F Super Hornet after a lengthy tender process. The deal is for the purchase of 36 fighters for an estimated cost of $4.5 billion. The contract is expected to be finalized by December 2014 and completed by 2023.
However, along with the good news the company had to deal with the bad when Swiss voters rejected a proposed acquisition of 22 JAS 39E Gripens. The deal, which had been worth an estimated $3.5 billion, was opposed by 53.4 percent of the voters. A reworked deal with Switzerland is considered unlikely in light of the vote. Despite that setback, Saab is proposing the Gripen for upcoming fighter procurements in Bulgaria, Croatia, Denmark, Greece, Malaysia, and Slovakia, among others.At sea, Saab expanded its maritime activities with the purchase of the Kockums submarine yard from Germany’s ThyssenKrupp Industrial Solutions AG. The acquisition was pursued after a falling out over price and submarine exports between Sweden and ThyssenKrupp. As a result, Sweden pulled A26 submarine work from the firm and tasked Saab with coming up with a plan for the country to maintain an indigenous submarine-production capability. Under the $50.5 million deal, Saab will acquire operations in Malmö, Karlskrona, and Muskö and add around 900 employees.
All told, Saab has been very proactive in adapting to the new aerospace and defense marketplace. Although it has at times been challenging, Saab has proved over the years that it can adapt quickly and successfully correct its course. With competition in these markets becoming even more fierce as government spending declines, this skill will be critical in the years ahead.