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Saab Maneuvers To Buy Swedish Submarine Maker

Mar. 2, 2014 - 03:45AM   |  
By GERARD O’DWYER   |   Comments
ThyssenKrupp Marine Systems, formerly Kockums, is developing Sweden's A26 next-generation submarine. Sweden may support a drive to put the shipyard back in Swedish hands by backing a takeover bid by Saab.
ThyssenKrupp Marine Systems, formerly Kockums, is developing Sweden's A26 next-generation submarine. Sweden may support a drive to put the shipyard back in Swedish hands by backing a takeover bid by Saab. (ThyssenKrupp Marine Systems)
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HELSINKI — Sweden — three years after selling its national submarine-maker Kockums to Germany’s ThyssenKrupp — is now fighting to wrest control of its indigenous sub-building capability from the German giant.

The clearest sign of deteriorating relations between Sweden and ThyssenKrupp emerged on Feb. 27, when Sweden’s defense procurement agency FMV announced that it had allocated $3.84 million to investigate Saab’s ability to design and produce Sweden’s next generation submarine.

The move drove speculation that Sweden might support a bid by Saab to take over Kockums, now called ThyssenKrupp Marine Systems (TKMS), which would put ownership back in Sweden.

Swedish Defense Ministry officials expressed disappointment and concern over the lack of guarantees provided by ThyssenKrupp covering commitments to maintain TKMS as a large-vessel producer. More specifically, Swedish officials claim that ThyssenKrupp has still not provided a fixed price for the delivery of two new A26 generation subs and mid-life upgrades to the Navy’s Gotland-class submarines.

The emergence of Saab as a potential builder of the A26 submarine has cast doubt over TKMS’ role in the Navy’s submarine modernization project. TKMS secured the contract to design the A26 in 2010, and provisional costs were included in Sweden’s defense budget for that year.

Management and unions at TKMS’ Malmo-based shipyard warn that the prevailing uncertainty could result in the closure of the country’s only submarine construction facility should the company fail to obtain the A26 and Gotland-class construction and modernization contracts.

Fears relating to the possible loss of contracts has extended to the Malmo shipyard’s 1,000 unionized workers, who are also facing a reorganization of operations, with ThyssenKrupp reported to be planning to designate Malmo as its industrial hub for small-sized subs and surface vessels up to 1,000 tons, a prospect that has also further hurt relations with Swedish authorities given that the A26 and Gotland-class subs have a displacement of around 1,900 tons.

The lack of a fixed price from ThyssenKrupp regarding the A26 and the Gotland-class submarine programs means that to proceed to the build stage would be neither practical, sustainable or the best use of funds in respect of the armed forces or taxpayer’s money, said FMV spokesperson Louise Wileen Bjarke.

Saab, which maintains that it could quickly create the capacity needed to build and modernize submarines, has declined to comment on market reports that it is engaged in exploratory talks that could see it takeover TKMS’ operations from ThyssenKrupp.

Sweden’s MoD, the FMV and ThyssenKrupp also declined to comment on a possible state-support acquisition push.

ThyssenKrupp, through its subsidiary Howaldtswerke-Deutsche Werft (HDW), acquired the then-Kockums Naval Systems business from Swedish industrial Celsius AB in 1999. HDW later became part of ThyssenKrupp Marine Systems.

The divestment placed Sweden’s submarine production capability under foreign ownership.

Along with Saab’s fighter production capability, submarine warfare represented the two biggest strands of Sweden’s indigenous defense industry.

Email: godwyer@defensenews.com.

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