HELSINKI — Saab wants to become a significant global player in submarine production, and those ambitions were underlined by an industrial teaming agreement between the group and Damen Shipyard Group (DSG).
The broader scope in the industrial teaming agreement reached between Saab and Damen Shipyard Group (DSG) underlines the Swedish defense group's level of long-term ambition to become a significant global player in the design and production of next-generation submarines and underwater craft.
The Swedish-Dutch agreement also reflects solid state backing for Saab's central goal to build a strong and competitive underwater naval capacity around its rapidly expanding Saab Kockums underwater division.
The long-term goal in Saab's expansionist plan takes the development of the next-generation Gripen fighter jet as its base model. The core objective here is to strengthen Sweden's ability to design and export advanced submarines and auxiliary solutions through strategic industrial partnerships that offer optimum cost-sharing advantages in key areas such as development and maintenance.
Significantly, the Swedish government's backing for Saab's expansion into the submarine and naval vessel segment is supported by FMV (Försvarets Materielverk), the Swedish defense materials supply organization.
FMV will remain a pivotal force within Saab's long-term global ambitions. The company owns the proprietary rights to key advanced submarine technologies, including those connected to Saab's the ongoing development by Saab of the Swedish Navy's new A-26 submarine.
The Saab-Damen teaming deal's general focus — to join forces in pursuit of the Dutch Navy's Walrus-class submarine replacement project and similar naval program opportunities globally — has particularly piqued perked the FMV's interest.
The Netherlands is set to replace the 2,756 long-ton, life-extended Walrus subs, which entered service in the 1990s, after 2025.
The FMV sees distinct advantages for Sweden in finding strategic industrial cooperation partnerships that can lead to the sharing of development and maintenance costs in respect of the Saab Kockums-run A-26 submarine program, said Lena Erixon, the FMV's director general.
"From Sweden's perspective, it is important that we can share submarine development costs with other reliable countries. The Netherlands is such a country," Erixon said in a statement. (press statement).
Sweden, said Erixon, will need to be selective in the international cooperation partnerships it seeks within the submarine development and export arena, due to complex matters such as technology sharing and transfers.
"These are very sensitive technologies that no one wants to really share, and this makes it even more important when it comes to countries we decide to work with," Erixon said. "It's important in the Gripen program, and it becomes even more important in relation to submarines. We will be very careful with whom we work with." said Erixon.
The teaming deal with DSG is the single biggest industrial partnership initiative by Saab since its completed the acquisition of ThyssenKrupp Marine Systems (TKMS) from German vendor ThyssenKrupp in July 2014. TKMS has since been re-named Saab Kockums.
Saab's CEO, Håkan Buskhe, described the $50 million takeover as the key to unlocking the group's submarine development capacity and export potential. The acquisition included naval shipyards in Malmö, Karlskrona and Muskö.
"With Kockums, Saab is now one of few companies in the world with the ability to develop, produce and deliver total defense solutions for air, land and sea," said Buskhe said.
The teaming deal with Damen would not be possible, or even necessary, without Saab's takeover of Kockums and the goodwill it received from the state to follow the acquisition through, said Allan Widman, chairman of Sweden's Parliamentary Defense Committee (PDC).
"On a larger scale, the deal returned full control of key submarine technologies, including the Stirling-based air independent propulsion system, to Sweden," said Widman said.
The scope of ambition for the Saab-Damen collaboration will also set its sights on pending submarine programs in Europe and beyond, said Marc Brandt, a Brussels-based industry analyst.
"Norway has shown an interest in the Swedish A-26 program. Poland and Canada are also potential customers, although I understand that there is a general acceptance within Saab, and government circles in Sweden, that Australia's preference for the Japanese Soryu-class sub has put this program effectively out of reach," said Brandt said.
However, Saab still clearly retains hopes that it can potentially secure sub-systems contracts from the AUS $17 billion (US $13.7 billion) Australian US $13.7 Collins-class submarine replacement program, said Brandt said.
"Saab's capacity to deliver subsystems was discussed in some detail with government officials, and executives from Saab and FMV, when Australian submarine program managers and engineers visited Sweden in December as part of a wider tour in search of potential partners in Europe," Brandt said.
The robust degree of government backing for both Saab's teaming deal with Damen, and the defense group's broader export plans, is underscored by a strong desire to ensure that Sweden remains a relevant and competitive force in core combat aircraft and naval offerings, said Widman said.
"The state's role in supporting growth within the indigenous defense sector is not new, but the relationship is growing and becoming more focused on a narrowed range of high value export products such as combat aircraft, and more recently submarine and naval vessels," said Widman said.
The Swedish government's backing, underlined in the cooperation with Damen, will strengthen Saab's capacity to expand within the submarine and underwater naval segment, said Gunilla Fransson, the head of Saab's Security and Defense Solutions business area.
"We have the full support of our Swedish customer in broadening our customer base to include a new, demanding high-end customer," said Fransson said.
Saab's intent to expand within the underwater defense segment is likely to lead to a series of niche international partnerships in the future.
On Jan. 29, the company reached an industrial cooperation agreement with the German vehicle survivability specialist IBD Deisenroth Engineering, which that will enable Saab to leverage on shared technologies and product synergies in the areas of advanced survivability solutions for land sea and air applications.
DSG operates a network of 35 shipyards worldwide. The company had sales of $1.03 billion in 2014. One of DSG's 17 overseas shipyards is located in Oskarshamn, Sweden. Overall, DSG produces around 150 civilian and naval ships a year. Naval offerings include coastal, offshore and ocean going interceptor craft and patrol ships with a length of between 7 to and 200 meters and a range of 200 to 3,750 tons.