This text describes the changes that have taken place in the realm of policies affecting national and international security and how this has influenced Sweden's view of external threats. This has greatly influenced the plans for Sweden's future defences, which in turn influences industrial capability both on a national level and with regard to necessary cooperation with international partners. Here you can read about how adaptation has been a necessity, with Saab realigning its positioning from a product focus to a solution focus.
Here we describe how the situation in Sweden has shifted from the threat of mass invasion to a multifaceted threat scenario. In Sweden, the assumptions of successive government committees on defence have influenced the focus of the country's defences, which in turn has influenced defence investments in high-tech systems. Sweden's network-based defence is a result of the change in defence policy seen in the country, placing a strong focus on industrial capability. Working with technology demonstrators was an effective way of securing advanced product and capability development.
This required a new positioning, shifting from a product focus to a solution focus with practical adaptability, eventually entailing a stronger focus on international initiatives and cooperation.
The author recommends the following texts that relate to this story: In chapter Adaptability for new requirements under the heading An Altered World in chapter Ensuring long-term operations capabilities under the heading Continuing To Grow and under the heading Planning and Implementing Capability Development.
This text concerns the highlighted areas of A Journey of Change in the Aircraft Industry
The end of the Cold War meant new roles for the armed forces of many countries, and in Sweden it entailed a transition from the real threat of mass invasion to a more multifaceted threat scenario. This meant a completely new role for the Swedish armed forces.
The same development was seen throughout the Western world, with increased international involvement. In a number of wars and conflicts in recent decades, the opposing forces have comprised coalitions of several nations. When different military forces are to cooperate, it must be possible to coordinate and integrate various systems. Consequently, there is increasing demand for open systems and system integration.
Parallel to the changes in international security, rapid technological development enabled new strategic and tactical possibilities. Information technology became an indispensable part of civil society, and this influenced the view of how a military force should carry out its task. New technology also enabled a radical shift in military doctrine.
The altered threat scenario and new technology have entailed a structural shift in defence investments towards more high-tech systems, especially in Western Europe and North America.
The end of the Cold War meant new roles for the armed forces of many countries, and in Sweden it entailed a transition from the real threat of mass invasion to a more multifaceted threat scenario. This meant a completely new role for the Swedish armed forces.
Decisions made in 1999 and 2000 concerning Sweden's defence emphasised the military's new role in society and, not least, the Swedish Armed Forces' capability to participate in international missions.
The same development was seen throughout the Western world, with increased international involvement. In a number of wars and conflicts in the 1990s, the opposing forces have comprised coalitions of several nations. When different military forces are to cooperate, it must be possible to coordinate and integrate various systems. Consequently, there is increasing demand for open systems and system integration between different types of defence systems.
Parallel to the changes in international security, rapid technological development enabled new strategic and tactical possibilities. Information technology became an indispensable part of civil society, which influenced the view of how a military force should carry out its task. New technology also enabled a radical shift in military doctrine and combined with an altered threat scenario this entailed a structural shift in defence investments towards more high-tech systems, especially in Western Europe and North America.
Developments in defence spending in the countries that comprise Saab's primary markets varied in the 1990s, with large cutbacks in some countries and stable defence budgets in others. In Sweden, defence investments remained relatively unchanged in the 1990s, although a reduction in volume was initiated. All in all, defence investments in the 1990s were relatively stable.
The Committee on Defence is a forum where the Swedish government and the political parties represented in Sweden's parliament can meet to discuss the nation's security and defence policies. The aim is to achieve broad consensus on the formulation of Sweden's security and defence policies.
In the late 1990s and early 2000s, Sweden's Committee on Defence determined that the focus of the country's defence policy could be drastically altered. The Committee felt that there was a very small or non-existent risk of a major and widespread war, which also meant that the risk of war in Europe was non-existent and as such Sweden was not at threat.
The reasoning of the Committee on Defence makes it apparent that predicting the fall of the Iron Curtain was difficult and that such errors of judgement are not uncommon. The effects of this can be seen now, such as in the misjudgements concerning Russia's actions in Europe over the past ten years.
The Committee on Defence had previously determined that the focus in Sweden's security policy could be shifted away from Europe, and identified three types of risks. First, it was determined that conflicts would arise within sovereign states, and that these conflicts would be based on ethnic, religious and national differences.
Second, it was predicted that conflicts would arise between countries or ethnic groups, with these conflicts leading to humanitarian disasters, such as in Rwanda, Burundi and Zaire.
Third, conflicts were predicted to arise through international terrorism facilitated by relatively inexpensive access to effective technology. Organised crime is also highlighted as a major national security problem for some countries, although not in Sweden as of yet.
The Committee on Defence is of the opinion that Sweden's international security policy should focus on cooperation within the OSCE, the EU and a reformed UN.
When assessing Russia's actions, three main traits are identified:
The Committee on Defence believes that Sweden's defence policy should be focused on a credible defence of the country's borders alongside international interventions and peacekeeping missions. The credible defence would not be capable of resisting a large-scale invasion in the short or medium term.
The Committee proposed prioritising long-range combat forces to keep an opponent outside Sweden's borders, and this largely encompasses air combat forces. The importance of the entire armed forces is emphasised, although there is still a great deal of competition for the allocation of resources. As regards the supply of materiel, this is very central to the ability to maintain domestic competence, although this is judged to be sufficient. Accordingly, Sweden needs to intensify its participation in international cooperation even as regards materiel.
In the early 2000s, it was determined that a number of countries, including the USA, had an accumulated investment need.
Investments had been shifted towards high-tech systems and powerful modern defences, which meant extensive investments in and updates to various weapon systems and a focus on new technology and techniques.
At this time, different defence doctrines were under discussion, such as Revolution in Military Affairs (RMA) and Dominant Battlespace Awareness (DBA), wherein the possibilities of information technology were highlighted and attracted much attention. These defence doctrines were the subject of many investigations and scientific studies. RMA was related to emerging new advanced information, communication and space technology that could be used by the American military. RMA is a military theory hypothesis, with recommendations on how wars may be fought in the future and is specifically tied to technical and organisational changes in the USA's actions.
The following description of the Dominant Battlespace Awareness approach is taken from an assessment of Sweden's situation at the beginning of the 2000s. Source: Royal Institute of Technology in Stockholm, Sweden (KTH).
"There are large uncertainties regarding the kind of tasks that the Swedish Armed Forces will encounter in the future.
The emphasis will be on threats such as terrorism and disasters, rather than on the large invasion that previously was considered to be the main issue. Flexibility is the keyword when dealing with these situations that may be classified as being in between war and peace.
The commanders must be able to combine and utilize available armed units, as well as other resources, to achieve the goals of a given task. Providing general solutions is thus essential when developing support systems for the future military organization.
Support tools relying on general principles will greatly facilitate flexible co-ordination and co-operation between different military and civilian units and organizations."
This influenced Swedish actions and a new Swedish defence took shape. The transition to Sweden's network-based defence was a gradual process and was achieved by new systems becoming part of the defence, as well as by adapting existing systems to work in the new structure.
The idea behind network-based defence was to link together information, command and execution systems in networks to make Sweden's defence more flexible, more efficient and less vulnerable.
Network-based defence is comprised of different types of military and civilian infrastructure for information transfer.
Network-based defence comprises a doctrine shift wherein new technical possibilities in information retrieval systems, as well as in command and execution, are to create the conditions for a more efficient way to manage and organise the military.
Each defence doctrine is based on the tasks a defence system is to conduct and the technology that is available. Accordingly, future doctrines will be based on the armed forces' future focus, increasing internationalisation and new threats, such as access to new technology.
Sweden's defence was previously based on a national ability to face the threat of mass invasion. New circumstances mean a military force operating in a Europe without an iron curtain and with growing responsibility to participate in international peacekeeping missions.
Common to the development seen in both defence strategies and technology is the growing importance of knowledge about the world around us and being a part of it.
Fire power is still important, but precision in the use of weapons is increasingly replacing volume, and this development influences the defence debate in Sweden and internationally. The development of a network-based, flexible operational defence with systems that support this focus and the capability to participate in international contexts comprise two cornerstones of the direction taken in the latest defence policies adopted in Sweden.
Sweden's ambition is to develop a high-tech and increasingly network-based defence that is also flexible and adaptable in order to be able to act in international contexts.
In the 2000s, gradual adaptations were made, enabling the discussion of a development process if not a revolution with radical and immediate change.
This is a process in which existing systems are adapted and developed to work in a network structure. Even if Sweden is a relatively small country, there are favourable opportunities in this area and the decision process has come far compared to several larger nations. Technical knowledge in both the civilian and defence industry sectors is extremely advanced.
In 2000, the Swedish Air Force was an example of a Swedish networked system in operational service and adapted for international interventions.
By 2000, the air force was comprised of a number of different subsystems that together provided a highly advanced air defence system. The core systems included, for example, the Gripen, the StriCcombat combat command system from Saab and the ERIEYE airborne surveillance system, originally from Eriksson Microwave Systems and now produced by Saab Surveillance. These subsystems have the capability to function autonomously and are adapted to be able to work in a network structure. Sweden's transition into a network defence took place in the 2000s and determined the primary focus of the country's defence investments.
In the early 2000s, the Swedish Armed Forces invested in developing new network-based systems. The Swedish Armed Forces procured a number of demonstrator projects, in which the network concept was developed for existing and future defence systems. Saab was awarded one of the first development project orders in the shape of a technology demonstrator.
In the early 2000s, Saab invested heavily in international expansion, the result of altered circumstances surrounding defence contracts due to Swedish defence policy. This provided both great opportunities and major challenges, as historically the market for defence materiel had been a national concern. The step from domestic business in defence materiel to an international market was considerable. Saab invested heavily in deals with a high system level, in both the military and civilian markets.
The Swedish Armed Forces are without a doubt Saab's most important partner, and ultimately it is the Swedish government that decides the focus of and conditions for the export of Swedish defence materiel.
Selling defence materiel and participating in international collaborations requires the support of the Swedish government.
Saab Aeronautics developed a number of technology demonstrators, which could be components of the network-based defence. A number of such technology demonstrators were developed in the 2000s, such as SHARK, aerial vehicles to demonstrate unmanned autonomous flight, and Filur, which was developed for testing low signature characteristics.
Neuron, an international initiative, was another development project for an unmanned aerial vehicle with low signature characteristics and which was also to be designed as a combat vehicle. Neuron involved the development of, among other things, advanced avionics.
Later in the 2010s, the MIDCAS technology demonstrator was developed, and is used to test systems for preventing collisions between airborne vehicles. MIDCAS is a project that falls under the European Defence Agency (EDA) and in which Sweden, Germany, France, Italy and Spain participate. MIDCAS is an acronym for Mid-air Collision Avoidance System and, in brief, is a solution by which unmanned aircraft – RPAS (Remotely Piloted Aircraft Systems) – are able to detect and avoid other aircraft. This capability is called Detect & Avoid (D&A) and is crucial if RPASs are to be granted permission to operate in controlled airspace together with other air traffic.
Over a number of years, Saab's operations have undergone major changes that have entailed a realignment of the company's direction. For decades the company acted in a purely Swedish capacity, but has now switched to an international focus. Previously, the aim was to sell products to protect borders, but this has now changed to offering products to protect flows. The company has also shifted from having a product focus to acting as a service provider with a solution focus on customer operations.
In the mid-2000s, the strategic direction was altered following the identification of the market conditions presented below. These were:
i. Globally altered threat scenario
ii. The need for cutting-edge technology
iii. Altered security needs
iv. International security and economic macro-factors
v. Social integration requires partnerships
vi. Complex solutions entail complex business agreements
vii. Local presence delivers new business opportunities
viii. Maintain a unique level of expertise over time
The strategic direction required the adaptation of organisational capability to new circumstances.
The Cold War was followed by a period of diffuse threats, with the growth of international terrorism and local hot spots and conflicts.
The direct military threat from the then Soviet Union ceased to exist, and the changes that swept across the globe were rapid and far-reaching. New international security scenarios combined with strained economies led to many governments reducing their defence budgets. Countries also reconsidered the focus of their defence policies, prioritising technically qualitative solutions. Developments in materiel procurement were similar across many countries, with reductions in quantities. There were, however, greater demands on performance when procuring new defence materiel, which resulted in increased costs.
In Sweden, the focus shifted to participating in international efforts within the EU and in partnership with NATO.
Advanced technology is key to success in the military market and a large share of the technical development seen in society has been driven by the development of military products. Participation in international collaborative projects in both civil and military industrial operations demands investments in cutting-edge technology.
Saab's endeavours in the development of unmanned aerial vehicles entailed heavy investments in cutting-edge technology, and this enabled participation in the European development project Neuron.
Considerable investments in technical studies have been made on a continual basis in various research programmes. Many of these studies have been combined within the framework for different technology demonstrators in the field of unmanned aerial vehicles (UAV). Moreover, advanced technology and capability developments have been achieved in conjunction with the work on the Gripen Demo technology demonstrator.
Examples of technologies that have been focus areas include sensor technology, presentation systems for pilots, navigation, autonomous control, simulation and modelling, model-based systems development and model-based development in design and production techniques.
The development time for military aircraft was previously about 15 years, but has now been cut drastically within Saab. This has been achieved with the introduction of new working procedures and new development and production methods, as well as a new approach to validating and verifying products during development work. As a result, the development time has been halved, and this has entailed significant investments in both technical capability development and altered organisational capabilities, with new working procedures, methods, and development and production systems.
The focus on both military and civil security has moved further up the value chain over the past 15 years. Development is moving towards larger system solutions and turnkey projects, which means that one supplier makes an extensive commitment, assuming the role of system integrator for both their own and others' systems.
This is a consequence of altered cross-border and global security needs. Demand has evolved to encompass broad, integrated solutions with rich service content, which has meant demand for complete undertakings for operation and function with a life-cycle approach.
Saab can be the supplier of a product or a system wherein a competitor assumes the role of integrator or operator. This requires new forms of business partnerships and collaborations, with a need for the capability to both cooperate and compete at the same time.
Market demand has developed towards new products with functions that have the operational capability to conduct monitoring missions, combat missions or a combination of the two.
Faster technical developments have enabled the use of more advanced software for simulation, modelling and sensor development, as well as improved systems for training and support.
During the 2000s, development moved towards larger alliances in peacekeeping and welfare initiatives, which drives development towards more security-oriented demand.
However, priorities can soon shift back towards more traditional defence technology, such as in conjunction with local conflicts that risk international escalation. This was also seen during the late 2000s and the early 2010s, such as Georgia in 2008, Libya in 2013, Ukraine in 2014 and, not least, the effects of the Arab Spring in the Middle East and Africa in 2013.
Political developments can affect the military industry to a greater extent than most other industries.
Large development projects, both civilian and military, have started to be conducted with the participation of partners from both the public and private sectors in various configurations.
As a result, new requirements and new business models emerge, which can be seen primarily in the area of infrastructure, with the operation of large facilities, systems, airports, sea ports, transshipment centres, railways, power systems and so on.
The so-called PPP solutions (public-private partnerships, also abbreviated 3P or P3) have attracted interest since they can open the way to new financing solutions. The introduction of PPP solutions most often entails a need to replace traditional business and governance models with new ideas, as regards both financing and operation. One example of a PPP solution in which Saab participates is the EU-backed research project Clean Sky, which aims to reduce greenhouse gas emissions in air transport. This is a ground-breaking technology that will be used in future commercial airliners to reduce fuel consumption and environmental impact, which is also one of the primary goals of the Clean Sky research project.
In tenders to states and government agencies, private enterprise, including Saab, offers to take over and operate all or parts of the customer's infrastructure. Such major contracts specify functional requirements and the quality to be delivered for a certain cost.
Saab, for example, has a long-term contract with the Swedish Defence Materiel Administration (FMV) regarding full responsibility for the SK 60 aircraft system, which is used for pilot training. In this instance, Saab is the principle supplier and is responsible for the operation, maintenance and upkeep of all SK 60 aircraft. This undertaking means that the system is airworthy and readily available for Swedish Air Force Wings in consonance with the Swedish Armed Forces' requirements.
Military and civil partnerships have become increasingly common between countries. The armed forces in the Nordic countries, for example, have expressed the ambition to increase their cooperation. Naturally, such changes have a direct impact on the industry.
Sales of large, complex solutions such as the Gripen system and associated products entail long and complex processes involving different types of stakeholders and agreements. A Gripen sale represents a major investment for the buyer of large sums of money over a long period of time, which means that many different interests and stakeholders will be involved in the drawing up of the agreement.
The requirements for industrial partnerships concern far-reaching industrial collaboration linked to defence contracts. Essentially all countries the world over demand industrial collaboration, Sweden included, in conjunction with more extensive defence materiel acquisitions. The specific requirements are often regulated in the procurement legislation of the concerned countries.
The aim of industrial partnerships is most often to strengthen industrial development and production in the country. The supplier receives an undertaking to in the client country generate and support investments that create new exports. Moreover, it is important that the partnership includes research and development, as well as technology transfer, in order to generate competitiveness and create new business operations, and thereby new jobs.
These partnerships are often used to steer investments towards areas of national strategic importance. The long-term goal is for them to create growth in the economy and thereby strengthen the national budget. The value of these industrial partnerships can amount to 100 percent of the contract value or more.
Saab has extensive experience of international industrial collaboration as well as broad industrial collaboration with other Swedish and international companies.
Parallel to the development towards a more global society in which everyone has an interest in a functioning whole is a need for local presence. This applies to both military and civilian markets, where the winners are globally active companies with strong local positions.
Customers demand integrated solutions from companies with keen awareness of both the international context and the specific circumstances of the local market. In order to increase the opportunities to be chosen as a business partner, and to also have development work partly financed by state funding, it is important to establish local operations.
Strong local positions are required to be a preferred supplier to customers and to have development work partly financed by defence budgets.
Customers in the military field are the country's armed forces. For Saab and the Gripen system, the creation of regional hubs on different continents is essential. It provides the opportunity for new aftermarket agreements and for offering customers good access to maintenance and service. Based on an existing strong presence in its prioritised geographic markets, Saab is further strengthening its presence by establishing operations in six market areas.
Sweden has shifted from focusing solely on the Swedish defence capability to focusing on international participation together with other countries. Following this, a new direction has emerged that returns to a more mixed approach by combining both territorial defence and participation in international missions.
Over the years, the Swedish state's defence budget has made a significant contribution to the accumulation of expertise at Saab Aeronautics. This has been achieved by the Swedish state being the largest and most significant customer, as both a development partner and a reference customer.
Dwindling Swedish defence budgets have required the development of new forms of financing to retain the technological advantage that has been key to maintaining a unique level of expertise over time.
In the future, the need will remain for customer financing for the development of major industry projects. This also demands the capability to establish strategic positions and partnerships in important markets.
In the late 2000s, the market was characterised by a global financial slowdown. The crises in Europe became increasingly tangible as government cutbacks merged with increasing structural and business cycle-dependent unemployment.
Extensive reforms within the financial system were also high on the European agenda, which has influenced the overall size of national budgets and thereby even defence budgets.
For the defence industry, this meant postponed orders and tougher requirements for delivering operationally attractive system solutions at the right price. The latter entails a competitive advantage for Saab in export efforts for the Gripen system.
Defence investments are typically made with a time frame of at least 10 to 20 years. From a geopolitical perspective, we have seen shifts in focus on the economic, political and geographic planes over the past ten years. The USA has gradually shifted its focus from Europe and the Middle East to the Asia and Pacific region.
Top-level politicians within the EU have expressed the ambition to cooperate on defence issues in order to work more effectively.
Saab is a clear example of how system solutions can offer integration with other systems, thereby leading to more cost-effective products. The Gripen has equipment and subsystems from about 350 different companies.
However, parallel to the need for increased cooperation becoming more apparent, it is also important to remember that this must be accomplished in an effective manner and generate products and solutions that are actually better than before.
As an example, we can mention the Neuron which was test-flown in 2012, an unmanned aircraft that Saab has developed in cooperation with a number of European companies. This is a clear example of positive forces combining to break new ground.
Over the coming ten-year period, wars will most likely be fought in largely the same manner as today. In the longer term, the way in which military powers plan and wage their wars will most likely change.
Economic growth affects all industries. Recent years have been characterised by strained national budgets with a need to prioritise spending. In 2012, we saw global defence spending fall for the first time since 1998.
As advances in technology spread throughout the world, threat scenarios will also change for most nations. In a not all too distant future, society will need to create resistance and defences against, for example, advanced and coordinated asymmetrical threats from missiles combined with cyber-attacks.
These may also target vital public services rather than traditional military targets. They may be carried out by perpetrators who are difficult to identify and be planned and orchestrated by other states or other actors with abundant financial resources.
There is also demand for proven products that have been evaluated in terms of not only performance, but also cost efficiency over the product life cycle. Parallel to this, there are increasing demands on functionality, efficiency and interoperability.
There is increasing demand for open solutions that can be integrated with existing equipment and systems from other suppliers. Customers in both the military and civilian sectors want broad, integrated solutions with greater service content, such as training, exercises, support and maintenance.
The trend towards international cooperation demands open systems that can be coordinated and integrated operationally.
Defence contracts that include industrial collaboration most often require that part of the contract value be delivered through production in the buyer country, as well as general technology transfer.
Technology transfer and knowledge sharing are important, especially for a company such as Saab that operates out of an export-dependent country. Long-term and trusting partnerships between companies and countries benefits all involved. In an age when many countries strive to attract overseas companies to establish operations and invest in their countries, there is increased competition for international investments and industrial collaboration.
Due to its successful rationalisation efforts and close cooperation with customers, Saab has a strong position in delivering needs-adapted and effective solutions.
The Chair of the Board of Saab AB, Markus Wallenberg, comments as follows:
"Partnerships are important for the defence industry and Saab. For many years, we have established international partnerships in training, research, development and production that have helped the company succeed in the technology areas in which we operate."
The technology areas differ, but common to all is that everyone involved is increasingly realising the advantages of the mutual and trusting sharing of knowledge. Saab has long realised that access to the sharpest minds is decisive to remaining at the very forefront of technical development.
Saab's systems and solutions are characterised by a high degree of interoperability wherein system integration is the core capability. This gives Saab great opportunities to adapt to new forms of collaboration and requirements for technique and technology transfer, and this is an important part of the Gripen contract with Brazil.
One effect of defence budgets having decreased in recent years in many countries is an increased interest in cost-efficient products. This benefits the Gripen, which combines advanced technology and high performance with low operating costs, making it the most cost-effective multi-functional fighter aircraft system on the market.
The extraordinary technical challenges faced over the years have driven and developed Saab into a broad, innovative and competitive Swedish company. High-tech capabilities of world class have been created and the list of ground-breaking innovations is long.
The total cost for an aircraft includes both the purchase price and operating costs during the plane's entire service life. The Gripen has a low life-cycle cost and a low cost per flight hour compared to its competitors.
Operational reliability and dependability are high. The Gripen is easy to maintain and repair. A six-man ground crew can fully rearm and refuel a Gripen in just ten minutes. An engine can be replaced in less than an hour.
This contributes to operating costs that are far less than the Gripen's competitors and entails major tactical advantages for users.
Saab has its base in Sweden, along with its primary research and development, but international partnerships are essential and encompass training, research and development, and production. An agreement with the Swedish Defence Materiel Administration (FMV) for a new generation of the Gripen was signed in February 2013, and this is without a doubt one of the largest agreements ever in Swedish industry.
In a number of wars and conflicts in recent decades, the opposing forces have comprised coalitions of several nations. When different military forces are to cooperate, it must be possible to coordinate and integrate various systems. Consequently, there is increasing demand for open systems and system integration.