These sections provide various examples of how capabilities can create value for customers. Also shown is how Saab as a company can create added value for society in the form of dissemination of technical expertise and spin-offs to create new companies.
How Saab has contributed to increasing technical capabilities in Sweden through innovations in technology and ways of working is described as well. This has been accomplished through new approaches and by implementing and using modern working procedures.
This section describes the capabilities that constitute the prerequisites for an effective organisation and how work with change must be approached.
Developing various capabilities is intended to create various values. Saab's fundamental capabilities for several decades have been adaptability, system thinking and innovation. With these capabilities, Saab has created three basic values. The following long-term values were gained during development and production of the Gripen system:
Customer value – International security benefits for purchasing countries and space to manoeuvre in safeguarding their borders. Operative benefits for purchasing countries’ armed forces include unique operational capabilities at a low life-cycle cost. Trade policy benefits arise through extensive industrial collaboration that profits both the purchasing countries’ industries and Swedish industries.
Value for owners – Products that give owners long-term profitability through a strong industrial capacity oriented to proactive business and development capabilities in military fighter aircraft systems, which creates business benefits both in individual business agreements and in industrial partnerships.
Value for society – That Saab as an innovative company creates new advanced products and systems has produced a dissemination effect far beyond Saab’s core operations and created spin-offs of new advanced products for civilian use.
That Saab creates many jobs – both locally and globally through systems procured from subcontractors and partners, as well as other forms of industrial collaboration – has trade policy significance and boosts commerce with purchasing countries.
Saab generates expertise dissemination to other industries, society and academia through advanced development operations.
Reference: Professor Gunnar Eliasson in his publication on visible costs and invisible profits (“Synliga kostnader och osynliga vinster”). Swedish publisher: Centre for Business and Policy Studies
Creating effective organisational capabilities in a company can be likened to keeping a top spinning. Balance must be maintained, because while it is always good to further develop an organisation and strengthen its capabilities, existing products must be enhanced and delivered with high quality and superior properties. This is all carried out with a certain degree of intensity and external influences.
So what has to be done to balance a company?
Put in simple terms, one could say that it is the company's products, business activities, technology and operations that must be kept in balance in order to create comprehensive capabilities and consequently generate business benefits. If there is imbalance, financial difficulties usually occur, along with other negative effects.
Capabilities are developed over time. Work has always been conducted with capability development at Saab in one way or the other over the years. During the past 15 years however, there has been a focused and strategically based initiative to develop all capabilities so as to keep the company and its operations in balance.
Saab's operations and product development are based on a time perspective with product life cycles of 25 to 40 years. This places entirely different demands on developing new capabilities in comparison to other industries. With product life cycles that usually exceed 25 years, an organisation must be in a state of constant change. Consideration must be then taken to the maturity of the organisation.
It is necessary to assess the needs and demands for changing various capabilities related to control and management, supply and development of expertise, demands on business development and new business models, needs for new processes, methods and tools for the organisation, etc. External demands for change must also be assessed that arise from security policy changes, market changes, technological development, new competitive relationships, etc.
The degree of maturity in the organisation, what is essential to change and what produces competitive advantages and financial benefits are some of the factors that must be taken into consideration. Changing an organisation requires assessing its maturity so that the right measures can be taken and the business cases are realistic. What can be rectified in a short time and how is enthusiasm for making changes established in an organisation? What will take a long time to change and how are needs balanced against the available resources? In a complex organisation, capabilities must be developed with a long-term approach and with consideration to what is realistic to achieve.
Capability development is best when continuous work with change is balanced.
This is accomplished in part with a Lean approach, with Agile methods and Lean tools.
But it is also necessary with long-term capability development in which the company's goals and strategies from business, product, technology and operational plans are addressed in major change projects that provide the desired capability improvements.
This section briefly describes examples of societal benefits for which the defence industry has been a prime mover.
The aircraft and defence industries generate a number of application areas for society at large. This is important to take into consideration when politicians and government agencies make decisions. Significant factors are shown in the figure below.
To be an enabler in development of capabilities for the benefit of society, very high expertise must be maintained throughout the organisation and there must be leading-edge skills in technological development. The company must also have the capability to develop working procedures that produce significant efficiency throughout the value stream. This applies from the early conceptual phases and through the development and production chain, and not the least in working procedures for providing service and maintenance to customers and users.
Technological research is one of the pillars that is essential in this context. Technological research has been well established at Saab for quite some time; this in order to supply the organisation with new technology and new knowledge.
One aspect of continuously maintaining the highest level of technological development is producing different types of technology demonstrators. Technology demonstrators can show future possible product solutions at the same time as new technologies can be tested and new techniques developed.
Collaboration with customers and government agencies on technology demonstrators is also important, since solutions can be tested for customers’ future operative needs. An example of this is the Neuron technology demonstrator, which was the result of international collaboration in Europe. In the Neuron project, new effective methods were developed for model-based development and production of structures and fuselages for military aircraft. This is an example of technology dissemination since this methodology can be used in all types of more advanced production.
The Gripen Demo is another example of a technology demonstrator. It was the result of collaboration with the Swedish Defence Materiel Administration for testing among other things, future military capabilities.
The Gripen Demo provided input for mapping future development capabilities for the Gripen system. This subsequently produced the necessary information on which the Swedish government based its decision for developing a new generation of the Gripen. The platform also provided the opportunity for export and industrial collaboration. The Brazilian order for the Gripen NG is an example of this. Other societal benefits have also been gained with this order. Collaboration with Brazil provides both industrial collaboration in high-tech industries and collaboration in research and education.
Another important reason for using technology demonstrators is that work can be conducted with different types of product concepts, which define and show the most important properties for the products to be developed.
Work is thus necessary with a number of key technologies; such that are critical or include new technology that provides important product characteristics. As an example, within these key technologies, a basic technology can be used that is specific to aircraft. Aircraft-specific basic technology is often developed at research institutes and universities. In addition to this, more generic technology/industrial technology is also needed, i.e. basic technology that has applications in society, such as in computers and communications systems.
This section briefly describes how Saab could give a customer added value at the same time as the organisation was streamlined and organisational capabilities were strengthened based on demands for increased profitability.
If you would like to read the full text, see Increasing customer value.
Reduced defence budgets have consequences for Saab's development capabilities. With the societal situation in the mid-2000s, with reduced international security tension in Europe, politicians had no plans for further development of the Gripen system.
The Swedish Defence Materiel Administration had submitted orders for a number of development assignments that constituted the basis for Gripen development at the time, but due to the limited funds allocated for engineering studies, the orders could not be processed.
The government and the parties in Parliament were drawn in a new direction regarding Sweden’s defence capabilities, with investments for participation in international missions rather than investments in invasion defence, which had constituted the prevailing defence doctrine in Sweden since the Second World War. This led to phasing out invasion defence and the conscript system, along with radically reduced defence budgets.
In other countries, technological and capability development in military fighter aircraft continued.
Costs for international development of military fighter aircraft had begun to rapidly escalate. This had not gone unnoticed by Swedish politicians and there was consequently major scepticism regarding military investments. What was special at this time was that there was no direct military threat against Sweden.
Saab assessed that Sweden needed to keep pace with capability development to manage the defence capabilities that various defence studies had arrived at and for which there were decisions in Parliament.
The most important challenge for overcoming the political resistance against investments in military development programmes was breaking the trend of skyrocketing costs for military products. Saab needed to show the politicians, the general public and the Swedish Defence Materiel Administration that the cost trend could be broken for development of military aircraft systems.
Due to the rest of the world continuing to develop the operational capabilities of military fighter aircraft, it was Saab's assessment that the Gripen system also required development. This so that Sweden would have the requisite military operational capabilities after 2025 and be able to counter future military threats. This applied both to threats against Sweden and threats that require participation in international peacekeeping operations.
To leverage its capabilities, Saab needed to maintain continuity and retain its world-leading development capabilities for military fighter aircraft. To enable this, either a new development project was needed or a project in the form of a technology demonstrator. Saab had also determined that working procedures had to be created to significantly lower costs for development, production and maintenance. The reasons were many. In part to further reduce life-cycle costs for the Gripen system, but also because of the assessment that funding for future investments in military fighter aircraft would be very limited.
The Gripen Demo project was Saab's way of realising and showcasing future capabilities for the Gripen system, with the sights set on continuing as one of the world-leading players in military fighter aircraft. The Gripen system had to be further developed to be cutting-edge and developable with unique operational capabilities until 2040.
The Gripen Demo project was a strategic development project that produced a technology demonstrator for testing new concepts and new system solutions for future development of the Gripen.
The Gripen Demo was also intended to showcase Saab's unique development expertise and to provide value to our customers in the form of development of new systems with the focus on a low life-cycle cost.
At the time, many of the development orders from the Swedish Defence Materiel Administration were regulated in a long-term agreement that was very detailed. This meant that a solution was needed for funding the Gripen Demo.
How could this be achieved when no financial means were available for development assignments of this size and character? An aggressive approach through new working procedures and new management of capability development was the answer. And this was when the save-to-invest concept was born.
If Saab could rationalise and streamline its operations so that the previously submitted orders from the Swedish Defence Materiel Administration could be filled with retained quality and functionality at a substantially lower cost, this would create the financial means to move forward. The Swedish Defence Materiel Administration would then be able to order development without expense to the Swedish taxpayers.
Saab needed to streamline operations and significantly increase capacity so that the company could retain its unique system development capabilities in the years ahead.
To succeed, radically altered working procedures would be needed, in part to increase profitability, but above all, to increase efficiency.
A few months were spent on preparing a rationalisation and streamlining programme for the company that encompassed all aspects of the organisation. A project proposal was produced and no organisational areas would be spared. Efficiency measures would be implemented both in the larger line organisation and in product projects. All types of efficiency measures would be implemented in accordance with the principle of “every little bit helps.”
The completed project proposal utilised a new approach to how streamlining would be accomplished so that a foundation could be laid for creating long-term and sustainable profitability. The proposal was presented to Saab Aeronautics management and approved.
A short time later, Saab AB's CEO at the time encouraged management in all business areas to focus activities on strengthening profitability. And to make it all the easier, there was already a finished proposal for an efficiency programme for creating long-term and sustainable profitability.
It was decided at the onset of the rationalisation and streamlining programme to implement the save-to-invest concept. Each day of the year on the Swedish calendar is assigned a name. And because the decision was made on 9 January 2006, the project was called Gunder, which was the name on the Swedish calendar for that day. This programme would encompass many new ideas for streamlining and rationalisation to create long-term and sustainable profitability.
The Gunder Programme and the entire arrangement for how streamlining and rationalisation would be implemented constituted the foundation of a cost-saving programme called the Billion Programme (Miljardprogrammet) that would apply for all of Saab AB. The Billion Programme was started about one year after the Gunder Programme.
Basic to the Gunder Programme was to work with sustainable profitability and to establish sustainable change management that could generate effective working procedures and capability development that produced long-term and strong competitiveness in the international military aircraft market.
Important programme goals for the Gunder Programme were as follows:
The Gunder Programme included nine sub-programmes that would contribute to sustainable profitability. The sub-programmes were oriented both to streamlining and rationalisation, as well as the ability to conduct long-term value-creating activities and capability development in the line organisation, but above all in producing new effective working procedures for product development projects.
One of the sub-programmes produced a new set of values for the business area so as to establish value questions related to ways of making decisions and conduct for all personnel on all levels in everyday work.
There were three rationalisation sub-programmes. One sub-programme was oriented to production, for creating profitability in short production runs with consideration to low and flexible production rates. Another sub-programme implemented a new working procedure for logistics and stock management to reduce costs throughout the logistics stream. The third rationalisation programme concerned all overhead costs and surveyed all resource needs, as well as fixed and variable costs in the entire organisation.
Four of the sub-programmes were oriented to increased capabilities. One sub-programme concerned business and contract models. It was a matter of how business and contract models could be developed and adapted, based on the conditions indicated by the strategic business plan from a ten-year perspective.
The second sub-programme for streamlining implemented a new working procedure and system for change and configuration management of articles.
The third sub-programme was oriented to project efficiency to improve performance in conducting and managing product projects, as well as in handling quality issues in these projects.
The fourth sub-programme was oriented both to efficiency, and above all, to capability development in work with system development. It implemented a model-based working procedure for the development organisation. Entirely new working procedures were created here that radically reduced lead times and increased quality and delivery precision.
One sub-programme was directly oriented to work with partners and suppliers. Major changes and improvements were made here to supplier agreements and the forms for supplier collaboration. This ensured future delivery capabilities for purchased articles with high economic or strategic value. The programme also encompassed activities for risk minimisation and for handling obsolescence of purchased articles.
The results of the Gunder Programme contributed to reducing costs at the business area and even enabled the creation of a financial solution that permitted the Swedish Defence Materiel Administration (FMV) to place a development order for the Gripen Demo. There was thus a two-pronged effect with the save-to-invest concept that benefited both the FMV and Saab. Saab was able to enhance its system development capabilities, and the administration received a technology demonstrator and a more effective supplier without contributing new funds.
In the long-term, the Gunder Programme contributed to a cost reduction of about 35 percent in relation to a nominal value defined in 2009. The project also achieved considerable risk minimisation for handling obsolescence of purchased articles.
This text is based on interviews with representatives of state and authorities.
This narrative presents an overview of a few important incidents and events that influenced Swedish defence policy and which resulted in new conditions for the state and industry.
A brief summary is also given of how defence capability planning influences the actions of the Swedish state and industry. The connection to the aviation industry is specifically described as well as how the state, through the Swedish Defence Materiel Administration (FMV), has steered the development of defence and industrial capabilities in this area.
The narrative concludes with viewpoints from the author and a representative from the State on the important conditions for actions of the Swedish state and industry within defence.
For many decades, the Swedish government and industry have shared the belief that cooperation promotes industrial progress. This conviction paved the way for a prosperous Swedish export industry, particularly with respect to the Swedish defence industry.
The Swedish stance on defence policy had a solid foundation prior to the fall of the Berlin wall, which meant that Sweden would remain unaffiliated during peacetime and would eschew political-military partnerships such as military alliances in favour of neutrality in times of war.
Owing to the fact that the Swedish Armed Forces placed rigorous and specific demands on operational defence capabilities for many years, the defence orders submitted to the industry have developed and become very advanced and unique.
This has resulted in success with regard to the challenging militaristic operational requirements necessary and invaluable for a country in the Baltic region.
Swedish defence capability planning has been carried out in accordance with 15-year perspective plans. The main focus in these plans is on assessing security policy positions and, based on this assessment, defining the focus on the capabilities required by Swedish defence.
Examples of some particularly important defence policy considerations that have steered the focus of, and which proved exigent for, Swedish defence since the Second World War are:
Strategic investment in Swedish defence began in 1936 when it was determined that having an air force was a strategic resource for Sweden. At the end of Second World War, Sweden invested heavily in defence and in order to create a domestic materiel supply.
A few examples of these initiatives included:
The Army was supplied with special vehicles with load bearing capacity that could cope with difficult ground conditions, e.g. mires, which are frequently found in northern Sweden. Investments were made in developing special armoured vehicles and personnel carriers adapted to Swedish terrain. Rocket-propelled grenades were developed to arm mobile infantry which could effectively repel armoured troops.
The Navy developed combat boats especially adapted to Swedish skerries and archipelagos. Submarines were developed which had unique engine designs. These could operate underwater for extended periods and were also adapted for the specific and turbid water conditions existing off the Swedish coast within the Baltic region.
The Air Force received an aircraft type during the 1950s that could effectively combat nuclear-armed enemy aircraft. Since then, the Air Force has received advanced air combat capabilities able to match and repel all conceivable attacks from the air.
Important Conditions for the Development of the Swedish Industry
An invaluable condition to the successful development that occurred in key sectors of Swedish industry was the past state involvement which led to investments in infrastructure.
One important incident significant to security policy decision-making was the grounding of the Soviet submarine U 137. This occurred along the Torhamnaskär coast in Gåsefjärden, approximately 10 km south-east of Karlskrona on 27 October 1981 and in close proximity to the Swedish Navy's most important naval base.
A second major incident was the intense submarine hunt in Hårsfjärden in 1982, outside the Navy's naval base in Muskö within the Stockholm archipelago. During this operation, mines were used for the first time, when it was realised that a foreign submarine was attempting to flee the area. The submarine hunt led to the government instating a so-called "Submarine Protection Commission".
These incidents would come to have significant influence on the political will to maintain a high level of Swedish defence during the 1980s until the fall of the Berlin Wall.
Later, "new winds would blow" within the area of defence. This resulted in appreciable changes to Swedish defence. After the shift from anti-invasion defence to operational defence which began in earnest at the close of the 1990s, ambition levels for Swedish defence changed dramatically.
Certain significant changes to Swedish defence capabilities were as follows:
Owing to the significant reduction of the defence budget and the fact that all the new weaponry required major investment, the defence budget was insufficient to cover all the desired system procurements. The Swedish Armed Forces therefore selected to focus on the most urgent defence systems. This meant the Army and Navy were forced to stand aside with respect to the investments that were later made within aviation.
The 1990s also constituted a breaking point in defence orders. The new defence procurement policy changed, which meant that, first and foremost, turnkey defence systems were to be purchased instead of developing systems suitably adapted to Swedish needs and conditions.
Pivotal to Swedish defence capabilities was the escalation of the Cold War and the tension existing in the Baltic region. Swedish strategy at that time was to have strong defence.
One can see how different political decisions comprehensively and drastically changed perceptions on Swedish defence and one can see how the direction changed over time. Prior to 1989, the basis was on full defence focused on anti-invasion defence. This included both civilian and military defence.
Various financial crises naturally had considerable impact on the shift in focus and perception on Swedish defence. Such economic episodes can be traced to 1991, 1996, 2000 and 2008, which impacted strongly on subsequent development.
From 1989 to 2000, the focus was on maintaining Swedish defence capabilities. From 2004 and 2009, the direction was focused on national operational defence with participation in international efforts within UN and EU frameworks.
After war broke out in the Balkans, requirements became more pressing to broaden analyses to extend beyond Sweden's immediate surroundings. Large streams of Balkan refugees made their way to Sweden and it became apparent that Sweden was now a part of Europe in another way than before. This had a clear impact and the course was changed from solely protecting Sweden's territory towards participation in international peacekeeping initiatives. It was determined at this time that there was no specific threat against national security policy towards Sweden.
A few partnerships involving Swedish participants did, however, arise. The pan-European Neuron project proved successful. There was also a degree of cooperation during the procurement of a new helicopter for Sweden (with Swedish designation - Helikopter 14). The project was plagued by myriad problems which resulted in delays in deliveries.
As part of the 2004 defence resolution, it was decided that a new version of the Gripen system would not be developed. All types of major development orders were expunged from the Swedish Armed Forces' materiel planning.
In 2006, the new centre-right Moderate-led alliance government drastically altered the view on Swedish defence and Swedish defence policy. Leading politicians in the government considered Swedish defence and the defence industry an oblique interest. This contributed to the continued reduction of the defence budget.
This was expressed in no uncertain terms on a number of occasions and became even more apparent during the 2007 annual political week held in Almedalen on the island of Gotland. The finance minister made it clear that the defence budget was to be drastically reduced, which eventually led to the resignation of the defence minister.
There has been renewed focus on Swedish defence since 2014, owing to Russian action in Crimea and eastern Ukraine, which resulted in increased attention and focus on the Baltic region.
A domestic defence industry is a prerequisite to a nation cooperating on an international level. The possibility to offer the requisite expertise must exist for a country to be seen as an attractive partner.
And to be able to cooperate in an international high-tech industry such as the defence industry, a country must possess strong domestic R&D capabilities. The capacity to adapt this capability industrially must also exist.
At present, national defence requires the utilisation of various societal capabilities. It is essential to have e.g. a well-established and functional training system able to respond to new demands for expertise.
An example of this can be seen in the requirements for an industrial company within the defence industry. Saab works continuously with the following:
A productive partnership has existed for a long time between the Swedish State (in the form of political governance through FMV), the Swedish Armed Forces, the Swedish Defence and Security Export Agency and Saab.
Saab is regarded by the Swedish state to be a strongly committed company possessing considerable innovative capability.
Saab, as a company, is a driving force in technology comparable to a university that educates and provides engineers with exceptional abilities in the field of technology. This includes specialists within various technological disciplines as well as the general knowledge acquired by engineers through Saab's operations. This provides a very broad spectrum of skills which are not only beneficial to Saab, but which prove invaluable when individuals transfer to other companies or other businesses.
The Swedish Air Defence Commission has repeatedly assessed the operational capacity of and threat towards Sweden, as well as the need for industrial competence within Sweden. Over the years, there has been substantial disparity in the reports from different defence commissions.
It is imperative that the Swedish aviation industry continuously works to develop new capabilities and expertise and that these are retained. A valuable way of doing this is to focus R&D operations towards the development of technology demonstrators which develop new technology and create new competencies while affording the state the opportunity to trial new methods to safeguard different defence capabilities. Technology demonstrators are also essential for maintaining and developing competencies conducive to improved defence systems, but which also advance Swedish development expertise with respect to technological systems.
Examples of some areas which will see the development of new capabilities include sensor technology, automation and robotics for future air combat systems. The use of bistatic radar will also be emphasised, as this technology is particularly suited to the development of new tactics to increase operational capability. Cooperation on small UAVs will then become important.
Owing to a pragmatic approach between the Swedish state and industry, a small nation such as Sweden has demonstrated that it is possible to drive the development of high technology while, at the same time, satisfying societal concerns for defence requirements.
The starting point for this was to jointly create added value for all parties.
The Swedish state has had a progressive and genuine interest in Swedish industry having a competitive capacity in general. This has also applied to the defence industry, which contributes advanced technological developments to society owing to various spillover effects. It is also important that industry cooperates closely with research institutes and academia.
The state and industry have played different roles but have had a common interest in managing these roles in a responsible manner in order to avoid conflicts of interest. They have worked in concert to ensure that the common interest lies in creating the greatest benefit for Sweden as a country and to ensure prosperous industrial policy.
Cooperation between the state and the defence industry has worked exceptionally well over the years owing to clearly defined roles which have allowed this partnership to work convincingly.
The aforementioned relationship resulted in the creation of the Swedish model.
Direct procurement can take place within the defence industry when all nations possess their own ability to protect their territories. This entails that every willing and able nation shall have the possibility to develop and manufacture the requisite defence systems domestically.
When the Swedish government assessed future air defence, the possibility of purchasing foreign aircraft was deemed essential as a way of maintaining a Swedish aviation industry.
In order to maintain a Swedish aviation industry, it was important to be able to retain skills deemed necessary for a new aircraft system throughout the operational life-cycle. The Swedish aviation industry was required to retain these skills over a long period of time. For this to be possible, a steady flow of development orders was required, otherwise skills would disappear along with the operational capabilities of the Swedish Air Force.
Consequently, industry was required to safeguard, to a greater extent than before, the requisite capacities and capabilities through its own efforts.
There had been a limited number of people involved in strategic decision-making in the political sphere and within government agencies, departments and the Swedish Armed Forces. This resulted in non-bureaucratic oversight of strategic issues with regard to the JAS project.
Owing to the existence of a legal framework for exports, there was also strong support for providing the Swedish defence industry with export support.
The JAS Industrial Group was required by government agencies to provide an annual summary of the results and finances within the JAS project. This information was then reported to the Swedish parliament on a yearly basis.
Through the Swedish Defence Materiel Administration (FMV), the state was afforded valuable insight into the defence industry. A level of transparency existed as an "open book" economically, technologically and operationally.
The open reporting on the JAS project also allowed the roles to be differentiated intelligently and clearly.
Antecedents to the decision to procure the Gripen system constituted two important standpoints:
After numerous investigations and a long and complicated political process, the decision was made to invest in Swedish alternatives. This allowed for the retention of skills within the Swedish defence industry.
Parallel to the decision on the Gripen system was an agreement between the state and industry which proved to be very progressive.
This meant that:
It became evident during the 1990s that a new form of cost-sharing regarding the JAS programme would be advantageous to the Swedish state as well as industry. The Swedish state was required to further develop Gripen as new technologies had emerged within strategic technological areas such as radar, sensors, avionics, countermeasures, etc.
Moving forward, sharing system development costs with other countries is vital to achieving a reasonable expense level for air combat systems.
Work tasks and business direction changes over time. The Swedish Armed Forces and the procuring agency, FMV, both have renewed focus on enhancing the operational capabilities within Swedish defence. In the past, there was also a major emphasis on technological solutions. This means that FMV can now focus upon public undertakings with the development of effective Swedish defence systems. FMV is therefore able to establish requirements for development assignments along with the associated commitments to industry.
Role distribution between FMV and the defence industry has become more apparent with a greater level of commitment from industry. Open and trustworthy forms of cooperation via integrated project teams provide optimal conditions for successful and effective operations pursuant to the Swedish model.
In relation to major development orders, the client enters into a life-cycle commitment applicable to products as well as the operational capabilities of defence systems. The client therefore commits to maintaining development resources with the requisite expertise. There is an enormous responsibility to keep these products and defence systems up-to-date and effective throughout their life-cycle. This entails major commitment to the Swedish state.
Swedish industry and Saab were required to create an investment initiative in order to develop new capabilities and to sell the Gripen system to other countries to ensure continued progress.
Two projects were initiated within Saab to further develop the Gripen system. One was sanctioned by the Swedish state and called for the further development of Gripen and the other project involved adapting Gripen for export, and was undertaken jointly with BAE systems.
Shortly thereafter, major advantages in coordinating these projects became apparent, which provided Sweden access to a new Gripen system adapted for NATO and allowing for cooperation with other countries.
Resulting from the valuable partnership with FMV, the export version and the Swedish development of Gripen was coordinated in a single project termed Gripen C/D.
This meant that two versions of the Gripen system would exist: Gripen A/B which was fully adapted to Swedish defence and Gripen C/D, which was essentially a modernised version and could be used together with other countries.
When looking at how FMV worked over the years with strategic capability development, a clear pattern becomes apparent. The entire Gripen system constituted a complete weapon system comprising aircraft, weaponry and ground systems alongside training and maintenance systems.
FMV has had a well-established strategy for the procurement of weapon systems. FMV has overseen development orders of the Gripen system in 3-year cycles, so-called editions.
This was done for numerous reasons. One reason was the fact that skills retention related to - and the development of - Weapon System 39 gradually and successfully became competitive over time. There was no need to wait several years to implement new capabilities. This also made it possible to steer capability development towards areas beneficial to Swedish air defence. This also contributed to having good control over expenditure.
Another major reason it was prescient to have 3-year cycles was that it allowed for the retention of the industrial development capabilities necessary for Saab. The Swedish Armed Forces and industry will be able to maintain full capability over the next 30 years.
This places considerable demands on maintaining all these capabilities over such a long period of time. Development within defence technologies therefore progresses at a rapid pace. This means that the Gripen system needs to continuously keep up with this development in order to remain modern, competitive and usable to Swedish defence.
FMV also benefits from the lessons gained in implementing shorter Gripen system development orders. In terms of planning, various capability requirements can be altered to better suit users as the Swedish Armed Forces' operational requirements and needs change over time.
FMV has been proactive in steering industry towards taking greater responsibility. The consolidation of responsibility for system capabilities has been shifted in a rational manner. Changes in the technical responsibility and system capabilities has afforded FMV increased room for business focus and business development which has resulted in a significant price reduction for FMV's customers while, at the same time, providing a superior product.
Success in the future requires effective cooperation with government agencies as well as new types of business models regarding supplier and customer financing.
When the time came to make decisions, in relation to procurement of the Gripen system, a very wise and strategic decision was made to maintain the unique capabilities of Swedish air defence. A specific economic framework was allocated to the Gripen system, which was termed the JAS framework.
The JAS framework provided a long-term economic standard for Swedish air defence. It provided stability from a long-term perspective so that one could plan which financial resources were available for different capability strengthening in the Gripen system.
FMV has previously led and driven the development of Swedish air defence in terms of purchasing competence and development expertise for complete weapon systems. A change took effect at the end of the 1990s which allowed industry to assume greater responsibility for the work involved in aircraft development. FMV focused instead on leading weapon system development.
This resulted in a long-term plan for Gripen systems being developed. This plan afforded a uniform fleet of aircraft, consisting of Gripen C/D. This plan came to be called F100, as the total number comprised 100 fighter aircraft. The decision was made in the middle of the 2000s.
FMV also oversaw development in order to increase operational capabilities by means of new tactical abilities, and new concepts for maintenance, data links, technological development, etc.
During the 1960s and 1970s, the AJ/JA 37 Viggen aircraft was the backbone of Swedish air defence. At that time, procurement took place via separate orders from different systems suppliers. FMV, at this time, served as a system integrator and had a great deal of expertise with respect to fighter aircraft and weaponry. This allowed FMV to procure systems in separate contracts for engines, radar, fuselages, etc.
FMV also had comprehensive testing operations and served as support for the verification and validation of the Viggen system.
This meant that FMV and the Swedish Armed Forces were required to make supplementary orders which resulted in cost increases. The Viggen system gained notoriety as an exorbitant industrial project.
In the 1980s, when the Gripen system was procured, the industry was required to take full responsibility for the development and production of aircraft, including major subsystems. This was a notable shift for all parties involved, but was a prerequisite to an agreement.
FMV managed agreements in separate contracts with various suppliers concerning maintenance systems, simulators and certain subsystems, etc.
Industry became a contracting party within the framework of the Industry Group JAS AB.
The Swedish parliament decided on a long-term economic framework for the whole JAS project, referred to as the JAS framework.
At this time, FMV still had good knowledge about the development of air combat systems and work was allowed to continue on subsystems which was deemed necessary. Notwithstanding the fixed price contract, subseries 1 did not produce valuable economic benefits for any of the parties involved. There were still certain rising costs.
During the1990s, a great change took place when regulations were introduced for Military Aviation (RML). This changed the system responsibility for the Gripen system at the weapon system level. Saab then took over production responsibility for the JAS 39 Gripen aircraft. FMV, however, assumed greater responsibility for aircraft verification. Budgetary changes occurred when the Swedish Armed Forces became responsible for materiel provision instead of FMV.
This meant that FMV retained customer orders from the Swedish Armed Forces with fixed prices and payment upon delivery. This allowed FMV to focus on a clearer customer role and comprehensive governance over finances and projects including management of advance payments, interest rates, milestones, etc.
These changes resulted in a sound model for all parties and did not involve any rising costs!
After the Gripen aircraft crash during a demonstration at the Stockholm Water Festival in 1993, there was a crisis of confidence in the Gripen system. After several investigations involving a political review of the project along with alternative solutions, the state reiterated its full confidence in the Gripen system.
The 2000s saw many changes, including the establishment of what was referred to as a type service for the Gripen system. Different kinds of orders were separated. One type of order entailed the maintenance of all the basic resources required for the Gripen system. Another type of order consisted of two development orders in the form of different editions being developed.
This resulted in FMV commencing with weapon system deliveries of Gripen C/D to the Swedish Armed Forces. At the beginning of the 2000s, after the Gripen system had been adapted for export, FMV signs the agreement with Hungary and the Czech Republic concerning the leasing of a number of aircraft. The new contracts also resulted in aircraft and several products being included under the same contract.
These contracts constituted development, production, operations and maintenance as well as an exchange programme for equipment-related maintenance units for three operators. Through FMV now having expanded its customer base, customers with new and different corporate cultures could also be dealt with.
FMV continued to keep certain systems in separate contracts for logical reasons, e.g. weaponry that industries were not permitted to purchase and which could only be purchased between states. These changes resulted in profits for FMV!
To complete the deal by Brazil, Saab has been authorized to deliver the entire weapon systems.
FMV stipulates a great many requirements in contracts with the industry, in this case with Saab and Gripen International. Gripen International is a jointly owned company involved in the marketing of Gripen for export. Saab's partner in Gripen International is BAE Systems. Owing to the investment in Gripen C/D, Saab could now sell aircraft to Sweden and for export.
It can be noted that various reasons existed for customer interest in the Gripen system. When the Czech Republic acquired the Gripen system, there was an interest in the total Gripen system and particularly in the unique, tactical expertise that had developed within the Swedish Air Force. The Czech Republic has fully understood and exploited this.
A diagram showing the basic development plan for a generic type Gripen.
Weapon System 19 was directed, to a greater extent, towards operational capabilities. Earlier system deliveries were more geared towards technical capability development. This meant that requirements for industry were now expressed in terms of capabilities, where capabilities covered all products in Weapon System 39, i.e. the aircraft, support systems, external loads, etc.
Changes with regard to rights of use for FMV also took place regarding the sale of capabilities to all customers, including Saab's customers. This resulted in a significant royalty increase for FMV due to Saab's sales to other customers.
Requirements from the Swedish Armed Forces were now expressed in terms of capabilities. FMV developed collaborative forms and risk/profit sharing principles with the industry. FMV also began working on architecture issues in a new way which was described as "system of systems".
New challenges arose during the sale of Gripen to Thailand.
In principle, this contract comprised an entire air force including the following:
The sale to Thailand entailed yet another new customer and a new corporate culture. The system FMV delivered to Thailand can be considered a "turnkey" system.
A contract was also entered into with Saab AB concerning all operation such as verification of the entire system in Sweden and Thailand.
This technology demonstrator was implemented with a single project management team instead of two. A new approach was also taken as a result of funding being received from many different stakeholders for the implementation of Gripen Demo. Funding came from subsystem suppliers, main suppliers, the state and prospective customers. Saab now focused on its core expertise which was the integration of the entire Gripen system.
Gripen Demo was a flying test platform for the next generation of Gripen and for the further development of existing versions. Gripen Demo was developed with new features such as:
The demonstrator programme would provide experience which contributed to risk reduction, shorter development times and lower costs in subsequent development programmes.
The investment in Neuron at the start of the 2000s was important for the European notion of consolidating the European defence industry, thereby becoming competitive with USA defence industries.
There was good cooperation at the ministerial level between Sweden and France. Relationships between governmental procurement agencies were also good. Swedish government agencies were represented by the Swedish Defence Materiel Administration (FMV) and French agencies by Direction générale de l'armement (DGA).
The Neuron project brought knowledge on unmanned aerial combat vehicles and provided extensive experience on employing new ways of working within Model Based Definition (MBD). The Avionics Demo project in Gripen Demo was the most ground-breaking for future system architecture. Comprehensive work involving systems integration was carried out effectively within the project.
From 1945 until the 1990s a consensus existed in Swedish politics stipulating that Sweden must possess strong defence. This defence should also contribute to industrial development and employment in Sweden. A very strong defence industry able to develop the defence systems required by the Swedish Armed Forces was of the utmost importance.
There was substantial societal support at this time, and high ambitions within social and industrial development. This created security in Sweden itself and resulted in respect for Sweden around the globe.
One of the fundamental ingredients in the context of defence was conscription, which served partly to create social discipline but also cultivated social commitment. At the beginning of the 2000s, a wave of change flowed across society at large and particularly within defence and the defence industry.
It dictated significant adaptability throughout society and specifically for the industry to be able to supply the solutions required within the framework for the new conditions that arose.
Because defence systems and, in particular, air combat systems are expensive, international cooperation between nations and industries became a necessity in order to have sufficient development capabilities and financial resources.
Knowledge about and the skill to develop advanced systems are just as important as the defence systems themselves. Funding these new defence systems places new demands on innovative business models.
Industrial capacity is contingent, first and foremost, on an intelligent approach, seeing possibilities, being innovative and having good business models. Furthermore, having a well-established approach to managing product and operational capabilities is also a prerequisite to being effective.
When the author analyses and considers the driving forces behind a strong Swedish defence, one can divide them into four main areas:
It describes a number of important prerequisites to creating a successful defence industry and what is relevant in terms of politico-security.
Prosperous defence industries always have numerous successful projects and products as a base for their progress. These products have not come about by chance, but have invariably been the result of deliberate efforts to resolve specific tasks related to defence.
When studying successful projects it is possible to identify several criteria, prerequisites and incidental effects which characterise these projects. When studying failed projects it has also been possible to subsequently identify the failure to achieve one or more of these characteristic aspects.
The following points outline a few successful defence projects that have been studied (probably other major projects as well).
As is evident by the list of criteria and conditions, correct and professional interaction between the state and industry has been pivotal for the achievement of success. This is applicable to all countries that have developed advanced military products.
For Sweden, however, certain distinctive features can be noted which have influenced development in a specific direction.
Our policy of neutrality and non-alignment has resulted in us undertaking a monumental task, which has been very asymmetric.
We have therefore chosen to utilise technology as a tool to confront overwhelming threats and greater forces with smaller but more intelligent strengths. To achieve intelligent solutions, we decided to build up all the necessary structures ourselves; intelligence services, study departments, case departments, development departments, testing facilities, production resources and maintenance services - a power structure in miniature.
Task sharing between the state and industry has been accomplished in a pragmatic manner where the state has, among other things, been responsible for collaboration with other countries and the industry was tasked with marketing and selling the products overseas.
Insightful dialogue could be engaged in with all parties involved as well as with counterparts abroad and colleagues and experts at home.
Issues that have been discussed based on somewhat common values have involved technology provision, capability and product needs and industrial, structural and collaborative questions.
A prerequisite has also existed necessitating that the state assume responsibility for the planning and funding of major projects.
The common values in our nation's defence and defence industry among all stakeholders from politicians at the top to the capable and educated workers within the industry, and to the competent conscripts in units, have allowed for the export of manufactured products and the development of partnerships at the political and governmental levels.
The level of technology and the homogeneous manner in which all stakeholders have conducted themselves has cultivated an understanding of Sweden's products abroad which, in turn, has resulted in Sweden being perceived as relevant from a politico-security standpoint. Our voice has had an impact and our perceived capabilities have often led to us assuming a professional, leading and, sometimes, mediating role in civilian, military and technological concerns on an international level.
This section describes how new approaches can be used to speed production optimisation by using modern working procedures. Also described is how added value can be created for customers who want to further develop both their own and their country’s capabilities.
Saab presently has expertise in 14 fields of technology with a great many different engineering disciplines. This expertise constitutes the foundation for development, production and flight tests, both for military fighter aircraft and entire weapon systems. Over the decades Saab has remained at the leading edge when it comes to technology and is a world-leading supplier that develops and produces advanced military fighter aircraft and other airborne platforms.
Being able to both develop and produce is essential for long-term capability development – you cannot develop unless you know how to produce. And you cannot produce unless you know how to develop. These capabilities are in constant symbiosis, dependent on one another.
With its depth and breadth in all fields, Saab can also support customers and partners in achieving their goals in developing and creating new capabilities. Saab can provide both advanced products and expertise. Gaining the expertise in the 14 fields of technology necessary for developing advanced military fighter aircraft has entailed substantial investments in time, capital and skills development.
Saab can provide solutions ranging from advanced courses with training in actual development and production environments, to work packages designed to create added value for the recipients.
Producing advanced military fighter aircraft in a cost-effective manner can be accomplished in many different ways. Looking at final assembly tasks, these are normally performed after the various components have been joined together into a complete aircraft. This can entail, for example, that the wings are already in place when final assembly begins, which can mean installing wiring and mechanical parts while working under the wings. This necessitates awkward and demanding working positions for aircraft assembly workers. Most spaces in a military aircraft present similar problems, such as when installing fuel tanks in fully assembled aircraft.
The figure shows final assembly with the traditional approach.
But by using a modular approach, many tasks traditionally performed during final assembly can be completed beforehand. With this approach, modules are constructed from substructures that can be positioned vertically or even pivoted while work is underway, not only optimising the working environment but also significantly shortening throughput times. This entails that component installation is either fully or partially integrated when joining the major structural components into a complete aircraft.
Moreover, both availability and accessibility are substantially increased for operators. Improved production quality, shorter lead times and lower production costs (recurring costs) are also gained in comparison to when installation is conducted during a later phase, when the aircraft is nearing completion. An improved working environment is also achieved.
The figure shows structural components ready for final assembly with the modular approach.
Being able to offer customers added value in addition to the actual aircraft is essential. An example of this type of added value is the development of various types of capabilities. Such capabilities can concern development of expertise for users, industries or universities.
Being able to offer capabilities to produce one of the world’s most advanced aircraft to new customers is presently limited to aircraft design and its current production concept.
With existing working procedures in final assembly, industrial collaboration cannot be offered that includes production of smaller integrated modules and installation. This is because the various structural components are first joined into a complete aircraft and the systems are installed afterwards.
An aircraft is simply too large to transport once all the major structural components have been joined together into a complete unit, and there are no financially viable logistics solutions.
If smaller modules are offered instead for installation, the products can be adapted to customer needs. This also enables various forms of technology transfer, with customers being offered solutions based on what they need. This entails that added value can be created both in offering an aircraft that includes a complete weapons system and capabilities that are designed based on customer needs.
The figure shows structural components ready for final assembly (including a complete aircraft) with the modular approach.
A model is shown below in the form of a learning curve that is used to plan production of new products. This model is based on an international standard used by all companies in the aircraft industry. As defined in the model, 180 units must be produced before the product is optimised and fully understood.
The learning curve concerns all steps in producing a product based on among other things, the time it takes for operators to learn the product. Many other steps are also included in the learning curve, such as utilisation of drawings and requirements in creating an optimal working procedure for a given task, as well as optimising tool chains and logistics, etc.
Because aircraft manufacture can involve fairly long cycles before a task is repeated, it takes quite some time before 180 units are produced.
The learning curve for manufacturing new products has been used by Saab since the 1950s.
The figure shows the internationally recognised learning curve for aircraft production.
By virtually creating and designing aircraft and tools in a 3D environment, very effective value streams can be obtained throughout the development and production chain. Designers, production engineers and operators are able to identify collisions, verify access and optimise tools and production streams at an early stage of development, before the hardware is manufactured.
New personnel can be trained in the production of all new products by first learning to repeatedly build the space virtually before the hardware is physically available. They learn the production process and gain familiarity with the spaces, tools and materials that are to be assembled or installed.
Learning can be significantly more efficient in regard to both time and cost. The virtual environment can also be used to continuously improve and develop processes and methods. The purpose is to reduce lead times, lower production costs and consequently ensure and improve production quality, etc.
Flexibility in how and where operators are trained is also substantially increased. Capabilities for training operators, technicians and support staff is not as dependent on hardware location. Training can instead be largely conducted in a virtual 3D environment. This can be compared to training of new pilots, where simulators have now replaced what previously required training in actual aircraft.
With the Gripen E, Saab will have a learning curve of 30 units.
The figure shows Saab’s learning curve for future production of aircraft.
The following examples illustrate how the modular approach can be applied in practice to create future customer solutions.
The examples encompass three scenarios for customer needs, along with possible solutions for these scenarios. With a modular and flexible approach, customer values can be increased through close collaboration with the concerned stakeholders.
A leading manufacturer in the aircraft industry in country X is a recognised supplier of composite structures to major manufacturers in civil aviation. The company is presently a “build-to-print” supplier but has a vision of advancing up the value chain. In the future, the company wants to become a “design-to-built” supplier of integrated composite structures, including installation and systems.
The country's air force will be conducting “front and back” maintenance of the Gripen and the customer does not see the point of conducting final assembly of the aircraft in the country. The number of aircraft purchased is relatively small in comparison to the costs entailed in building up the requisite production capabilities. There is however, a need to develop a lighter and less expensive stabiliser since the present design does not meet the customer's requirements profile.
The preference is for technicians and support personnel to conduct final assembly of the aircraft at the customer site. Knowing which processes, methods and tools that are used is necessary for being able to maintain and repair the aircraft in the best possible manner.
By using the on-the-job training method, experienced Saab staff can teach personnel from the new industrial partner how to use processes, methods and tools for developing, designing and producing an integrated structure for installation as well as for systems in the stabiliser.
The customer's air force sends technicians and support personnel to Saab to participate in final assembly of their aircraft. There they can work in the process with methods and tools together with experienced Saab personnel in final assembly of their own aircraft.
By utilising Saab's capabilities and expertise, a complete solution has been created that satisfies the customer's requirements and the industry's expectations, but without Saab sacrificing its own capabilities. The customer receives added value in being able to train in all aspects of final assembly at Saab.
The blocks in the figure indicate training packages for participating customers or industries at Saab.
The new customer in country Y needs 30 aircraft. Due to the new configuration stipulated in the customer's requirements specification, Saab needs to redesign certain parts of the rear section because a partially new engine and new APU are to be integrated. New materials, components and systems will also be developed, integrated and adapted to production. The customer wants to develop own capabilities, and to a certain extent, wants to be able to integrate new systems in the aircraft.
Industry in the country has some of the necessary expertise for this, but the capability is lacking for managing and executing a complete solution from development and design to production.
The air force wants technicians and the support organisation to have knowledge of final assembly of the aircraft in order to optimise maintenance and repairs, and also wants to be able to paint and deliver aircraft in the country to maintain and assure expertise.
Saab gathers the new industrial partners designated by the customer and starts a joint development project.
Saab is responsible for assuring that technology transfer to the industry is performed within certain areas, including capabilities for managing and executing complex and cross-functional projects. Technology transfer is initiated through courses and on-the-job training at Saab, and later transitions to various work packages.
Industry in country Y gains the opportunity to develop, design and produce their own rear sections, which is an entirely new capability.
Through training of its personnel in final assembly at Saab, the air force gains deeper and sounder knowledge and experience of the product. Furthermore, the air force is also responsible for painting of the aircraft in the country.
By offering a complete solution with the provision of skills, capabilities and products, Saab can give industry in country Y added value through new capabilities that would otherwise have been difficult and time-consuming to obtain. Capabilities that the industry can use to create added value in the form of new business and larger markets with other products, without Saab sacrificing its own capabilities.
Red blocks in the figure indicate work packages and what is done by the receiving customer or industry. The blue blocks in the figure indicate training packages for participating customers or industries at Saab.
The new customer in country Z needs 80 aircraft. Moreover, there is a clear requirements specification calling for the customer being able to develop and integrate new systems, primarily with regard to communications, links and sensors, since these are unique for the new customer.
The customer also wants industry in country Z to have the capabilities to independently maintain and repair critical components and systems in the aircraft, as well as peripheral equipment. Additionally, it has been clearly stated that the aircraft must largely undergo final assembly and be delivered in the country to assure expertise for future upgrades. The customer also wants to develop the country’s industrial and technological capabilities.
A new development assignment is started by Saab and industry in country Z. Work is initiated by Saab to gain access to and proximity to the concerned areas of expertise, processes, methods and tools. Work is gradually transitioned to various work packages in which the industry is given responsibility for delivering complete solutions in the form of development, design and production, as well as delivery of finished products.
The customer and industry gain a unique complete solution regarding capabilities to develop and integrate own systems, but also capabilities for manufacture, fabrication and final assembly of their products and aircraft.
Together with the customer and industry in country Z, Saab also initiates cross-border academic collaboration. This collaboration involves universities, technical institutes and industries. The goal is to jointly develop and establish knowledge of future development for new platforms and products.
Through Saab's expertise, capabilities and products, as well as collaboration with universities and technical institutes around the world, Saab can offer a complete solution that satisfies the requirements for development of the country’s industrial capabilities and becoming independent in the future.
This is added value that has been created for the customer in the form of new products, capabilities and services. Through collaboration with new partners in new markets, added value has also been created for Saab, which as a result of new collaboration in country Z, can develop new business models.
Red blocks in the figure indicate work packages and what is done by the receiving customer or industry. The blue blocks in the figure indicate training packages for participating customers or industry at Saab.