Many countries around the world have formal requirements and regulations in place which relate to industrial cooperation.
“Even countries that don’t have such formal requirements often want Saab to contribute to their industrial development,” says Anders Edlund, Director at Saab Industrial Cooperation. “In some cases it involves increasing exports, in others it is purely a matter of security – they want to be able to maintain and upgrade the system they have purchased from us.”
The most recent major business deal is Brazil’s purchase of 36 Gripen aircraft. The contract stipulates a number of requirements for industrial cooperation, including the training of Brazilian engineers and workshop personnel. By the end of 2024, more than 350 individuals from the Brazilian Air Force and Saab’s business partners will have taken part in training courses in Linköping, Sweden.
The contract also includes a new hub for technology development and flight tests, which was inaugurated at the end of 2016. A local production facility will be built, and the assembly process at the site is set to begin in the early 2020s. In addition, various research projects are being conducted jointly with the Brazilian Air Force.
Analysis before agreement
When making such an extensive commitment, Saab undertakes a comprehensive analysis of the country concerned before considering entering into an agreement.
“You have to understand the country and its conditions, its driving forces and development potential,” says Edlund. “We want to be able to create something that offers good value for both the customer and for Saab.”
It can sometimes be challenging to agree on the value of the different elements of cooperation. It’s easy to determine how much it costs to build a production facility, but harder to place a value on the transfer of technology.
“We have a model for valuing the transfer of knowledge and we are clear about that there is an associated cost,” says Edlund. “Then it’s a question of agreeing with the customer about the possible scope and the value .”
Extended supplier base
Saab derives benefits from industrial cooperation in several ways. Firstly, cooperation is often a prerequisite for clinching a deal. Additionally, the company then becomes well-known in the country concerned, which can also be of benefit in other business transactions. Saab can also extend its supplier base and gain valuable feedback through the exchange of technology.
“In the case of Brazil, we’ll also gain an additional production line that will increase our capacity and flexibility,” Edlund says.
Over the years, Saab has entered into various levels of industrial cooperation with a number of countries. In South Africa, cooperation has resulted in Saab having a significant operation in the country and in it being able to extend its product portfolio through electronic company Saab Grintek Defence. In India, the company plans cooperation in areas such as advanced ground-based air defence systems and Gripen, which is now on the agenda for India’s forthcoming procurement of combat aircraft.
“If we get the business, there will also be very extensive cooperation there, too,” says Edlund. “India wants to increase its level of defence production, which requires proper development of the industry.”
3 customer benefits from industrial cooperation
- Increased technological competence in the customer country’s industry
- Future upgrades of the aircraft fleet can be done domestically
- Door-opener for new products and services for the defence market