Epicos 2016 Special Focus: Finland Volume 8 Number 04 – Wednesday, 27 January 2016 Part I: Finland 1. Finland: Future Defence Budget and Procurements 2. Finnish Defence Industry: Main Competences & Total Turnover 3. Epicos “Industrial Cooperation and Offset Projects” 4. Advanced Fiber Optics Cable Repair System 5. Comprehensive military shooting training system based on optoelectronic technology 6. News from our A&D Business Network Part II: Epicos Newsroom 1. ESA selects Airbus Defence and Space for two new Sentinel-2 satellites 2. Rockwell Collins technology aids in historic first KC-46A tanker refueling flight 3. SAAB Receives Order from EDA for Carl-Gustaf Ammunition 4. First China Airlines A350XWB takes shape in Airbus’ Final Assembly Line 5. Rheinmetall creates Europe’s leading producer of military vehicles © Epicos Informational Services Page 1 Epicos 2016 Special Focus: Finland Finland: Future Defence Budget and Procurements Finnish defence budget for 2016 is estimated to reach, according to the country’s authorities, 2886.3 million Euros, significantly augmented (227.5) compared to the 2015 defence budget. This is mainly a result of postponing the payment schedules of some earlier materiel projects. From this amount the biggest percentage, will be used to cover the payroll of the defence forces’ personnel, accounting for 783.5 million Euros (approximately 27.1% of the country’s defence budget), slightly decreased compared to 2015, when it reached 793.4 accounting for 29.8% of total defence budget. Operational expenses and procurement of materiel follow with 701.6 (accounting for 24.3% of the total budget) and 544.7 million (accounting for 18.9% of the total budget) respectively. Defence Budget 2014-2016 Procurement of Materiel (Excl. VAT) Payroll of the Defence Forces Upkeep of Conscripts (excl. salaries) Real Estate Expenditure Other Operational Expenses Military Crisis Management Cost of VAT Other Administrative Expenditures Total 3500 2950 2886.3 2900 3000 2850 2500 2800 2000 2750 2670.8 1500 2658.8 2700 2650 1000 2600 500 2550 0 2500 2014 2015 2016 2014 2015 2016 € Mil. % € Mil. % € Mil. % Procurement of Materiel (Excl. VAT) 427.6 16% 416.8 15.7% 544.7 18.9% Payroll of the Defence Forces 847.4 31.7% 793.4 29.8% 783.5 27.1% Upkeep of Conscripts (excl. salaries) 161.3 6% 172.5 6.5% 173.3 6% Real Estate Expenditure 249.6 9.3% 250.3 9.4% 259 9% Other Operational Expenses 605 22.7% 626.9 23.6% 701.6 24.3 Military Crisis Management 57.3 2.1% 38.6 1.5% 36.6 1.3 Cost of VAT 298.1 11.2% 335.2 12.6% 367.4 12.7 Other Administrative Expenditures 24.5 0.9% 25.1 0.9% 20.2 0.7 Total 2670.8 € Mil. 2658.8 € Mil. 2886.3 € Mil. Source: http://www.defmin.fi The prime goal of the Finish Defence authorities is to promote the security of Finland and to support the decision-making of the government. This goal is reinforced and materialized through the augmentation of the defence budget. We should not fail to notice that when © Epicos Informational Services Page 2 Epicos 2016 Special Focus: Finland expressed as percentage of GDP, Finland’s defence expenditure has not fluctuated significantly since 2003. For the period 2003-2016 on average, Finland allocates 1.35% of its GDP on Defence. Defence Spending 2003-2016 3500 1.8 1.6 3000 1.54 1.46 1.4 1.41 1.371.4 1.34 1.34 1.37 2500 1.32 1.32 1.27 1.3 1.29 1.18 1.2 2000 1 1500 0.8 0.6 1000 0.4 500 0.2 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Defence Spending (€ Mil.) Defence Spending as (%) of GDP Source: http://www.defmin.fi One of the most important procurement programs Finland is going to carry out in the following years is “Squadron 2020”. Under this program the country will replace six surface vessels (including Rauma-class fast attack missile crafts and Hämeenlinna-class minelayers) that will become outdated by mid-2020s. Additionally, Finland is planning to replace the Air Force F/A-18 aircraft, which will be decommissioned as of 2025, with a multi-role fighter. The final decision for the aircraft that will replace F/A-18 will be taken in the early 2020s. Kyriazis Vasileios, Epicos Newsletter Head Editor © Epicos Informational Services Page 3 Epicos 2016 Special Focus: Finland Finnish Defence Industry: Main Competences & Total Turnover Finnish aerospace, defence and security industry is small but agile and highly competent. The industry’s know-how is mainly focused on the domains of logistics, armored wheeled vehicles and turreted mortar systems. It is also extended to dual-use products, various sensor solutions and C4I. More on that Finnish companies have great competences with cyber and information systems. Throughout the years the Finnish aerospace, defence and security industry has created an outstanding competitiveness in Europe and even worldwide in the production of the above-mentioned weapon systems. The Finnish defence, aerospace and security industry is represented by the Association of Finnish Defence and Aerospace Industries (AFDA). AFDA has approximately 100 member companies. The total turnover of AFDA members was approximately 1.2 billion Euros in 2014. Exports represented approximately 48% of total turnover. Moreover AFDA’s member companies are responsible for approximately 5500 jobs. Finally, it is worth mentioning that Finish defence, aerospace and security companies invest significantly in R&D (15% of turnover for 2014). Exports and Domestic Sales Source: http://pia.teknologiateollisuus.fi With a few exceptions, Finnish defence, aerospace and security companies are privately owned SMEs. Kyriazis Vasileios, Epicos Newsletter Head Editor © Epicos Informational Services Page 4 Epicos 2016 Special Focus: Finland Epicos “Industrial Cooperation and Offset Projects” Epicos “Industrial Cooperation and Offset Projects” provides a unique set of online tools enabling the structure, identification and implementation of comprehensive Offsets programs, through a searchable database. By introducing different offset projects and ideas proposed by local A&D industry it ensures the optimum cost for Prime Contractors and reassures that the priorities of local industry are fully met… For Further Information Press Here Advanced Fiber Optics Cable Repair System A company specializing in high-precision optical passive devices, equipment and fiber optic network systems, in the frame of an offset program, is proposing collaboration with a foreign company active in fiber optic equipment sales and/or manufacturing, in order to act as a local representative for its Advanced Fiber Optics Cable Repair System. For Further Information Contact our ICO Department Mail at: [email protected] Comprehensive military shooting training system based on optoelectronic technology A company specializing in the design and manufacture of optoelectronic devices, for a wide range of applications, is proposing the implementation of a small arms shooting training system for armed forces. The system will comprise of training management facilities, training methods, related equipment and software, for indoor and outdoor facilities (basic, range and field shooting). The system design caters for a progressive method that provides further instruction for training personnel and covers the complete range of small arms. For Further Information Contact our ICO Department Mail at: [email protected] © Epicos Informational Services Page 5 Epicos 2016 Special Focus: Finland News from our A&D Business Network Airbus Helicopters maintains civil market lead and sees commercial success for new products in 2015 During 2015, Airbus Helicopters delivered 395 rotorcraft from the company’s civil, parapublic and military product lines, strengthening its leading position on the civil & parapublic market while maintaining its share of the worldwide military market. Meanwhile, the company booked 383 orders – adjusted to 333 due to contract amendments for governmental NH90 and Tiger helicopters – with a strong performance of the new-generation medium H175. Demand remained steady for the H135 and H145 family of light twin helicopters, with bookings levels exceeding the company’s targets for 2015. “We are now harvesting the fruit of our strategic transformation plan that puts us in the best position to operate successfully despite a challenging market environment”, said Guillaume Faury, President and CEO of Airbus Helicopters. “Our focus on customer satisfaction, quality and safety, as well as competitiveness has produced tangible results on our journey to go from the biggest to the best and to become the benchmark of the helicopter industry”, he added. Highlights of last year include a strong commercial performance of the 7-ton H175 with 36 units booked, exceeding the company’s objectives for 2015. The gross order book of the H175 is now up to 101 units after being endorsed last year by several key oil & gas operators despite the low price of the barrel impacting them. Operated by NHV since December 2014, the H175 has achieved 2000 flight hours with a high level of availability thanks to the work done to improve maturity at entry into service. A first order for the public services variant was also placed in 2015 by Hong Kong operator GFS. “The focus on our customers is resonating well with them as external surveys are now placing Airbus Helicopters in second position for customer satisfaction” explained Guillaume Faury. “In 2016 we will maintain our efforts to implement improvements for the benefit of our customers, and providing them with high-performing and reliable aircraft for their demanding missions,” Faury explained. “In this challenging environment, we are also preparing the future – the H Generation – embodied by the H160 and the X6,” he added. In 2015, Airbus Helicopters successfully launched the flight-test phase of the new H160 medium helicopter, the first member of the “H Generation”.