Sweden's Goals Fuel Saab's Acquisitions

Defense News 04/21/2014 Copy Reduced to %d%% from original to fit letter page

SPECIAL REPORT TOP US R&D PROGRAMS 9 Defensewww.defensenews.com News April 21, 2014 Hunt for Airliner EUROPE Sweden’s Goals Fuel Saab’s Acquisitions New Finmeccanica CEO Shows Limits of Observers wonder if new leader of Italian defense giant will Australian Shipyard Is Another Possible Target change plans to drop transport Satellite Imagery By GERARD O’DWYER group. Page 18 By ANDREW CHUTER 15 Turkey: New procurement chief. HELSINKI — The Swedish government’s drive to rebuild core nation- KUALA LUMPUR — The big question NORTH AMERICA al defense capacities is pivotal to on the minds of industry execu- Saab’s ambitions to develop a com- tives and others attending the De- petitive submarine branch and be- fense Services Asia (DSA) exhibi- come a major global player in this tion in the Malaysian capital last segment, government and compa- week was what effect the crash of ny insiders say. Flight MH370 would have on de- Saab is reportedly close to agree- fense spending priorities here. ing to a takeover price with Thys- The disappearance of the Malay- senKrupp for shipyards operated sian Airlines Boeing 777 in the by the German group’s subsidiary, PH2 PATRICIA R. TOTEMEIER/US NAVY southern Indian ThyssenKrupp Marine Systems Eyes on Sub Market: The Swedish diesel-powered attack submarine Götland and others Reporter’s Ocean is posing (TKMS), in Malmö, Karlskrona and of its class were built in Sweden by Kockums, now part of ThyssenKrupp Marine Systems. notebook: questions about African Presence Muskö, Sweden. Stockholm supports Swedish company Saab’s move to buy the former Kockums from its More DSA news. the country’s mili- US troops find deeper, more The acquisition of TKMS’ yards German owners. Page 12 tary capabilities to complex involvement in African is fundamental to Saab’s quest to track and search mission. Page 4 acquire the design and construc- a vital component to Saab’s pursuit aggression in Crimea and the Uk- for even civilian aircraft, let alone tion infrastructure it needs to se- of an international partner, said raine, has decided that a strong in- potentially hostile military targets. 15 US: Controlling F-35 costs. cure state contracts ahead of Peter Hultqvist, chairman of the dustrial defense capacity that is Malaysian Defence Minister Da- taking over the A26 Next Genera- Swedish parliament’s Standing Swedish-controlled will be the cor- tuk Seri Hishammuddin Hussein ASIA & PACIFIC RIM tion Submarine and Götland-class Committee on Defense (SCD). nerstone that underpins defense has already pointed to the need for fleet modernization programs for a “The wheels have turned,” Hultq- policy and future capability.” surveillance improvements and a cost of $3.5 billion. vist said. “The government, possi- The government’s view is that a review of the country’s ground- Capacity acquisition will also be bly in response to Russia’s See SAAB PLANS, Page 7 based air radar capabilities follow- ing the aircraft’s disappearance. “I think not only Malaysia but the whole world should relook at their defense needs, capacity and capa- US Ship Study Likely To Favor Existing Designs bilities in the context of MH370,” Indian AWACS Dispute he told a press conference as the Air Force, state research organi- By CHRISTOPHER P. CAVAS the proposals might have their best Defense Secretary Chuck Hagel to show opened April 14. zation clash over acquisition of chance yet — as the choice to suc- cap purchases of ships built to ex- The Malaysian government will radar system. Page 14 WASHINGTON — Ships that look ceed the LCS as the US Navy’s next isting LCS designs at 32, and requir- likely get the chance to discuss like littoral combat ships (LCS), small surface combatant (SSC). ing the Navy to evaluate the future MH370 and wider defense and se- INTERVIEW but are armed with SM-2 surface- More than a decade of controver- of its SSC efforts. What’s needed, curity issues when US President to-air missiles, bigger guns and Ae- sy has dogged the LCS program. he said, is “a capable and lethal Barack Obama visits this week as Tomasz gis combat systems. A gray-hull pa- Although most cost and schedule small surface combatant generally part of a tour that includes Japan, trol frigate that takes the hull of a issues have been solved, critics consistent with the capabilities of South Korea and the Philippines. Siemoniak white US Coast Guard cutter and still shower officials with now a frigate.” The results, Hagel said, Obama is the first US president Poland’s defense increases its combat power. years-old complaints, even though could be modified versions of ex- to officially visit this moderate minister dis- With an eye to the international the program is largely on time and isting designs, a new design or con- Muslim nation since Lyndon John- cusses the future market, shipbuilders Lockheed on budget. Many critics decry the tinuation of the current ships. son in 1966. path for NATO, his interest in Martin, Austal USA and Hunting- absence of permanently installed The Navy formed a nine-member The hunt for answers to any mil- seeing a greater US and allied ton Ingalls have worked to develop weapons, preferring instead more Small Surface Combatant Task itary shortcomings resulting from presence in Poland, and military more heavily armed versions of heavily armed ships. Force (SSCTF) in mid-March to MH370 is in full swing. Like the upgrade and acquisition plans. ships already in production for do- Those complaints, in many ways, perform the review. The results, search for the airliner itself, the Page 22 mestic customers. Now, ironically, lie behind the Feb. 24 decision by See SMALL COMBATANT , Page 16 See LIMITATIONS, Page 6

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www.defensenews.com April 21, 2014 DefenseNews 7 WORLD NEWS

rines and the Australian Service Aussie DEFTECH SAAB PLANS Life Extension Program (SLEP) Connection: From Page 6 From Page 1 for its six Collins-class boats in the Royal same time frame. Australian Navy DEFTECH has its eye on produc- Swedish-controlled submarine ca- Saab and ASC constitute natural Collins-class ing composite products for the pacity is the best means to release partners, Carp said. subs Boeing F/A-18 Hornet fighter, Bell TKMS’ (formerly Kockums) dor- Defense cooperation, including Dechaineux, UH-1Y utility helicopter, AH-1Z at- mant potential to produce world- collaboration on submarine capa- Waller and tack helicopter, the Saab 2000 class subs and surface naval ves- bility, was discussed when FMV of- Sheean sail in ERIEYE airborne early warning sels. It will also enhance Sweden’s ficials visited Australia in recent formation and control aircraft and Gripen ability to pursue international con- months. Japan is also exploring co- during a 2013 fighter. tracts, such as Australia’s pro- operation with Australia. exercise. The Saab confirmed that it is working posed $37.5 billion Future Collins subs on a deal with DEFTECH on the Submarine program, Hultqvist Troubled Relationship are based on a Gripen. said. The emergence of Saab as a glob- Kockums At DSA, Bell Helicopter Textron Anders Carp, senior vice presi- al player in submarine production design. and Malaysia’s DEFTECH signed a dent and head of Saab’s Nordic and would not be possible unless the “letter of expression of interest” on Baltic market area, said that the company had the “wholehearted ROYAL AUSTRALIAN NAVY April 16. Bell Textron sources indi- company is looking to increase its support” of the Swedish Cabinet, cated the letter would best be de- presence in Australia and has not said an insider at FMV. ThyssenKrupp’s original interest reasonable Swedish solution, but scribed in the West as a ruled out bidding for the Aus- “Soon after ThyssenKrupp in acquiring Kockums was to “gain it is not a good European solution.” memorandum of understanding to tralian sub-builder ASC. bought Kockums in 2005, there control” over a competitor on the A Saab takeover, she observed, “seek collaborative projects and “We are impressed by the compa- was a sense that the state had submarine market, one German would only further delay much- look for opportunities here in Ma- ny [ASC]; they have built up a very missed the opportunity to safe- naval analyst said. needed industry consolidation laysia.” good business there, both with guard submarine building in Swe- “Now there will be a competitor across the European naval sector. “We are looking at what they are submarines and the Air Warfare den,” the FMV insider said. “These on the market again, which is not Other European countries, said doing in their aerospace industry Destroyer. But we need to look fears intensified when Kockums’ under control,” he said, adding that Balis, could use the Saab-Kockums and see where the fit is,” a Bell Tex- into that when it happens,” said project bidding role was removed the Swedish naval sites being pur- case to justify a similar national ap- tron official said. Both companies Carp, who also is in charge of to Germany at a time when it was sued by Saab do not “possess the proach toward the creation of larg- will explore “high value projects ... Saab’s corporate responsibility for working on bids for the Australian same level of experience and er industrial conglomerates, based to develop new shore- and sea- government affairs. program as well as the prospective knowledge as ThyssenKrupp’s fa- on a vertical integration of domes- based operations.” The Saab-Australian connection $4 billion Ula-class replacement cilities in Germany. Saab will have tic capabilities. A Bell Textron source said the had earlier been flagged by Lena program in Norway.” to build up much of the technology Similar developments, Balis letter would help pave the way for Erixon, the CEO of FMV, Sweden’s The government’s unease over again.” said, are underway in France and sales of new AH-1Z and UH-1Y heli- defense materials procurement The collapse in the relationship Spain, with Paris favoring Thales copters in Malaysia and the region. agency. between ThyssenKrupp and Swe- to increase its 35 percent stake in The advantage of both helicopters “It is possible that the work may Saab’s acquisition den’s Ministry of Defense culmi- DCNS, while Madrid is pushing for is that they share an open architec- also be shared with Australia and plans “may be a nated with FMV, under armed a consolidation of shipbuilder Na- ture design and have 85 percent Poland. In Australia, there is con- escort, turning up at TKMS’ Malmö vantia and technology company commonality, which reduces costs siderable interest in a partnership reasonable Swedish headquarters on April 8 to “secure” Indra. in training, components and sup- regarding submarines,” Erixon classified documents, intellectual “Vertical makes very little busi- port equipment. The company said. solution, but it is not a property and blueprints related to ness sense. There are six subma- brought an operational UH-1Y to The Royal Australian Navy’s the A26 and its stealth Stirling air- rine-producing nations in Western DSA, along with the flight simula- (RAN) existing fleet of six Collins- good European solution independent propulsion engine. Europe, which is unsustainable,” tor for the AH-1Z. class submarines are based on a “The raid incident is very Balis said. “The Malaysian Army wants the Kockums design. This fact, cou- ... There are six sub- strange, very unusual,” said Gun- The political aim may be to pro- UH-1Y first and then the Zulu pled with the state-held ASC’s ser- marine-producing nar Hult, a defense-political ana- tect jobs, but without sustained de- [AH-1Z],” a DEFTECH source said. vice and maintenance contracts lyst at Sweden’s National Defense mand, both long-term employment The UH-1Y can be used as an with the RAN, has added a new dy- nations in Western College. “It has long been thought and capabilities are put at risk, she armed transport and there is a namic to the prospect of a future in Sweden that ThyssenKrupp ac- said. pressing need for both since the Saab bid for ASC, which continues Europe, which is quired Kockums to remove a com- Submarine production in Lahad Datu standoff in early 2013 to be the subject of sale rumors. petitor. What is somewhat Europe is centered on companies that involved more than 300 mili- ASC officials have not comment- unsustainable.” surprising now is that ThyssenK- based in France, Germany, Britain, tants in Sabah. ed. rupp decided to negotiate with Italy, Spain and Sweden “The military had no real capabil- Australia has a requirement for Christina Balis Saab, who may become a compet- Saab’s takeover talks with Thys- ity of putting men on the ground 12 large conventionally powered Avascent itor. I wouldn’t be surprised if there senKrupp have also raised eye- quickly with cover fire,” he said. submarines under Project Sea1000 are lots of calls between the Swed- brows in Italy. Textron AirLand hopes to sell (Future Submarine). The choice ThyssenKrupp’s ownership of ish and German governments “It seems strange — not from an the new fixed-wing Scorpion to has been narrowed to either an Kockums increased when the about such a strategic matter.” industrial point of view, since Saab Malaysia. The aircraft would pro- evolution of the Collins boat or a company name was changed to has produced naval combat sys- vide the military with a number of new design. ThyssenKrupp Marine Systems in ‘Not a Good European Solution’ tems, but from a national point of options that were not available to Saab, says Carp, is interested in 2013 and the German parent sig- Saab’s ability to do a deal with view,” an Italian defense industry it in Sabah. both options. naled its intent to move large-scale ThyssenKrupp would inject new analyst said. “There has been an at- The Scorpion can serve as a “Sea 1000 is one of the largest submarine production out of Swe- life into a Kockums in decline, said tempt to consolidate the defense strike aircraft or a trainer, and can and most interesting programs and den, said Allan Widman, the Liber- Luc Viellard, a director of strategic sector in Europe, but that requires perform intelligence, reconnais- it’s Australia’s biggest program al Party’s spokesman on defense studies and solutions at the French a consolidation of demand. What sance and surveillance missions. ever,” Carp said. “Being in the de- and a member of the Standing consulting firm Compagnie Euro- we are seeing here goes against “It is not a one-trick pony,” Tex- fense industry, you’d be kind of Committee on Defense. péenne Intelligence Stratégique. that trend.” tron’s Chuck Gummow said. stupid not to be interested in it.” “ThyssenKrupp proposed a mas- “Saab would add one more com- Italy’s Fincantieri has built sub- The aircraft has six hard points Saab sees synergies between sive reorganization under which petitor to the European and the marines for Italy at its yards in Italy on the wings and can carry 3,000 Sweden’s A26 program and Aus- its yards in Sweden would build world market,” said Viellard, who in cooperation with ThyssenK- tons of ISR packages under the tralia’s Sea 1000 Future Submarine mini-subs of under 1,000 tons,” noted that a Saab acquisition of rupp, using German intellectual middle fuselage. At $20 million per project, and is examining a possi- Widman said. “The A26 has a 1,900 Kockums could pose a threat, or property while producing Italian aircraft and an operating cost of ble partnership with ASC on new tonnage. The alarm bells really be- an opportunity, for French subma- variants on models. N $3,000 per flight hour, the Scorpion submarines and the upgrade of ex- gan to ring at FMV and in govern- rine builder DCNS. has a lot of potential in the market- isting boats. ment when ThyssenKrupp refused However, Christina Balis, the Tom Kington in Rome, Albrecht Müller place, he said. N Another possible fit is Sweden’s to either commit to building the head of European operations at in Bonn, Nigel Pittaway in Melbourne, planned midlife upgrade on its A26 in Sweden or deliver a fixed consulting firm Avascent, said Australia, and Pierre Tran in Paris Email: [email protected]. three A19 Götland-class subma- project price.” said Widman. Saab’s acquisitive intent “may be a contributed to this report.