Saab is certainly a company that can punch above its weight.
With a limited home market for support, the company has had to look abroad for growth. As it seeks to stay competitive, the company has adapted to the current economic environment through international partnerships. Through a series of acquisitions and joint ventures, Saab has aggressively penetrated new markets in India, Brazil, and, most notably, the United States.
Though not without risk, the push into the world’s largest defense market does make sense. However, Saab may face some difficulty in penetrating the market. The pressure from the U.S. government to buy local has been amped up under the new Trump administration. To counter this, Saab has established partnerships with U.S. aerospace and defense firms. Such teaming up would create perceived support for U.S. firms, making the acceptance of Saab products for military consumption all the more palatable. True to this strategy, the company teamed with Boeing in late 2013 to offer a new clean-sheet aircraft design for the USAF T-X trainer program – a program it ultimately won in late 2018.
Under current plans, the Air Force intends to purchase 351 T-X aircraft (including five EMD aircraft) and 46 simulators. Initial Operational Capability is scheduled to occur by 2024, with Full Operational Capability slated to happen by 2034. Saab supplies the aft fuselage and other components and systems for the T-X aircraft. Saab intends to perform this work at a new, purpose-built facility in West Lafayette, Indiana.
This win is expected to open the door for partners to score additional trainer buys. In the U.S. alone, potential is great for an increased buy from the USAF. In addition, the T-X aircraft could also be selected to replace the U.S. Navy’s T-45 Goshawk trainers. The Navy has a fleet of nearly 200 T-45s. With its USAF imprimatur, the Boeing/Saab T-X aircraft will be a formidable contender for sales on the global advanced jet trainer market. In addition, the T-X design could also be adapted for use as a light fighter or light attack aircraft, thus opening up that portion of the military aircraft market to it as well.
Meanwhile, Saab’s independent fighter program continues to be a strong competitor around the world. In South America, Saab scored a major coup when its JAS 39E Gripen NG was selected as the winner of Brazil’s FX-2 fighter competition. The Gripen beat the Dassault Rafale and Boeing F/A-18E/F Super Hornet after a lengthy tender process. The deal, valued at $5.4 billion, is for the purchase of 36 fighters. Aircraft deliveries are scheduled to begin in 2019 and will be completed in 2024. Looking ahead, Saab forecasts a market for some 300 to 450 Gripens over the next 20 years. Numerous sales opportunities for the Gripen exist around the globe, as a number of countries are, or will soon be, looking to replace and/or supplement aging fighters. A few more wins like the Brazilian FX-2 fighter fulfillment and the company may reach its ambitious goal.
However, the program is not without its share of disappointment. In mid-2019, the Gripen E was pulled from the competition following a formal recommendation from the Swiss procurement agency. According to a Saab statement, the reason is that the flight tests have been designed to only evaluate aircraft that are operationally ready in 2019. This is doubly disappointing no doubt given that the Gripen E was originally selected to fulfill a Swiss requirement in 2012. However, this decision was nullified following a Swiss public referendum in 2014 on the purchase.
At sea, Saab expanded its maritime activities with the purchase of the Kockums submarine yard from Germany’s ThyssenKrupp Industrial Solutions AG. The acquisition was pursued after a falling out over price and submarine exports between Sweden and ThyssenKrupp. As a result, Sweden pulled A26 submarine work from the firm and tasked Saab with devising a plan for the country to maintain indigenous submarine production. Saab is therefore now in the process of building two A26 submarines, named Blekinge and Skane, and modifying two Gotland class boats under contracts worth nearly SEK10 billion. Beyond this, though, the future is more clouded.
According to Forecast International’s Warships Forecast, the Swedish Navy believes that it can resurrect Swedish submarine design and construction capability, but the truth is that it is far behind the curve in a fast-moving technological field. It therefore will have to seek some level of cooperation in order to make up for lost ground. The underlying problem is that industry consolidation over the last two decades, of which the original sale of Kockums to TKMS was a part, has eliminated many of the prospective partners for such an agreement. Without such support, it is questionable whether any additional sales will be achieved.
All told, Saab has been highly proactive in adapting to the new aerospace and defense marketplace. Although this adaptation has sometimes been challenging, Saab proved over the years that it can make quick strategy changes and successfully correct its course. With competition in these markets becoming even more fierce, these skills will be critical in the years ahead.
A military history enthusiast, Richard began at Forecast International as editor of the World Weapons Weekly newsletter. As the Internet grew in importance as a research tool, he helped design the company's Forecast Intelligence Center and currently coordinates the EMarket Alert newsletters for clients. Richard also manages social media efforts, including two new blogs: Defense & Security Monitor, covering defense systems and international issues, and Flight Plan, which focuses on commercial aviation and space systems. For over 30 years, Richard has authored the Defense & Aerospace Companies, Volume I (North America) and Volume II (International) services. The two books provide detailed data on major aerospace and defense contractors. He also edits the International Contractors service, a database that tracks all the contractors involved in the programs covered in the FI library. More recently he was appointed Manager, Information Services Group (ISG), a new unit that encompasses developing outbound content for both Forecast International and Military Periscope.
