March 4, 2014

Saab Being Subsidized To Buy Back Kockums?

A possible design for Kockums' A26. Will it ever be built? (Courtesy of Kockums' website

Christopher Harress of International Business Times, March 3, 2014 reports
"Saab Is Angling To Take Control Of ThyssenKrupp Submarine Yard In Sweden"

Three years ago, Kockums, the Swedish national submarine manufacturer was sold by the Swedish government to Germany’s ThyssenKrupp, but after uncertainty over jobs and boat building guarantees, it appears the Swedish government is angling for Saab to take control of the Malmo-based ship-building yard.

In a clear statement of intent, Sweden’s procurement agency FMV announced on Feb. 27 that it was allocating $3.84 million to test whether or not Saab had the ability to design and build the next generation of Swedish submarine.
The move was spawned by disappointment coming from the Swedish Defense Ministry that Thyssen wouldn’t give guarantees that ThyssenKrupp Marine Systems, what Thyssen renamed the old Kockums yard in Malmo, would continue to be a large-vessel producer in the region. Additionally, the ministry was concerned because Thyssen hadn’t provided fixed prices for the delivery of two new A26 generation subs and mid-life refits for the Gotland-class submarine.
That said, the failure for TKMS to get finalize those contracts has put jobs in jeopardy, says Thyssen. But Saab’s emergence as a possible buyer for the yard, according to the Swedish Defense Ministry, is because it’s believed that Thyssen is going to reorganize the 1000 unionized workers in Malmo and is to begin the manufacturing of small-sized subs and surface vessels up to 1000 tons. The New A26 class boats and those awaiting refit are around 1900 tons.
The Swedish government procurement agency has said that Thyssen’s reluctance to ioffer fixed prices for the new boats and upgrades means it is currently not possible to move forward to the build stage as it is not practical, sustainable or best use of taxpayer’s money.
Saab has contended that it could meet the needs to design, build and refit submarines, however, it has declined to comment suggestions that it might take control of the TKMS yard." 
Please connect with Singapore's December 2, 2013, decision to buy two HDW 218SG subs instead of the  purchasing Kockums' submarines and 

This development begs questions. Why did the Swedish Government sell Kockums to its German competitors in the first place? Swedes may also want to know how much government money will be required to fund the buyback of Kockums? Also how much government money will Kockums need to build two new A26 generation submarines and for the mid-life refits for the Gotland-class submarines (two or all three)? 
Meanwhile US company DefenseNews reported on the same matter, but failed its geography test - by placing Helsinki in Sweden - see naughty!


Anonymous said...

The first thing a stumbled about was this statement: "three years after selling its national submarine-maker Kockums to Germany’s ThyssenKrupp" - Kockums was acquired in 1999 by HDW and then HDW was acquired in 2005 by ThyssenKrupp AG (AG - stock corporation). This is also mentioned at the end of the article?!?

The next thing are subsidies to SAAB by Sweden are not acceptable according to EU law.

TKMS a subsidy of ThyssenKrupp AG already has a submarine of A26 size - Type 212/214. Why should the company design a complete new submarine for less profit? AG means share holders want to see profit. Quite the opposite of state owned ASC.

So the "lack of a fixed price from ThyssenKrupp regarding the A26 and the Gotland-class submarine programs" is rather logic. Fixed price means the complete risk is located at TKMS. I believe TKMS could offer a fixed price but that price would include risk and therefore had to be rather high.

The last question is could Sweden force TKMS to sell Kockums?


Pete said...

Hi MHalblaub

I'll take your word for it about the Kockums and HDW takeover history.

I anticipate the subsidy for SAAB might take the form of the Swedish Government:

- quietly or publically guaranteeing to SAAB that if SAAB buys Kockums then the A26 builds and Gotland refits will go ahead,

- pay deposits to SAAB ahead of A26 completions and Gotland refits.

Difficult for Sweden to force TKMS to sell Kockums.

Also TKMS may have already quietly acquired Kockums' technological secrets and A26 plans - making it difficult for Kockums to compete in the world submarine market for years.


Anonymous said...

Dear Pete,

according to my knowledge the rights according to submarines belong somehow to the state of Sweden and not to Kockums alone. So a Stirling engine by TKMS would be impossible.

On the other side knowledge is something not only related to rights and patents. With a good insight at Kockums TKMS might buy out some of Kockums engineering brains.


Pete said...

Thanks MHalblaub

I had in mind that if Kockums was sold back to Sweden then Germany's TKMS-HDW would have an advantage over Kuckums in submarine sales. This would be due to knowledge acquired by TKMS-HDW about Kockums technology over the last few years. I don't think any "Chinese Walls" would be effective.

This advantage need not extend to actual use of Kockums (including A26) inventions on HDW subs.

HDW would have no reason to use Stirling engine technology because HDW is already using Siemens hydrogen fuel cells as AIP for the 214.



Joakim Wohlfeil said...

Having followed both the Swedish and German debate its interesting to see 2 totally different pictures of reality. In Germany nobody really denies the purchase of Kockums was a way to "kill" a competitor, but to get access to Kockums technology.
In Sweden the government had the idea that being a part of HDW would add an efficient sales organization. (Exactly what HDW wanted to prevent). Instead it's no secret HDW actually used their influence to force Kockums out of business either by not allowing them to offer or as in the Singapore case force Kockums to change their suggested price to a higher offer than 214 (HDW demanded to see and approve all Kockums bid). After protest from Kockums staff the Swedish government via political pressure made thyssen Krupp take ower the ownership formally makin HDW and Kockums equal entities in the thyssen group. However the quarrel continues as Germany wants Sweden to let HDW take over all construction of larger subs. However, Germany don't have all aces in their hand. The major problem for the Germans are that the Swedish boats continues to outperform the German from an operational perspective and the fuel cell technology continues to cause problems. HDW are also facing major financial compensations to several countries for underperformance of the 200 series. Although JDW has succeeded to stop most possible sterling business ex Japan demanded to be able to negotiate directly with Kockums. Also China is now believed to have chooses sterling (although of own or copied technology). And the fight now continues, thyssenKrupp has tried to deal with the miscalculation from HDW that the swedish navy never changed their position to release the patents from kockum to HDW where TK now has offered that Sweden might be able to build A26 in Sweden if the patents are released for HDW. Then as I have understood the feelings among the Kockums engineers are very negative towards TK and one option was elaborated in the local press that SAAB just can offer the staff new jobs and go around HDW/TK. However as the A26 would be a.major threat to HDW if Kockums again could act independently TK has reacted and said in Germany they would do everything to prevent Kockums to be allowed to compete again on the export market.

Joakim Wohlfeil said...

Breaking news update ;-) The Submarine war between Sweden and Germany escalates !!
SAAB has succeeded to recruit the full technical management team at Kockum, including the manager for the submarine division Per Nilsson and are now actively seeking to recruit the remaining ca. 230 engineers. (

According to local press in Malmö the engineers being feed up with ThyssenKrupp are joining SAAB en masse. As the Swedish government are the formal owners of the construction patent and drawings of all Swedish submarines SAAB could actually perform a hostile take-over without paying anything to ThyssenKrupp. (and this seems to happened with the blessing of the Swedish government

2 days ago, ThyssenKrupp formally protested to the Swedish government (military equipment agency, FMV) and demanded they should stop SAAB´s hostile recruitment campaign.

In return Thyssen Krupp has offered.
- ThyssenKrupp will not block the procurement process of A26 and approve that it will be built in Sweden
- Thyssen Krupp will allow Kockums to market A26 for export (however it´s not said if the condition that HDW can see and approve Kockums export offerings will be lifted)
- Repeating the offer Sweden besides of A26 will be the new centre for small submarines (an offer that has earlier been rejected by Kockums employees and the Swedish government).

However, if Sweden suddenly seems to sit on the upside, ThyssenKrupp can answer with obstructing the upgrades and service of Swedish naval crafts that is contracted to the still ThyssenKrupp owned Kockums industriers (TKMD)