Australia's Future Submarine - Swedish vs German Claims

This article, Saab Story: Sweden's New Submarines, June 10, 2014, http://www.defenseindustrydaily.com/saab-story-swedens-new-submarines-024760/ appears to have been inserted by Saab and maybe the Swedish Government to understandably increase the chances that Australia's future submarine will be designed and partly built in Sweden. Japan's Soryu propulsion system is of course being considered by Australia and US input, or at least Lockheed Martin's, has for years been considered for the combat system. All may be even more complicated and multi-country than the Collins' deals 1980s-2000s. 

The article however seems to avoid the issue that if TKMS still owns Kockums (as indicated here http://www.kockums.se/en/ ) then TKMS through Kockums retains many intellectual property rights that Sweden-Saab assumes are Sweden's rights. Intellectual property like the Stirling engine may be used in Australia's future submarine. But who owns the the intellectual property rights to the Soryu's Stirling engine and separately does Germany mostly own the licensing rights to the Soryu's diesel? Sweden-Saab? Germany-TKMS-Kockums as it applies to Japan? Where do Japan's submarine builders, Mitsubishi and Kawasaki, stand?  It all needs to be clarified by German, Swedish, Japanese and Australian lawyers, businessmen and politicians. See also "The reported Swedish solution would buy [Australia's] ASC" below.

Here are the relevant parts of the article which is on the Defense Industry Daily website http://www.defenseindustrydaily.com/saab-story-swedens-new-submarines-024760/ :

Saab Story: Sweden’s New Submarines

Jun 10, 2014 18:46 UTC by Defense Industry Daily staff

.... In order to field their next-generation design, however, Sweden may have to do something unusual: partner with other countries…

....The A26 will be equipped with an air-independent propulsion (AIP) supplement to its diesel-electric systems,...

...The A26′s AIP system will be Kockums’ Stirling, which also equips Sweden’s 3 Gotland and 2 Sodermanland Class submarines, Singapore’s Archer Class Sodermanlund variant, and Japan’s Soryu Class.

...April 14, [2014] Saab to buy Kockums. Saab AB and ThyssenKrupp Industrial Solutions AG sign a non-binding Memorandum of Understanding concerning the sale of the Swedish shipyard ThyssenKrupp Marine Systems AB (formerly named Kockums), including its Malmo, Karlskrona, and Musko operations, to Saab AB.

“Both parties agree that during the negotiations phase, the integrity and the operating ability of ThyssenKrupp Marine Systems AB must be safeguarded. The transaction will be subject to regulatory approval. The negotiations between Saab AB and ThyssenKrupp Marine Systems AB are at an early stage and more information will follow.”

There’s a major backstory here. Sweden’s FMV effectively raided TKMS’ offices in Malmo “to take sensitive technological equipment,” but FMV says that since “…it was a transfer of defence material, belonging to FMV, all information regarding the transfer is classified as secret”. It’s generally believed that they came and took the A26 submarine’s plans, as well as a complete Stirling Air-Independent Propulsion system, which are technically owned by the Swedish state. [does Germany-TKMS agree it is legally owned by Sweden?].  A country that believes time is of the essence, and doesn’t want what it perceives as a hostile corporation to have leverage from holding state materials, might be inclined to move swiftly. The very fact that this happened speaks to how badly relations between Sweden and TKMS have deteriorated. 

April 12, [2014]: Australia. The Collins Class was built around a Swedish design, and News Corp Australia says that Saab and the Swedish Government have been engaged in secret talks around a new joint submarine effort. That proposed approach may have the potential to cut through many of the dilemmas faced by Australia’s government, and Sweden’s as well....

The reported Swedish solution would buy [Australia's] ASC, and embark on a fully cooperative joint design for Sweden and Australia’s next submarines. Australia would receive a design that’s explicitly built for Australia’s needs – a necessary compromise for Sweden, whose needs are different. It’s also worth noting that the Japanese Soryu Class propulsion system which is attracting so much interest from Australia’s Navy is part Swedish. From industry’s point of view, making ASC part of Saab removes any conflict of interests with a foreign firm that acts as the project lead, creating both development jobs/skills, and production work. From the politicians’ point of view, a program that includes Sweden and Australia offers the added security of shared risk, and shared acquisitions.

Sweden is looking to re-establish an independent submarine industry (q.v. March 26/14), and their challenge will be buying enough talent, building an equivalent production workforce, and designing the new sub within Sweden’s budgets. Australia offers Sweden a development partner, and a workforce with good experience...."

PETE'S COMMENT

This whole matter still seems a political and legal mess or challenge, at least. If TKMS looks like it would lose Australia's future tender to build Australia's future submarine then TKMS will construct legal intellectual property right obstructions to make it very difficult for Saab to smoothly win the tender.

Pete 

Swedish Cabinet responding to Russians or Submarine Industry?

Five instead of two A26s? (Graphics courtesy of TKMS-Kockums website) 

Events in Crimea and Ukraine have increased concerns in Sweden about the possibility of an increased conventional military threat from Russia.

DefenseNews.com March 16, 2014 reports: http://www.defensenews.com/apps/pbcs.dll/article?AID=2014303160008:

Sweden’s government is examining a proposal to boost military spending to defend its own territories and the strategic Baltic Sea area in the face of renewed Russian aggression in Ukraine. There is also a movement among high government officials to re-examine the long-running issue of joining NATO. The Swedish Cabinet will discuss, in coming weeks, a cross-party coalition proposal to significantly increase capital spending on the Navy’s submarine fleet.

…The Swedish Cabinet will examine in coming weeks a proposal by Foreign Minister Carl Bildt to expand the Navy’s submarine modernization program to cover the acquisition of five rather than two next-generation subs at an additional cost of $1.6 billion.

“We need to strengthen our military presence on Götland and our overall capability in the Baltic Sea. Two new subs is not enough. The ambition should be to have the best fighter and submarine capability for our size of any European nation,” Bildt said in a statement. “This is vital if Sweden is to create a credible defense.”

The Riksdag in June 2010 approved plans to buy two new submarines. The first of these were to have been delivered in 2018. However, the project has been delayed by several years, with the prospect that Saab, and not the Malmö-based, German-owned ThyssenKrupp Marine Systems (formerly Kockums), will get the contract.

Also see Corporate Battle Between SAAB and TKMS Over Kockums of March 14, 2014 at http://gentleseas.blogspot.com.au/2014/03/corporate-battle-between-saab-and-tkms.html.

Might the Swedish Cabinet be planning to spend more on submarines due to the resurgent Russian threat or is it simply a pretext to revive Sweden's submarine industry?

Pete

Corporate Battle Between SAAB and TKMS Over Kockums

The reality of corporate battles (Cartoon courtesy of CartoonStock.com).
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For the latest on this issue see June 11, 2014’s Australia's Future Submarine - Swedish vs German Claims http://gentleseas.blogspot.com.au/2014/06/australias-future-submarine-swedish-vs.html . It is unclear whether Germany or Sweden hold the strongest intellectual property rights to the Stirling AIP.

The current corporate confrontation between SAAB and TKMS underlines the need for Australia future submarine project (SEA 1000) to be (reasonably) technically self reliant and flexible enough to tolerate changes in the threat-strategic environment, corporate and broader international economic environment. Australia needs as much autonomy as possible in intellectual property, spare parts and test facilities. 

Connect the current escalation in corporate conflict between SAAB and TKMS over Kockums with:

- Kockums loss of its traditional Singapore customer to HDW – see Singapore Buying Two HDW 218SG Submarines – Sweden’s Loss of December 3, 2013http://gentleseas.blogspot.com.au/2013/12/singapore-buying-two-hdw-218sg.html , and

- German’s Sinking Kockum’s Swedish Sub-Maker of November 13, 2013 http://gentleseas.blogspot.com.au/2013/11/germans-sinking-kockums-swedish-sub.html .

ARTICLE

Birgitta Forsberg of affars Valdern (translated from Swedish) of March 12, 2014 reports http://www.affarsvarlden.se/hem/nyheter/article3811470.ece :

"Thyssen Krupp ask FMV stop Saab"

"Kockums German owners ThyssenKrupp ask FMV stopping Saab from recruiting top people from Kockums.

n a letter to Lena Erixon, Director General for Defence Materiel Administration, [known as]  FMV, asking the head of the German Thyssen Krupp Marine Division, Dr. Hans Atzpodien FMV stopping Saab from recruiting key personnel from Kockums.

Thyssen Krupp wholly owns Kockums but has for years thwarted Kockums from exporting submarines because the Germans also owns the German shipyard HDW where they would rather control the business. Recently, FMV enough of the Germans' delaying tactics when it came to ordering a Swedish Kockums and instead asked Saab to do a feasibility study on Sweden's future submarines.As a result of the Saab has recently recruited top people from Kockums and also went yesterday, Tuesday, issued a press release that the company seeking employees for its shipping division.

The letter writing Atzpodien addition to the Thyssen-Krupp

§  - will support the export of the planned Swedish submarine A26

§  - is willing to negotiate a contract to sell the A26 to Sweden

§  - is willing to offer Swedish authorities influence at board level in Kockums or at least greater  transparency in company

§  - want to invest in to let Kockums produce a small submarine (up to thousand tons)

§  is willing to develop Kockums

§  - wants Kockums and HDW cooperate closer without infringing on the patents FMV own

His Atzpodien and Lena Erixon has a meeting scheduled for 18 March and it's ahead of the meeting that Atzpodien written the letter.

But the offer of influence has come before, and that the Germans want the Swedes to focus on small submarines, while the German shipyard HDW may take the major orders, are also known. According to a source, who sees the whole thing as a way to get Kockums out of the way as a competitor, there is no bigger market for small submarines. In other words, it is doubtful whether FMV soothed by letter. 

The whole thing is complicated by other agreements between Kockums and FMV, including for servicing submarines." ENDS

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COMMENT

Joakim Wohlfeil on March 14, 2014 sent the following comment to Australia by the Indian Ocean:

"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. (http://www.affarsvarlden.se/hem/nyheter/article3811470.ece ["Thyssen Krupp ask FMV stop Saab" see above].

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 ([the Defence Materiel Administration known as] 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)"

Pete

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 http://www.ibtimes.com/saab-angling-take-control-thyssenkrupp-submarine-yard-sweden-1559035

:
"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." 

ENDS 

COMMENT

Please connect with Singapore's December 2, 2013, decision to buy two HDW 218SG subs instead of the  purchasing Kockums' submarines  http://gentleseas.blogspot.com.au/2013/12/singapore-buying-two-hdw-218sg.html and  http://gentleseas.blogspot.com.au/2013/11/germans-sinking-kockums-swedish-sub.html 

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 http://www.defensenews.com/article/20140302/DEFREG01/303020012/Saab-Maneuvers-Buy-Swedish-Submarine-Maker?odyssey=mod_sectionstories naughty!

Pete