4 Capturing the Direct and the Serendipitous Spillovers:
4.1 A Brief History of Saab
Growing hostilities between Germany, on the one hand, and France and England, on the other, were the reason Svenska Aeroplan AB (Saab) was once founded in 1937 to produce aeroplanes for the defense of Sweden.
In 1940, Saab had developed a light bomber Saab 17. Three hundred twenty-two of them were manufactured in four versions. A large bomber (Saab 18) was ready in 1942. Altogether 245 Saab 18 were produced. Finally, 1943 saw the fighter bomber aircraft Saab 21A with its propeller mounted in the rear ready for service. Three hundred one Saab 21A were manufactured for the Swedish Air Force. The Saab 21A
Capturing the Direct and the Serendipitous Spillovers: The Case of Sweden’s Military Aircraft Industry
G. Eliasson, Advanced Public Procurement as Industrial Policy, Economics of Science, Technology and Innovation 34, DOI 10.1007/978-1-4419-5849-5_4,
© Springer Science+Business Media, LLC 2010
the rapid development of Saab into one of the world’s most advanced producers of military aircraft. This was possible because of Sweden’s advanced industrial base, to a significant extent developed during the war rearmament, the existence of a very competent public customer, the government military procurement agency Försvarets Materielverk (FMV) and the political willingness to provide resources for Sweden’s defense. Even though not discussed in those words at the time it was possible for a small industrial economy to develop one of the world’s most sophisticated military aircraft systems without draining the economy of resources for other industrial devel-opment because of the very large spillovers generated by the project. In addition to that, and with implications for the analysis of Saab in South Africa in Chap. 6, Saab’s technological prowess as a developer and producer of military aircraft depended in a large measure on access to US technology, notably advanced electronics. The first US Polaris missiles that were deployed in 1960 had a limited range. To reach Moscow they had to be launched from positions very close to Norway and in fairly shallow waters. The US submarines were therefore vulnerable. In return for building a very strong airforce capable of preventing Soviet anti-submarine aircraft from crossing Swedish airspace the USA made advanced military technology available to Sweden, technology that made it possible for Saab to develop a sophisticated aircraft system very fast (Militärteknisk Tidskrift, 2005:6–11). For some time, Sweden then had the fourth largest military air force in the world.
The cold war rearmament and the outbreak of the Korean war had demanded the entire manufacturing capacity of Saab. The Saab 29 “Flying Barrel” jet fighter was introduced in 1948. Six hundred sixty-one were built. The Saab 29 was followed by the supersonic Saab 32 Lansen in 1952, by Saab 35 Draken in 1955 and by Saab 37 Viggen in 1967. 1988 saw the maiden flight of the first “fourth generation” combat aircraft ever with “instability properties,” the JAS 39 Gripen, that entered service in 1997.
Until 1984 when the Saab 340 was introduced, almost the entire aircraft develop-ment and manufacturing capacity of Saab had been allocated to military aircraft.
With Saab 340, however, Saab rapidly advanced into the civilian market for regional aircraft, and parallel to the development and manufacturing of JAS 39 Gripen.
Throughout these years Saab has entertained constant ambitions to create businesses and an economic return on its technological spillovers, the diversifying ambitions some-times giving more a picture of fragmentation than of a coherent business strategy. In fact, spillovers around Saab are found in all four circles in Fig. 1 (on page 35), and I will go through many of them in the form of brief case stories, beginning with the core products in the inner circle and then moving gradually to the outer circles.
One methodological problem, however, makes it necessary to split the case studies into two chapters. To measure the spillover multiplier of the JAS 39 Gripen devel-opment investment we have to separate the Gripen spillovers and their industrial effects from those of earlier aircraft generations. Military aircraft development and production had been a continuing business during the entire postwar period and military technology had fuelled both future military and civilian development. This makes it difficult to isolate the spillovers from the JAS 39 Gripen project from a history of earlier military spillovers.2 The third generation fighter aircraft Saab 37 Viggen development, for instance, was completed in 1967 and all aircraft had been
82 4 Capturing the Direct and the Serendipitous Spillovers
delivered by 1990. Spillovers from the Viggen project can therefore to a large extent be studied ex post and their origin traced. The JAS 39 Gripen aircraft development (next Chap. 5) is more difficult. Procurement conditions were different and tougher.
Gripen has a much larger content of imported subsystems than previous Swedish-developed fighter generations3 and significant parts of the spillover flows and conversions into civilian business are still to be seen. I will try, nevertheless, to identify and isolate the Gripen spillovers in the next chapter.
There is, however, one overriding organizational industrial competence that I have called distributed and “integrated production” (Eliasson 1996b) that is generic to engi-neering industry, that was first developed in military aircraft industry and currently is becoming a critical engineering technology associated with concepts such as modular-ization, outsourcing and distributed production, and the ongoing globalization of production of the world economy. In the increasingly modularized global production system the technology of the most advanced engineering firms is often referred to as the development of “concepts and integration” rather than manufacturing, development being located to the advanced economy, where the systems architecture of the product and of the production system are being designed. Since much of the physical manufac-turing has been outsourced, the final systems integration and assembly of all the sub-systems and components then has to be brought back again to the advanced economy.
While distributed and integrated production only began to diffuse through engineering industry with the advent of the microprocessor (invented by Intel in 1971), the third generation military aircraft Viggen development program predated the microprocessor by half a decade. The first Viggens delivered in 1971, however, featured the very early, advanced, and extensive use of central digital computing based on integrated circuits.
When the last Viggens were delivered in the late 1980s the microprocessor and distrib-uted computing that defined state-of-the-art computing had also been implemented in the aircraft. Not until the integration of computing and communications technology in the 1990s (the fifth generation of computing technology), however, did distributed produc-tion really catch on. By this time, however, Saab had been using this “new” engineering technology for more than a decade. This now generic engineering technology is never-theless more related to the JAS 39 Gripen development program which from the begin-ning was integrated within an early networked defense system, and notably the ongoing (2008/2009) upgrading to the Next Generation Gripen which is far more intensive in its use of distributed computing and communications than earlier Saab military aircraft.
As I see, it the industrial art of distributed and integrated production on a global scale is what has saved, and will save the engineering industry in the high wage industrial economies, the back bone of their industrial wealth and growth since the advent of the industrial revolution. I will, therefore, pay extra attention to Saab as a pioneer developer and user of integrated production in the next chapter.
It should also be observed already here that the capacity to develop a complete military aircraft platform (see below) or a large commercial airplane and the associ-ated systems is an extremely scarce industrial competence. Not more than six countries can do it today (2008) and they are the permanent members of the UN Security Council and Sweden.4 If you extend the range to small passenger aircraft you could add Brazil (Embraer), Canada (Bombardier), and Italy (Alenia) to this
distinguished group. It is no wonder that a number of aspiring industrial economies see aircraft industry as a vehicle to reach that goal, and that the wealthy industrial economies see their military aircraft industry as the means to maintain their indus-trial supremacy. This competence (with Saab in Sweden) therefore spills goodwill value to the entire Swedish engineering industry. The development of a complete aircraft industry, including (see below) also a civilian aircraft industry, hence, has been a positive brand for the entire Swedish engineering industry.