5 Looking into the Future on JAS Gripen Spillovers
5.10 What Did Not Happen
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improvement. The systems subcontractor then negotiated correspondingly tough risk-sharing contracts with their subcontractors.
Each aircraft, for instance, has to be equipped with a black box that registers what happens to the aircraft in flight and can be recovered in case of accident to figure out the reason. For the Gripen aircraft the specifications were that the black box should stand a water depth of at least 100 m. SLI Avionic Systems (a Lear company) got the contract, but did not deliver up to the specifications. The Saab purchase director did not accept the product and demanded that the product be redesigned. The Saab delivery therefore probably became a loss contract for SLI Avionic, but when it had fixed the black box up to Saab specifications they managed to have the US Air Force install the new black box on all its F 16 combat aircraft. So in the end this became a profitable deal for SLI Avionic Systems.
5.10.1.1 Example 1: Landing Gear
The landing gear of the Viggen and earlier Saab aircraft had been designed by Saab engineers but manufactured by Motala Verkstad in Motala, Sweden. This time the designers of landing gear in Saab had retired or left the company. Motala Verkstad only had manufacturing knowledge. The Gripen contracting conditions left no eco-nomic leeway for the reestablishment of an internal team within Saab to design the landing gear for Motala Verkstad, not even considering the new civilian aircraft that was then in the development phase. Saab was involved in too many engineering tasks even to consider this one. With the new civilian aircraft in the making there was also a considerable future domestic market for a Swedish subcontractor of an advanced subsystem for aircraft. Motala Verkstad, however, was not interested in taking on this business. The real threat of seeing the contract going abroad, however, stirred the political opinion both at the local and the national level.
Saab still considered the possibility of outsourcing design and development of the landing gear to a foreign firm and let the four potential manufacturing subcontractors, including Motala Verkstad, compete for the job. This alternative was, however, not economical compared to buying an existing landing gear in the market and have it modified. So the purchase of the Gripen landing gear went to UK AP Precision.
This firm had just weathered a crisis and was prepared to deliver at a very low price.
The purchase of landing gear for the civilian Saab 340 was managed by Saab’s early partner in the civilian venture, US Fairchild Industries on Long Island. Quite independently of the Gripen contract, the contract for the 340 also went to AP Precision. Again, this cooperation continued and the landing gear for Saab 2000 as well went to AP Precision.
5.10.1.2 Example 2: Rescue System
Saab pioneered the use of ejection or catapult seats in their military aircraft. The J 21 from the 1940s (see Sect. 5.6. and Technical Supplement S1) used a pushing propeller mounted behind the pilot. In case of accident it was necessary to catapult the pilot far above the propeller. Saab engineers therefore constructed an ejection seat, one for each generation of combat aircraft up to and including the Viggen.
Despite its initiative, competence, and technical lead Saab did not develop this busi-ness further. During Gripen procurement a competition was organized and the Saab engineers were invited to bid for the contract in competition with foreign specialist suppliers. The contract went to Martin Baker in the UK that was a volume supplier of rescue equipment for aircraft.
Rescue systems require special modifications for each aircraft and are expensive to develop. To be successful as a specialist supplier, an international reputation as quality supplier has to be established and this requires large marketing investments.
The alternative to develop aircraft rescue systems as a specialist business within Saab, therefore, was never an issue, even though Saab had the required technical expertise.
The interesting question rather is why no outside Swedish entrepreneur rose to the
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opportunity to establish a separate business in rescue systems. The consolation, however, is that Saab’s pioneering of rescue systems technology for military aircraft, because of its close links to the automobile industry appears to have diffused to Swedish automobile industry (Saab Automobile and Volvo Car) that in turn became pioneers in automotive safety.
5.10.1.3 Example 3: Environment Control System
Cooling, ventilation, air conditioning, heating, and air pressure control of the aircraft are handled through a separate system. There are differences between military air-craft where the cooling of electronics and instruments is important and civilian aircraft where the comfort of passengers matters more.
Cooling and air conditioning consists of a number of component systems of which the cooling machine is one. These component systems have to be integrated with other functions of the aircraft and the efficiency of the system requires a significant input of technical calculation. The installation, in turn, requires extensive tubing.
Most components are purchased in the market but the overall design is particular for each type of aircraft. There are several subcontractors in the market but the most important ones are Garret (for the Viggen), British Aero Space (for the Gripen), and Hamilton Standard (for Saab 340).
The aircraft developer is normally responsible for the technical calculations and the tubing which are unique for the aircraft. Altogether advanced systems and systems integration knowledge is needed to do this right, not least to save weight. Individual components on the other hand have always been purchased in the market. Contrary to the case with landing gear and rescue systems, which consist of standard systems modified for the particular aircraft, the cooling and air conditioning systems are designed to be integrated with the design of the aircraft and installed as part of the building of the aircraft. This market is not yet ready for separate specialist integrators.
It was never an issue for Saab as an aircraft developer and manufacturer to enter the relatively low tech market for cooling and air conditioning equipment, since at the time of Gripen procurement such equipment was readily available in the market. For Saab to enter that same market as a designer and installer of complete and integrated systems has never been an organizationally and economically fea-sible alternative.
5.10.1.4 Example 4: The Auxiliary Power Unit
When on the ground, large civilian passenger aircraft in particular have to keep a number of internal systems up and running. In the air these systems are driven by the engines. Such systems are electricity supply, air conditioning, hydraulics, etc.
On the ground these systems are kept running by a small gas turbine that is supplied by external vendors. The most important external suppliers are Garret (USA), Sundstrand (USA), P&W (USA), and MicroTurbo (France).
Saab has always purchased these systems externally. This is a matter of special-ist and fairly low tech competence that has not naturally exspecial-isted in, or been developed within, Saab. The contract for Gripen went to French MicroTurbo. The interesting observation from a Swedish point of view was that despite the local opportunities associated with the combined Gripen and civilian aircraft programs no potential Swedish entrepreneurs rose to the opportunity. MicroTurbo, however, was not up to its technical commitments and a new APU had to be developed by US Sundstrand.
New and more advanced design technology for communication over long distances between the integrator and the subcontractor now had to be introduced to prevent serious delays of the entire aircraft.
5.10.2 The Large Part of Gripen Spillovers Has Been Captured by the Large Partners in the IG JAS Industry Group
Summing up on this theme, I make the following observations. The previous sub-contractors to the Swedish (military) aircraft industry have been unable to manage the transition from simple contract manufacturing to subsystems development and production increasingly associated with the upper end of the value chains in distrib-uted production. This should be considered a problem for Swedish industry at large.
I have not studied the purchasing of components in the markets for contract manu-facturing. The situation here is more similar to those in automobile subcontracting where competition is notoriously intense, and high-wage Swedish producers with-out superior products disadvantaged. Entering those markets apparently was not viewed as a business opportunity by small Swedish producers.
Even though most independent potential systems producers backed out, the IG JAS partners rose to the opportunity and developed technologies and products that spilled further into civilian production and markets. So, one cannot say that the advanced systems subcontractors for Swedish aircraft industry have disappeared.
Both in electronics and in aircraft engines the advanced competence remains in Sweden and has been developed further. When seen from a very long-term industrial perspective, however, this may not be what matters most importantly. The important observation to make is that only the large and established firms were prepared to take on the considerable technical and commercial risks involved even though even more technical competence might have existed among the small- and medium-sized firms.
Was this so because of risk aversion among the small- and medium-sized firms, or because of lack of industrially competent venture financing.
The situation is entirely different when it comes to the simple contract manufac-turing industry that manufactures on specification and only competes with costs.
Swedish subcontractors took on such jobs. But this carries little significance for the Swedish economy in the long run. Some of the deliveries discussed above, further-more, have been out-contracted to South Africa as part of the Saab South African sale of 26 Gripen aircraft. That production is definitely more welfare enhancing for South Africa than it would ever have been for Sweden.
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