Abstract
My earlier spillover study on the Gripen development (Eliasson 2010a, b) is summarized, and estimates have been presented on the spillover potential of both modernizing the Gripen from the C/D to the E/F version and on the joint development of the two-seater F version of Saab and Brazilian Embraer. Finally, the Gripen is introduced as an early networked weapons system, which is also the appropriate way to fully understand its spillover implications. Networking technologies lead to unmanned combat aircraft and further on to cyber warfare.
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- 1.
Acquired in 2012 by British GKN
- 2.
The story is complicated, so the reader is referred to Eliasson (2010a: 99–112) for details. The story is, however, important since Ericsson figures heavily in the spillover multiplier calculated. Three critical contributing circumstances are involved: (1) a competent and insistent customer, the Swedish Public Telecom Agency; (2) the previous existence of a commercially successful central Ericsson digital switching system, the AXE; and (3) an in-house military radio division, headed by a stubborn person, who continued to develop a mobile telephone technology secretly on a military budget and against the resistance of Ericsson top management. The latter wanted to turn Ericsson in the direction of business information system development, a project that failed entirely. It is interesting in this context to note that the 1 billion US$, or so, lost on the failed business information systems project (EIS ) is a small money compared to the possible loss for Ericson and Sweden of Ericsson failing to capture the mobile telephony opportunity that could be developed, not “for free,” but almost so on technologies generated by military radiotechnology development and from the Gripen project. Besides the complete early disinterest of top management, the constellation of positive circumstances within Ericsson was unique. Ericsson, and possibly also Nokia , were alone among the telecom equipment companies of the world to have both telecom experience and radiotechnology in-house, and fortunately, and thanks to a stubborn Ericsson division head and a group of interested people within its main customer, the Swedish Public Telecom Agency, this enormous opportunity (mobile telephony) was eventually realized as a business success. One business success, however, is not sustained automatically and forever witness Nokia ’s fate and Ericsson’s current (2017) problems, if firm management has not learned through previous successes how to breed future successes. (See the “ideas production function ” of Jones and Williams (1998) in Sect. 13.3. Also see further Chap. 11 what a theory supporting sequential successes of an economic system has to include and Eliasson (1996a: 194ff) how Ericsson has managed to do it, at least so far, through several radical technological transformations.)
- 3.
The perhaps first ejection seat in the world. The gunpowder-powered ejection seat was needed to shoot the pilot above the propeller in case of emergency. For that time, sophisticated sensors to fire the gunpowder had to be developed by Saab, a know-how that has migrated to automobile airbag design. German Heinkel is also said to have developed an ejection seat during WWII.
- 4.
The US Airborne Warning and Control System (AWACS) entered service in the late 1970s. It is extremely expensive to operate. The Erieye system with roughly the same surveillance range entered service in the Swedish Airforce in the early 1990s.
- 5.
Also see Transfer Nr.4. 2003 on Saab Ericsson Space.
- 6.
The F version, a double seater, corresponding to the previous D version, will be developed in partnership with Brazil’s Embraer (see Sect. 4.4).
- 7.
The Swiss government had decided to buy 22 Gripens, pending a political referendum. The referendum said no in May 2014. Since Switzerland sooner or later will have to replace its aging fleet of about 50 Northrop F-5 Tiger and 20 F-18 Hornet combat aircraft that are both obsolete and run down, the opportunity for Saab may come back again (SvD Näringsliv, 24.2016:17). The F-5s were assembled in Switzerland and entered service in the 1970s. Also most of the F-18s, which entered service from 1996, were assembled in Switzerland. For Saab, however, the fact that the very competent Swiss military customer had chosen the Gripen, whatever the final outcome, is regarded as an important positive quality signal for potential future Saab customers.
- 8.
Ny Teknik (August 15, 2012, Nr 33:4f) lists a number of alternatives that have been evaluated: (A) keep the current C/D platform, with no technological upgrading. This alternative would tell the cost of maintaining the current base platform. (B) Keep the existing body structure or airframe , and the Volvo Aero RM12 engine, but upgrade other technologies, notably electronics and software. (C1) Modify body, use a stronger engine (same as in the demonstrator presented in 2008), and add extensive new technologies. (C2) similar to C1 but with a later introduction of new future technologies. The CEO of Saab has even indicated that an unmanned Gripen may be a reality in 5 years (DI, April 20. 2015:10).
- 9.
After having sold its automobile activity to US GM in 2000, Saab may in fact be gradually returning to automotive technology on the basis of the technology to keep the FCS and MCS systems” separate,” and the new radar technology developed, that also links up to the new 5G mobile communications networks. Both these technologies are expected to be needed for the development of safe driverless cars and trucks (SvD 26.Nov. 2016:12).
- 10.
Cf BAE systems’ principle of divided responsibilities in Australian interview Case 2 in Sect. 8.5
- 11.
The GE engine of the original Gripen was an earlier version (F 404) of the F-18 Hornet engine but modified and manufactured on license in Sweden by Volvo Aero . The engine purchase this time has been further complicated, because a large part of the profits for the supplier originates in the later service and upgrading of the engines. GE obviously wants that part of the job as well but prefers to service the engines in its factories in the USA, even though it can think of a local Swedish solution. Only the latter is acceptable for Sweden from a defense security point of view. There is also the argument that important industrial technology will then be leaving Sweden. Finally, also GKN wants to come in on the service job, as it already is on the Gripen C/D engines, and is quoting, together with politicians, job losses for Sweden if it does not get the job (SvD , Näringsliv, April 12.2017:14 and May 8., 2017:06). When this is being written, the decision has not yet been taken.
- 12.
In 2006 Saab acquired Ericsson Microwave Systems in Mölndal/Gothenburg that developed radar systems. It is now part of Saab’s Electronic Defense Systems.
- 13.
This experience learning is also illustrated in the interviews on Australia’s Collins submarine project in Chap. 8.
- 14.
During the 1990s Airbus and Boeing opted for two entirely different types of aircraft; Airbus on the enormous A380 aircraft, that could take almost 1000 passengers between hubs. Boeing, on its side, had brought together some airline companies (customers) in 2002 to ask them what kind of new passenger aircraft they thought they needed. Rather than an enormous hub to hub aircraft, Boeing learned that a large aircraft dimensioned for city to city direct flights would be a better option, and the Dreamliner concept was born. Two months later Boeing ditched its earlier plans for a new program, the 7E7, E for efficiency, that became the 787 Dreamliner with a first flight planned for 2008. Airbus, on its side, continued with its huge A380 project (Time, sept.17.2007:49–52). When Airbus understood, that they might have made the wrong choice, they announced that they also had began developing its own city to city aircraft, the somewhat larger A 350. Recent developments have also shown that so far the A380 has not been that much of a success.
- 15.
It is interesting to observe what a bold and fast technology initiative of a new and small entrant (the Tesla) with sufficient financial backing into a market, thought to be protected by enormous scale barriers, can accomplish suddenly in the form of industrial restructuring.
- 16.
Both Airbus and Boeing are currently going through a thorough makeover of their manufacturing organization. Their jetliners were previously made largely by hand but are now assembled in an automated production line (The Wall Street Journal, July 9–10, 2016:B4).
- 17.
Data do not allow a separate calculation on Gripen with and without Ericsson , which also would not be that meaningful. But a rough calculation removing Ericsson from both the numerator and the denominator, which would be principally incorrect to do, reduces the spillover multiplier to around 1.8. This is however still an inconsistent calculation since then one should also remove Ericsson’s part in the Original Gripen project, which would raise the estimate back up again.
- 18.
Or 77 billion SEK in 2007 prices, if we only add up the yearly numbers corrected for inflation. The larger 132 billion SEK estimate mentioned in Sect. 4.2 has been arrived at by upgrading each yearly investment vintage cumulatively with an interest rate up to and including 2007 and then adding up the vintages. See Eliasson (2010a:256f) for details.
- 19.
The development (R&D) part of total development and manufacturing of 204 Gripen aircraft is just below 70% of the total (Eliasson 2010a:257).
- 20.
In the interviews, I was frequently told that today everything is done through modeling and simulation on computers. Even the first prototype aircraft today “flies in the computer,” and the first flying aircraft is sometimes the first aircraft delivered on the production run. So in principle IT content should be 100%.
- 21.
As the difference between the social and the private rate of return
- 22.
The more common demand of the political customer in military procurement, for the supplier to provide local employment through an “offset trade” arrangement, has not been an explicit requirement this time. While to pay extra for complementary technology and industrial knowledge provisions makes economic sense (see further Chap. 9), asking for temporary employment in conjunction with the procurement contract does not.
- 23.
The Gripens constantly have to be improved to be both lighter and smarter, and Swedish industry is at the forefront when it comes to miniaturizing integrated mechanical and electronic systems and components. Already in 2009, Swedish FMV and the US Department of Defence contracted Uppsala research company ÅAC Microtec (a spin-off from the Ångström Laboratory, also in Uppsala) to use a unique US standard to reduce the size of and define interfaces to integrate electronic systems. This is an example of development projects with great spillover potential (Ny Teknik , 2 September. Nr 36. 2009:6).
- 24.
Except, among those mentioned, AEL which is located in southern Brazil, a diversified industrial area the size of France that (notes The Economist , Nov 26. 2016:41f) has weathered the recession of 2016 much better than the rest of Brazil
- 25.
The rules laid down by President Obama were (1) outside war zones near certainty was required that civilians would not be harmed, (2) targets had to be identified with near certainty and represent a threat that could not be dealt with in another way, (3) proper oversight and chain-of-command accountability (quoted as a reason for moving drone strikes from the CIA to the Pentagon), and (4) strikes had to advance broader American strategic interests. It appears, however, that the Trump administration is already working on loosening these rules from the previous administration ( The Economist , March 18.2017:34f).
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Eliasson, G. (2017). The Swedish Military Aircraft Industry: The Development, Upgrading, Modernization, and Exporting of the Gripen Combat Aircraft. In: Visible Costs and Invisible Benefits. Economics of Science, Technology and Innovation. Springer, Cham. https://doi.org/10.1007/978-3-319-66993-9_4
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