SAAB North America has been doing business in the United States for 50 years and is expecting to expand its North American operations, building on strong relationships with U.S. industry and the cordial relations between Sweden and the United States, officials said
“Look at the pure size of the defense market–the U.S. defense market is 50 percent of the rest of the world and you see the sheer volume of opportunity here,” said Wes Walters, executive vice president, Sales and Marketing for Saab North America. “We have to be here.”
“We have some competitive products and our plan is to grow in the U.S…as the company has a very small presence here…through acquisition and organic growth,” he said in an interview.
In business since 1937, Sweden’s Saab AB has operations in more than 100 countries, with about 13,000 employees–more than 800 in the United States–and annual sales of $4 billion, John Belanger, vice president of corporate communications for Saab North America, said. In the United States in 2011, sales were about $270 million. This year, the company will probably be close to $500 million in order intake.
Walters said Saab North America has seven offices in the United States and two in Canada. In the United States, sites include Saab Training USA LLC in Orlando, Fla., co-located with its largest customer, the Program Executive Office for Simulation, Training and Instrumentation. “We have a very robust product line, which is in the U.S. inventory.”
Another example is a manufacturing plant in Lillington, N. C., Saab Barracuda. The facility makes all the camouflage for the U.S. Army and Marines, and at the height of recent conflicts was producing 10,000 systems per month.
Considering growth, Saab North America recently acquired SENSIS, in Syracuse, N.Y., and other locations. “Our radar was selected for (Littoral Combat Ship) LCS,” he said. They also have land radars used in Iraq.
The company is heavily involved in land and naval systems, with perhaps the least impact on the air side, Walters said. However, the company is a major supplier to Boeing [BA] on the Dreamliner.
The company looks at niche areas, such as shoulder-fired weapons. Saab built 600,000 of them in the early 1980s. One, the Carl-Gustaf, is going strong, and is in use by special operations forces, Navy SEALS, Marines, and Army Special Forces. In late September, Saab signed a $31 million contract with the Army to supply the weapons, responding to an urgent need from Afghanistan.
“We don’t stop developing, about 20 percent of our sales go back to internal R&D,” Walters said. “We have a large number of products developed and sitting on the shelf that with very little tweaking” can be used as a solution. If a government doesn’t have a lot of money to invest, it can use an 80 percent solution and start operating right away.
The next generation Carl-Gustaf is already in process, expecting to be seven pounds lighter and using next-generation munitions.
“What we see as an advantage for us is that we’re not greatly invested in R&D in the U.S. market. We have products already developed,” Belanger said. “We’re small fish in the big sea over here. If we get a small percentage of business in the market,” it’s a large piece of business because the market is so large.
Parent company SAAB AB two years ago decided “to go all in,” and go for market expansion, Belanger said.
For example, Saab North America “set a goal to do more than $1 billion in revenue by the end of 2016,” he said. “Looking at the progression, we’re well on the way to meeting that goal, combining organic growth as well as strategic acquisitions.”
Walters noted the company teams with prime contractors, finding niche areas and areas where technology can help with what primes offer. He doesn’t see Saab as a competitor to those large defense companies, but as a technical partner.
Meanwhile, “there’s a sea change for the group in the way it does business,” Belanger said.
Saab AB is moving to a more market-based organic structure, he said. Last year, a successful experiment in this area encouraged the CEO and Board of Directors to decide that, as of Jan. 1, there will be six market areas in the company, such as Europe, the Middle East, Asia-Pacific, and the Nordic area.
This is really an evolution, he said. Companies need to be where the customers are to do business, with a local presence and an ability to transfer technology. U.K.-based BAE Systems did something similar not long ago, he added.
“We’re here. We have been here and our plan is to stay and grow here as an America company,” Walters said. Insiders know who we are, but the majority of people think we’re a car manufacturer. “We do not produce cars.”