Saab North America will sustain a $1 billion business in annual revenue in three and a half years, nearly trebling its size in the US and Canadian markets, with 40% of that growth coming from mergers and acquisitions.
At least, that is the vision at Saab's corporate headquarters in Stockholm, but it falls upon Dan-Åke Enstedt, chief executive of its North American subsidiary, to realise it.
Perhaps incongruously, Enstedt said recently that the possible start of a cyclical downturn in US defence spending is a good time for a company such as Saab to launch an aggressive sales push.
He explained that tighter budgets will force the US military to accept more "off-the-shelf" products, which lack the risk and cost of developing all-new solutions. With a product portfolio spanning fighters and patrol aircraft to unmanned aircraft systems to advanced sensors, Saab believes it can compete in almost any market except tactical fighters.
STRONG POSITIONS
North America is among four major regions, including Brazil, India and Southeast Asia, where the company is building "strong positions", according to Saab's 2010 annual report. The goal is to expand Saab's reach beyond its current focus areas in Scandinavia, central Europe, South Africa and Australia.
North America accounts for 9% of the company's overall annual sales, compared with 15% in Asia.
Part of Saab's challenge will be establishing partnerships with US aerospace and defence companies in certain markets at the same time as it attempts to consume market share amid a defence spending downturn.
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© Saab GroupThe Saab 340 could be perfect for North American ISR missions |
Saab is not the first European aerospace and defence company to seek eye-popping sales growth in the country that accounts for half of the world's military spending.
Saab North America's current situation is not unlike the position of EADS North America when it hired Ralph Crosby in 2002. Over the next five years, Crosby trebled EADS NA's sales in the US market to $1 billion, and put it within a whisker of snatching the prized KC-X tanker contract from the eventual winner Boeing earlier this year.
EADS succeeded on the strength of its winning bid with the UH-72A Lakota for the US Army's light utility helicopter contract. The North American subsidiary also made a large number of small and medium-sized acquisitions.
Saab North America foresees similar opportunities for key projects. Enstedt cited, for example, the Saab 340 and 2000 platforms for intelligence, surveillance and reconnaissance.
Since 2008, the Hawker Beechcraft King Air 350ER has opened eyes to the possibilities of a long-range, manned platform for the intelligence, surveillance and reconnaissance (ISR) mission.
But Enstedt said he considers the King Air platform too limited for the US military's expanding ISR requirements. The size and performance of the Saab 340 has been a "wake-up call" to potential customers, he added. The 340 is already in private service with Calspan as an airborne testbed for the Office of Naval Research.
Similarly, the company sees multiple opportunities for the Skeldar rotary-wing unmanned air vehicle, with requirements emerging in naval aviation, special operations and the Marine Corps, Enstedt said.
GROWTH STRATEGY
Saab's growth strategy in the US market also includes commercial opportunities. An example is the Boeing 787 programme, for which Saab supplies composite cargo doors. Company officials have also targeted the 787's passenger doors as an opportunity, but must displace Lagardère.
Besides organic growth, the company is also looking to make acquisitions in the US market. The company's focus is on subsystem suppliers, such as sensors, that can enhance Saab's products on the international market, Enstedt said. But the company is not ruling out a major acquisition on the scale of Finmeccanica's $5.3 billion purchase of DRS Technologies, he added.
Source: Flight International
