Bydén on lease of fighter jets

Pending the delivery of Gripen NG fighter jets, Brazil may well be the last export customer to lease Gripen C/D jets from the Swedish operational fleet, reports Dagens Industri.

Just days after Saab’s export deal with Brazil, incoming Supreme Commander Micael Bydén has said that the Swedish Air Force has “limited opportunity” to lend Gripen C/D fighter jets to other countries, and that a new leasing agreement of the kind reached with Switzerland last year would be imprudent. Developments in Russia and last year’s annexation of Crimea have led Swedish politicians to call for a strong defence force that can scramble fighter jets in no time.

Sweden currently has an operational fleet of around 90 Gripen C/D fighter aircraft. Brazil wants to lease some 10 aircraft by 2016, and Slovakia six. Malaysia has also expressed interest in leasing Gripen fighter jets, and Thailand wishes to procure another six planes. Saab is also in talks with Indonesia and India.

“Basically, this is positive for Sweden, for industry and for the development of the Gripen system, and for the economy. But one has to understand that resources are limited …,” says Bydén.

His words are likely to cause Saab problems. However, one possible solution would be to upgrade Gripen A fighters to the Gripen C model. Saab could also build new Gripen C/D fighters if needed.

Business world in talks with SD

A number of employer organisations, including the Confederation of Swedish Enterprise, Almega and the Swedish Federation of Business Owners, have been interacting with the Sweden Democrats (SD) in a bid to influence policy in a direction favourable to their members.

The issue is sensitive, and many businesses are unwilling to comment. However, Ericsson CEO Hans Vestberg tells Dagens Industri (DI) that SD officials have visited the company, but that this was on the initiative of the party, while entrepreneur Dan Olofsson tells the paper he believes that the business world should talk to all parties.

Apparently, one of the issues under discussion has been profit-making in the welfare sector. Left Party leader Jonas Sjöstedt has reacted furiously to the news, accusing risk capitalists of trying to rescue profits with the help of a racist party.

Closure predicted despite investment

The Oskarshamn 2 reactor is likely to be shut down for good. Following months of negotiations, principal owner E.ON is insisting the reactor, which has been shut down for more than two years during a multi-billion kronor upgrade, should not be re-started. The power company says Oskarshamn 1, which is the oldest reactor, should also be shut down early, i.e. sometime between 2017 and 2020.

Finland’s Fortum, which is a major stakeholder in Oskarshamn operator OKG, has contested this, but experts believe E.ON will win the battle.

“Our main scenario is that Oskarshamn 2 has produced its last kilowatt hour,” says Christian Holtz, from consultant firm Sweco.

Brazil Gripen deal takes effect

Yesterday the Saab defence and security group announced that the contract signed with Brazil in October 2014 for the supply of 36 Gripen NG combat aircraft has come into effect. The conditions from Brazil associated with the financing of the deal have been fulfilled. Brazil will pay for the SKr 39.3 billion order with credit from the Swedish export credit corporation (SEK).
The aircraft will be built both in Sweden and Brazil and deliveries will run from 2019 to 2024.
Håkan Buskhe, CEO of Saab, said the deal would mean growing interest in Gripen and other Saab products. The defence group has Gripen deals in the pipeline with Belgium, Indonesia, India and Finland.

Sweden lagging behind

Recent figures show that Sweden’s industrial output declined unexpectedly in July. Few have taken note of the fact that Swedish output has shrunk by 10% over the last five years on a par with Italy, Spain and Greece. If Swedish industrial output had grown on a par with Germany and Belgium, production would have been 20% higher today, writes Stefan Fölster, head of the Reform Institute.
Shrinking output will impact on growth and the unemployment goal, warns Fölster, and suggests that the government must take a comprehensive approach in calculating the cost of taxes and incentives so that areas of Sweden where industry is in decline are not abandoned.

Mixed report on industry

Industrial production in the transport and machinery equipment sector is good, while it is lagging in the metal products and electrical engineering sectors. To add to this, several suppliers are showing weaker figures, finds a business tendency survey by the employers’ organisation for engineering and technology companies (Teknikföretagen).

Orders for industry on the whole remain unchanged, but production continues to be slower. Chief economist Anders Rune writes that although the demand for skilled workers has improved over the year, it is still at levels “we usually see in times of recession”.

Damberg on women in the boardroom

The number of female board members of listed companies has increased from 22% to 28% over the last year, show figures from the Allbright Foundation.

“State-owned companies have shown the way by attaining gender equality in the boardrooms. We can see that neighbouring Norway’s mandatory legislation has contributed positively to gender equality in corporate boardrooms,” says Damberg, but adds that there is some way to go before the ratio of female board members reaches 40%.

The Albright report states that it will take until 2025 to reach the 40% target if the trend continues at the rate of the past decade. At the same time, small enterprises and industry are hampering the development, says Amanda Lundeteg, MD of Allbright.

Concern over early shutdown

Friday’s announcement by the Ringhals board that two reactors at the nuclear power plant will be closed in 2020, is seen as a move by Swedish state-owned Vattenfall to ignore the wishes of minority owner German E.ON, and will cost the state and taxpayers upwards of SKr 17 billion.

Representatives of Swedish industry voice concern over the decision, and SKGS, the organisation that represents the interests of the Swedish base industries (forestry, chemicals, mining and steel) warns that it could jeopardise production in Sweden.

Riksbank buries head deeper in sand

Sweden’s Riksbank announced on Thursday that it was leaving the repo rate on hold at -0.35% but was prepared to make monetary policy even more expansionary, if necessary.

“In the desperate hunt for inflation the Riksbank is leaving no stone unturned …. The autopilot is switched on at 2% inflation and the cure is negative interest rates in a country with annual growth of more than 3%,” comments business daily Dagen Industri’s Henrik Mitelman today.

The Riksbank is doing everything in its power to keep the Swedish krona weak. The stronger the currency, the lower the Consumer Price Index – and the bank wishes to avoid that at all costs, he suggests.

Mitelman believes that the Riksbank has painted itself into a corner, prepared to cut interest rates further. What the bank has failed to bear in mind is that interest rates in negative territory will only lead to even higher levels of household debt. Furthermore, the bank’s governors are oblivious to the fact that they are the ones who are so carefully laying the groundwork for the next financial crisis, he concludes.

Saab’s former CEO denies guilt

Saab Automobile’s former chief executive, Jan Åke Jonsson, and the company’s chief legal officer, Kristina Geers, have appeared at Vänersborg district court accused of falsifying documents just before the carmaker filed for bankruptcy in 2011. A third individual is accused of assisting the two, issuing two false invoices for some SKr 30 million.

The case focuses on an import and distributor agreement for the Ukraine market with Cyprus-based Dukelevel Holdings Ltd, drawn up on 23 March 2011. The Cypriot company was apparently prepared to pay SKr 30 million in advance for the agreement, thereby allowing Saab Automobile to pay a liability to former owner GM in order to avoid bankruptcy.

However, according to prosecutor Olof Sahlgren, there never was any agreement with Dukelevel Holdings Ltd, and no payment was ever made to Saab Automobile.

Both Jonsson and Geers admit to signing the agreement, but have told the court that they remember very little else about the deal.