Kockums vs ThyssenKrupp – The submarine conflict

Kockums AB is a shipyard in Malmö, Sweden, owned by the Swedish defence company Saab Group. While having a history of civil vessel construction, Kockums’ most renowned activity is the fabrication of military corvettes and submarines.

Kockums worked with Northrop Grumman and Howaldtswerke-Deutsche Werft (HDW) to offer a Visby-class corvette derivative in the American Focused Mission Vessel Study, a precursor to the Littoral Combat Ship program. It competed with several other concepts, including Norway’s Skjold class (part of a Raytheon led group).

The submarine conflict

Prior to 1999, Kockums was controlled by the Swedish state through the company Svenska Varv AB. Having implemented a highly advanced variety of the Stirling engine for low noise submarine propulsion, Kockums was considered to have strategic value for the Swedish Navy. However, in 1999, Kockums’ main competitor on the submarine market, the German ship-building company HDW, acquired Kockums. In 2005, HDW was bought by the German industrial conglomerate Thyssen Krupp. The time after 1999 was beridden with conflicts between Kockum’s only Swedish customer, the Defence Materiel Administration (Sweden) (FMV), and Kockum’s German owners. The Swedish view was that the technical advancements made in collaboration between Kockums and FMV ought to be used to create a new generation of submarines for lucrative export: the A26 submarine. On the German side, the A26 project was said to be regarded as a high-risk project that could lead to uncontrollably growing costs. Superficially, the major source of conflict seemed to be that neither ThyssenKrupp nor FMV would accept carrying unforeseen development costs. As several technical innovations to be implemented in the A26 were kept in classified status at the FMV, ThyssenKrupp argued that the implied costs were too difficult to predict. This deadlock persisted for months until the FMV decided to cancel the order of the A26 submarines.

Globally, the conflict also concerned the general business strategy. ThyssenKrupp insisted that Kockums ought to discontinue large submarine construction and to focus on the development of small submarines. Meanwhile, anonymous sources from inside Kockums claimed that ThyssenKrupp’s goal in acquiring Kockums was never to reach synergies with HDW, but only to eliminate its main competitor.

When the Crimea crisis erupted in March 2014, Sweden’s defence interests in the future of Kockums came under closer scrutiny. The turning point was described by the chairman of the Swedish parliament’s Standing Committee on Defense (SCD), Peter Hultquist:

The wheels have turned. The government, possibly in response to Russia’s aggression in Crimea and the Ukraine, has decided that a strong industrial defense capacity that is Swedish-controlled will be the cornerstone that underpins defense policy and future capability.

In the search for a partner to develop the next generation of submarines, the FMV approached the SAAB Group. During autumn 2013, Saab tried to reach an agreement to buy Kockums from ThyssenKrupp. ThyssenKrupp demanded to keep its monopoly position in the A26 deal, which Saab refused to accept, causing the negotiations to fail. Saab responded by approaching Kockums’ engineers, offering them employment at Saab Naval Systems. Thyssen Krupp tried in vain to keep its engineers at Kockums, proposing an extra month’s salary.

The hositility towards ThyssenKrupp reached a new level during the Kockums equipment repossession incident on 8 April 2014. As per protocol, two military trucks accompanied by armed soldiers entered the Kockums shipyard in Malmö to reclaim all materiel and equipment belonging to the Defence Materiel Administration (Sweden), FMV, as well as all secret blueprints and images. By orders from a manager, Kockums staff tried to sabotage the repossession by locking the gates with the repossession crew and escort still inside. According to a spokesperson from FMV this is the first time they have had to forcefully repossess equipment.

Shortly after, ThyssenKrupp initiated discussions to sell Kockums to Saab. The deal was finalized on 22 July 2014, making Saab the new owner of Kockums.

22 comments

  1. vikinglifeblog · December 17, 2016

    SAAB Kockums AB Karlskrona

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  2. vikinglifeblog · February 1, 2017

    Reblogged this on VikingLifeBlog.

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  3. ᛋᛉᚺ|ᛟᚾ · February 1, 2017

    Oh, the drama which comes with the territory of collaboration, Thyssen.. Krupp was the beginning of the end, once an Industrial Titan now a slave to mismanagement. On an unrelated note I am glad to see that the Stirling Engines are being more widely implemented that was news for me.

    Liked by 1 person

    • vikinglifeblog · February 2, 2017

      “once an Industrial Titan now a slave to mismanagement.”

      Yes, very sad! I guess, that you where thinking of Brazil and Alabama.

      The steel part is not going well (especially in 2012), but I think they have been making profit every year since.

      “ThyssenKrupp and Austria’s Voestalpine are the only two European steelmakers that are profitable.” 2016
      https://www.theguardian.com/business/2016/may/10/thyssenkrupp-cuts-earnings-estimates-profit-steel-glut-china-imports

      ThyssenKrupp is still world leader in elevator.
      https://www.ft.com/content/e57e01be-8f96-11e6-8df8-d3778b55a923

      Liked by 1 person

      • ᛋᛉᚺ|ᛟᚾ · February 2, 2017

        Also largely in part because the Chinese have over saturated the world’s steel supply with their crap tier material, the age old conflict of quantity vs quality. It is the early 21st century and the Chin can still barely master a contemporary metallurgical process with high slag content in their steels which leads to a higher brittleness under stress or corrosion even among so called “stainless steels”. But of course where there is an abundance of garbage readily available at low cost those who strive for higher tier goods will suffer in competition or succumb to selling out..

        Liked by 1 person

    • vikinglifeblog · February 2, 2017

      HAHA! Very well written and good point.
      I remember, that they found out that Chinese water scrap taps polluted the water inside. If it was left there, long enough.
      Chinese economic succes is also based on German/Western companies bringing technology, building factories, doing quality control and us buying it.

      Regarding ThyssenKrupp. Them getting caught in corruption scandals, is also pretty bad.

      Liked by 1 person

    • vikinglifeblog · February 2, 2017

      Maybe you will find this interesting, it is also part of Krupp`s history.
      https://vikinglifeblog.wordpress.com/2017/02/02/something-very-germanic/

      Liked by 1 person

  4. tonytran2015 · February 2, 2017

    This is of interest to Australians as their current subs are Swedish.

    Liked by 1 person

    • vikinglifeblog · February 2, 2017

      It looks like you will be subbing french, in the future. 🙂

      What are the submarines really protecting: Australia or federal seats?
      http://www.abc.net.au/news/2016-04-27/barnes-what-are-the-submarines-really-protecting/7361554

      Liked by 1 person

      • tonytran2015 · February 2, 2017

        Australian politics is now totally absurd on every single point. If you say “Australia for Australians” you will be called Racist and the government threatens to sue anyone who is politically incorrect. The politicians use new migrants to vote for them to tighten their grips on powers and on their entitlements. Politicians only need to promise to bring in their relatives. A senior politician even assigned his State funded driver to drive his two dogs around town in a parliament car to destress them!

        China chose French subs for Australia. Jap subs were recommended but China did not want Japan to have the military contract! The final insult is Israel now get a better type of nuclear sub from Germany for less than 1/2 the price for Aus sub which are still on the drawing boards with uncertain additional costs.

        Liked by 1 person

    • vikinglifeblog · February 2, 2017

      The first part of your comment sounds like Denmark, too!
      Yes, I read that China had influence on the matter. But, I did not understand how and why!?
      I wonder how far in the future Germany have to babysit Israel, it is grotesque.

      Liked by 1 person

      • tonytran2015 · February 2, 2017

        China said that much of Australian mineral export is sold to China, if Jap subs are chosen then Jap defence industry would grow and China may stop buying Aust minerals to punish it. Then Australia tremble !

        Liked by 1 person

    • vikinglifeblog · February 2, 2017

      Ahh, OK! Thanks, now I understand.

      Liked by 1 person

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