Sweden is a model Interview with Håkan Buskhe - The CEO of saab

This interview was written by Mario Sabino and published on Veja Magazine (Yellow Pages), February 2014.

 

The CEO of Saab, the company that sold the Gripen jets to Brazil, explains how education and the need to do more with less are key to the success of his company and his country.

Anyone arriving at Saab's offices in Stockholm, located on one floor of a small building without doormen, is shocked by the frugal atmosphere at what is one of the most cutting-edge companies in the armaments industry with almost 15,000 employees and which beat the Americans and the French to win a contract to supply Brazil with 36 fighter Jets – the Gripen NG, for Next Generation – at a cost of $4.5 billion. However, according to the 50-year-old company CEO Hakan Buskhe, it is this philosophy of simplicity which is behind Sweden's success. Before another trip to Brazil last week to meet with the commander of the Air Force and the minister of Science, Technology and Information, he granted us the following interview.

Do you have any idea what may have happened?

Well, anywhere in the world, this type of large and strategically important government procurement process involves a number of factors which can have an influence on the result. Quite often, the opinions of consultants involved in the process do not reflect the views of government leaders… To be honest, I do not know what happened to make Brazil review its decision. What I can say is that a fighter purchase is always a highly political decision.

When did talks with the Brazilian government start again?

Even after the 2009 announcement, we never lost contact and our conversations were always extremely friendly and focused on highlighting the qualities of our aircraft. I believe that I can summarize our position in the following way: we, the Swedes, who live close to the North Pole, where conditions are tough – and I was born quite close – quickly learn that sometimes you win and sometimes you lose. This is why we never have a bad word for our competitors. Like my father said, you shouldn't kill your neighbor because you may end up on your own, and this isn't a good way to survive in a hostile environment full of bears and elk… The fact remains that the Gripen NG is a tremendous fighter jet, the most modern in the world but it is reasonably priced. Additionally, we promised a complete technology transfer, which was a vital issue for Brazil.

Would you say that President Dilma Rousseff's administration took another approach to the fighter purchase?

All I can say is that the Brazilian Air Force has always behaved with great professionalism. It has always provided transparent and unbiased information, even though the selection process was a long one. For example, there was never a time when we felt we were number one or number three on their list and they did a very good job making sure this information did not leak. Obviously, we realized our assessment had been positive, but there was never an indication of who they preferred until the final choice had been made. Your Air Force was very skillful.

Could the US spying scandal have had an influence on the Brazilian government's decision to purchase the Swedish Jets?

Well, transactions like these involve a number of variables but I cannot say what, if anything, could have helped us win beyond the technical requirements. Ever since I took over as Saab's CEO, I have visited Brazil on many occasions, met many people, we have set up a technology innovation and research center in São Paulo and nobody ever talked to me about this, despite the rumors. You would probably be better off asking the Brazilian politicians.

Many Brazilians ask why a country with no enemies and so many gaps in education, health, housing and infrastructure would spend $4.5 billion purchasing 36 fighters. Do you have a good answer?

I believe it is important for a country to be able to defend itself from external aggression, however unlikely that aggression may be. Look at Sweden. We are country at peace and there has been no external conflict for exactly 200 years, since 1814, when Jean-Baptiste Bernadotte, one of Napoleon Bonaparte's best marshals, became king of Sweden using the name Carlos XIV and convinced the Swedes to become neutral. He was tired of witnessing so many devastating battles and seeing how unproductive the wars ravaging Europe had been. However, if a country is unable to respond to or avoid attack, there is a risk that its sovereignty may not be respected. This is why Sweden, a neutral country, maintains well-equipped armed forces. It is also wrong to believe that armies are only useful in times of war. They also help guarantee the security of the nation's resources, its logistics network and, depending on the situation, they can repel terrorist attacks. Clearly, what Brazil intends to do with the aircraft is not something within my remit. What I can guarantee is that we will provide the best fighter at the lowest price. It is a Swedish legacy: we are a small country, with less than 10 million inhabitants, which is why we force ourselves to do as much as we can with as little as possible. Because of this mentality, our defense costs have not compromised our education or health systems or our social reforms. The Swedish model, if we can call it that, shows that all these things can move forward at the same time.

Saab does a lot of business with emerging countries. Does the company face any corruption problems with this type of client?

In our business, ethical issues are bound to come up. I would be foolish to deny that this is a problem. However, we have zero tolerance for corruption, we take a very strong stand on this. In fact, I think it is very good that we have international assessments of business honesty because this educates people, and we always do very well. Additionally, I want to point out that if we did anything wrong, the Swedish government would simply hang us out to dry, because we need its endorsement to export military equipment and Sweden has a whiter than white reputation, in any type of business. There must be total transparency from manufacturers who have to follow the rules closely so that their goods receive the Swedish king's prestigious quality seal. For me, as a CEO, this is perfect. We have also signed up to the UN Global Compact which brings together companies committed to working within a framework of human rights and rejecting corruption. And if your next question is whether anybody asked us for bribes in Brazil, I can tell you they didn't.

The Gripen NG only exists as a prototype, it has never been tested in combat or crisis scenarios. How can you guarantee it was a good choice?

This fighter has over 120,000 completely safe flying hours which were performed during tests in Sweden, England, South Africa and Hungary. It is an improved version of the Gripen C/D, used by the Swedish and other air forces. Basically, it carries more weapons, more fuel and is equipped with new turbines. The technology risk is extremely low. I know that our competitors have been spreading information criticizing our fighter, claiming it is inferior to any other fighter in the same category, but this is nonsense. I have flown a Gripen NG, and it works. If you would like to fly it, you are more than welcome.

Many of the Mirage jets which Brazil purchased from France in the 70s ended up having accidents, either because of breakdowns or pilot error. What is the risk of the same thing happening with the Gripen aircraft?

I do not comment on our competitors, but the fact is that fighters like ours are much easier to pilot today. Anybody who spends a few hours in a simulator could take off or land one of these aircraft, provided they were supervised by a copilot. They have more sophisticated electronics which means they depend less on mechanical instruments, which are generally more fallible. It is practically impossible for a Gripen pilot to bring down his own plane. He could point the nose of the jet is straight down, but he still wouldn't be able to do it.

What does technology transfer mean, exactly?

It means we will be transferring everything that Brazil will need to develop its own next generation of military jets. We will be working with many Brazilian companies, including Embraer and Akaer, and I believe that 80% of the 36 fighters on order could be fully manufactured in Brazil. Our plan is for your country to become an export base for Gripens - we are building a factory in São Bernardo do Campo which is part of this project and I know there will be others. Depending on how successful project is, we will create thousands of jobs.

Brazil faces serious difficulties in education and, as a result, in terms of professional training. Will this be an obstacle for the technology transfer?

You have highly qualified people in the aviation industry. Look at Embraer: in terms of civil aviation, it defeated us in the 80s and 90s, when Saab was still in this market. But, if we have to educate people, we will, no doubt about it.

Would it be right to say that the success of Swedish companies is based, to a great extent, on one of the most efficient educational systems on the planet?

Yes, this is key to everything. We are no more intelligent or more stupid than any other country, but we like to work in groups, which means results are achieved faster. This consensus culture is impressed upon us from the first day we go to school. Another factor is that we learn to like learning. From lower school, we respect to each student's efforts even when we can see that they on the wrong path, because this is an important way of developing a person's ability to reason. No less important is the fact that Sweden spends 10% of its GDP on education, more than any other country in the world. Finally, Swedish companies are continually driving innovation. At Saab, we spend 25% of our cash on research.

You run a company that makes weapons. Do you sleep well at night?

When I accepted the invitation to become CEO at Saab, I had to convince myself that this was an honest way of making a living and I also had to persuade my wife and three daughters – which I must confess was the most difficult part. However, I concluded that countries have a right and an obligation to defend their territory. Furthermore, when you purchase weapons from a superpower, you also have to buy into their doctrines. But Sweden is not a superpower, so it has no doctrines to export. From a moral standpoint, this is comforting. We should also bear in mind that the arms industry has produced many civilian benefits, particularly in communications. Yes, I sleep well.