Saab reveals its biggest bottleneck for faster growth

Saab says the biggest challenge to growing even faster is no longer hiring engineers or expanding production capacity.

Instead, the company believes the key constraint now lies deeper in its industrial base.

Asked during Saab's second-quarter earnings call what currently limits the company the most, President and CEO Micael Johansson pointed directly to the supply chain.

- The bottleneck is probably more in the supply chain than anywhere else, Johansson said.

- Not in the recruitment. We are attracting lots of skillful people, fantastic employees on a rate of 3,000 a year net up roughly. So that's not a limitation really.

The comments offer an insight into how one of Europe's fastest-growing defence manufacturers is thinking about the next phase of its expansion. While governments continue to increase defence spending and Saab builds new factories and recruits thousands of employees, the company now sees its suppliers as the factor most likely to determine how quickly it can continue to grow.

Strengthening the chain

Johansson said Saab is pursuing several measures simultaneously to improve resilience across its supplier network.

- We have to work with our supply chain to make sure that that becomes more resilient. It's everything from putting a little bit more in stock like titanium and aluminium alloys and special steel and some components, and also looking at maybe trying to certify an alternative supplier of course to have redundancy, but also to insource a few things to do it ourselves.

The focus reflects the increasing complexity of scaling defence production, where expanding Saab's own manufacturing capacity is only one part of the equation.

The company is currently ramping up production across several major programmes, including Gripen fighters, GlobalEye airborne early warning aircraft, submarines and missile systems, supported by a record order backlog of SEK 318 billion. 

Around 60 per cent of that backlog is due for delivery within the next two and a half years, placing growing demands on suppliers across the value chain.

Johansson suggested that supply chain management has become a permanent strategic priority rather than a temporary consequence of surging defence demand.

- All of these things are in play. We have to continue being on our toes working that.

For Nordic and European defence suppliers, the message is clear: as prime contractors continue to expand, the ability to scale production, secure critical materials and provide resilient manufacturing capacity is becoming increasingly valuable.