buglerbilly
21-06-10, 04:42 AM
As EU Opens Up Market, Vehicle Maker Reorganizes
By GERARD O'DWYER
Published: 21 June 2010
HELSINKI - Responding to a decline in domestic orders and the need to further internationalize, Finland's Patria group is overhauling its defense, aerospace and security business units and its management structure.
The chief goal of the reorganization is to deliver a more technology-driven and focused company that can compete in Europe's increasingly cost-sensitive defense and aerospace markets.
Patria's most high-profile product is the Armored Modular Vehicle (AMV), an eight-wheel personnel carrier that can serve in other roles, including infantry fighting vehicle, ambulance or command center. Besides in Finland, Patria has won AMV contracts with armed forces in Poland, Slovenia, Croatia, South Africa and the United Arab Emirates. It has sold about 1,300 AMVs to date.
The group's reorganization, which took effect May 1, was heavily influenced by the European Union's decision last year to open up the continent's defense market, said Heikki Allonen, Patria's president and CEO. The EU approved a directive to member nations on defense and security procurement that aims to enhance competition, he said.
"To strengthen Patria's capability to meet these chan-ges, in the domestic and international markets, Patria's owners and management decided to renew group structures," Allonen said in a statement. "Technological requirements in the field have increased, and the development of net-centric, protected and efficient products is more expensive than before."
The reorganization, Patria said, will not result in layoffs.
How the Group Began
Patria's birth came about from a restructuring within Finland's defense industry in 1997, when the country's government merged five mainly state-owned industrial players. The aim was to produce a state defense enterprise with the capacity to evolve and compete internationally.
A 2001 deal gave EADS, the European aerospace and defense giant, a 26.8 percent equity stake in Patria, elevating the group's international profile, said Finnish industry analyst Kari Sundstrom.
"The objective here, as seen by the Finnish state, was to find a strong international partner for Patria that had the potential to unlock markets and open up new opportunities," Sundstrom said. "EADS' role has been very beneficial ... in that respect, particularly for the company's development of armor plate and armored wheeled vehicles."
Patria has three divisions:
■ Land Solutions, which included the Land & Armament business unit and Patria Hägglunds, a joint venture with BAE Systems.
■ Systems Services, inclu-ding the Aviation, Systems and Millog business units.
■ Industrial Holdings, formerly including the Aero-structures business unit. It currently includes the group's shares in two joint ventures - Nammo, an ammunition company that Patria owns 50-50 with Norway's government, and Eurenco, a European maker of explosives and chemicals in which Patria holds a 20 percent stake.
The reorganization has produced Patria Holding Oyj, a new umbrella company in which Finland's government and EADS will share ownership, with the state's holding remaining at 73.2 percent.
Under the new structure, the current Patria Group will provide administrative and financial services to the business units, such as managing capital investments and arranging financing for overseas deals.
In other changes:
■ The Aerostructures business unit was moved to the Systems Services division, where it will be a subsidiary of Patria Aviation.
■ The Land Solutions division is being reorganized, as the Land & Armament business unit has been divided into two units.
These include Patria Land Systems, a project management company being spun off to strengthen the group's foreign marketing efforts.
Patria Land & Armament, meanwhile, will change its name to Patria Land Services. The business unit will compete in such markets as the production and life-cycle support of military vehicles.
The reorganization also affects other business units, including Millog, which Patria formed last year to provide technical support to Finland's Army.
Patria also intends to strengthen its ability to assemble and maintain helicopters and planes, both military and civilian, with an emphasis on winning new international business, said Jukka Holkeri, Patria's executive vice president.
Patria has been a Eurocopter subcontractor since 2001, maintaining choppers and carrying out final assembly work. Eurocopter is an EADS subsidiary.
Patria also has carried out final assembly of the NH90, a European military utility helicopter, under the Nordic Standard Helicopter Program (NSHP). Finland, Sweden and Norway have ordered 62 NH90s through the NSHP.
Setting Goals on Land
The Finnish defense group has high ambitions of becoming a significant European force in armored vehicles, and it hopes to add Sweden's $300 million Armored Wheeled Vehicle (AWV) program to recent contract wins, said Lars Lundgren, a Stockholm-based industry analyst.
A decision by Sweden on the AWV program is expected by the third quarter of this year. Under the contract, the first vehicles would be delivered by no later than 2014.
"Patria is still very much in the running for the Swedish AWV order," Lundgren said. "It would be a major coup for the company, and a reference point to pursue even larger orders internationally. The EADS connection may be pivotal to opening doors for Patria in this … segment."
The strategy to move Patria to the fore in the armored vehicle market will involve a combination of rolling capital investment, to support research and development, and bolting on new firepower and options to Patria's basic AMV models, Lundgren said.
"Patria has already signaled its intentions in this regard, and with its linkup with Kongsberg [Group of Norway], it's clear that it is looking for partner opportunities to take its AMV offerings to the next level," he said.
In recent months, Patria has deployed Kongsberg's Protector remote weapon station and Protector Lite system in a hunter-killer role on what it calls the Nordic AMV. Patria is promoting the Nordic AMV as a standard infantry fighting vehicle for militaries in Finland, Norway, Sweden and Denmark. ■
E-mail: godwyer@defensenews.com.
By GERARD O'DWYER
Published: 21 June 2010
HELSINKI - Responding to a decline in domestic orders and the need to further internationalize, Finland's Patria group is overhauling its defense, aerospace and security business units and its management structure.
The chief goal of the reorganization is to deliver a more technology-driven and focused company that can compete in Europe's increasingly cost-sensitive defense and aerospace markets.
Patria's most high-profile product is the Armored Modular Vehicle (AMV), an eight-wheel personnel carrier that can serve in other roles, including infantry fighting vehicle, ambulance or command center. Besides in Finland, Patria has won AMV contracts with armed forces in Poland, Slovenia, Croatia, South Africa and the United Arab Emirates. It has sold about 1,300 AMVs to date.
The group's reorganization, which took effect May 1, was heavily influenced by the European Union's decision last year to open up the continent's defense market, said Heikki Allonen, Patria's president and CEO. The EU approved a directive to member nations on defense and security procurement that aims to enhance competition, he said.
"To strengthen Patria's capability to meet these chan-ges, in the domestic and international markets, Patria's owners and management decided to renew group structures," Allonen said in a statement. "Technological requirements in the field have increased, and the development of net-centric, protected and efficient products is more expensive than before."
The reorganization, Patria said, will not result in layoffs.
How the Group Began
Patria's birth came about from a restructuring within Finland's defense industry in 1997, when the country's government merged five mainly state-owned industrial players. The aim was to produce a state defense enterprise with the capacity to evolve and compete internationally.
A 2001 deal gave EADS, the European aerospace and defense giant, a 26.8 percent equity stake in Patria, elevating the group's international profile, said Finnish industry analyst Kari Sundstrom.
"The objective here, as seen by the Finnish state, was to find a strong international partner for Patria that had the potential to unlock markets and open up new opportunities," Sundstrom said. "EADS' role has been very beneficial ... in that respect, particularly for the company's development of armor plate and armored wheeled vehicles."
Patria has three divisions:
■ Land Solutions, which included the Land & Armament business unit and Patria Hägglunds, a joint venture with BAE Systems.
■ Systems Services, inclu-ding the Aviation, Systems and Millog business units.
■ Industrial Holdings, formerly including the Aero-structures business unit. It currently includes the group's shares in two joint ventures - Nammo, an ammunition company that Patria owns 50-50 with Norway's government, and Eurenco, a European maker of explosives and chemicals in which Patria holds a 20 percent stake.
The reorganization has produced Patria Holding Oyj, a new umbrella company in which Finland's government and EADS will share ownership, with the state's holding remaining at 73.2 percent.
Under the new structure, the current Patria Group will provide administrative and financial services to the business units, such as managing capital investments and arranging financing for overseas deals.
In other changes:
■ The Aerostructures business unit was moved to the Systems Services division, where it will be a subsidiary of Patria Aviation.
■ The Land Solutions division is being reorganized, as the Land & Armament business unit has been divided into two units.
These include Patria Land Systems, a project management company being spun off to strengthen the group's foreign marketing efforts.
Patria Land & Armament, meanwhile, will change its name to Patria Land Services. The business unit will compete in such markets as the production and life-cycle support of military vehicles.
The reorganization also affects other business units, including Millog, which Patria formed last year to provide technical support to Finland's Army.
Patria also intends to strengthen its ability to assemble and maintain helicopters and planes, both military and civilian, with an emphasis on winning new international business, said Jukka Holkeri, Patria's executive vice president.
Patria has been a Eurocopter subcontractor since 2001, maintaining choppers and carrying out final assembly work. Eurocopter is an EADS subsidiary.
Patria also has carried out final assembly of the NH90, a European military utility helicopter, under the Nordic Standard Helicopter Program (NSHP). Finland, Sweden and Norway have ordered 62 NH90s through the NSHP.
Setting Goals on Land
The Finnish defense group has high ambitions of becoming a significant European force in armored vehicles, and it hopes to add Sweden's $300 million Armored Wheeled Vehicle (AWV) program to recent contract wins, said Lars Lundgren, a Stockholm-based industry analyst.
A decision by Sweden on the AWV program is expected by the third quarter of this year. Under the contract, the first vehicles would be delivered by no later than 2014.
"Patria is still very much in the running for the Swedish AWV order," Lundgren said. "It would be a major coup for the company, and a reference point to pursue even larger orders internationally. The EADS connection may be pivotal to opening doors for Patria in this … segment."
The strategy to move Patria to the fore in the armored vehicle market will involve a combination of rolling capital investment, to support research and development, and bolting on new firepower and options to Patria's basic AMV models, Lundgren said.
"Patria has already signaled its intentions in this regard, and with its linkup with Kongsberg [Group of Norway], it's clear that it is looking for partner opportunities to take its AMV offerings to the next level," he said.
In recent months, Patria has deployed Kongsberg's Protector remote weapon station and Protector Lite system in a hunter-killer role on what it calls the Nordic AMV. Patria is promoting the Nordic AMV as a standard infantry fighting vehicle for militaries in Finland, Norway, Sweden and Denmark. ■
E-mail: godwyer@defensenews.com.