Rauma Marine Constructions and Saab to be Main Contract Partners for Pohjanmaa-Class Vessels
(Source: Finnish Ministry of Defence; issued Sept 19, 2019)
Finland has selected a local shipyard, Rauma Marine, to build its four new Pohjanmaa-class corvettes being procured under the €1.3 billion Squadron 2020 program, while Saab will supply their combat system. (Finnish MoD image)
At its plenary session on 19 September 2019, the Government authorised the Defence Forces Logistics Command to make a contract on the procurement of Pohjanmaa-class vessels and a combat system for the Navy.

Rauma Marine Constructions (RMC Oy and RMC Defence Oy) based in Rauma will construct the vessels for the Squadron 2020 project. Following the invitation to tender, the Swedish Saab AB was selected as the supplier of the vessel's combat system.

In addition to concluding an industrial cooperation contract with Saab AB, Minister of Defence Antti Kaikkonen decided on the procurement of ship-class propellers and propeller shafts from the Finnish company Aker Arctic Technology Oy.

The agreements on the construction of vessels, the supply and integration of the combat system and the supply of propellers and propeller shafts will be signed in Turku on 26 September 2019.

Finland’s maritime defence to be based on Pohjanmaa-class vessels

The Navy will decommission seven vessels and these will be replaced by four multi-role corvettes, capable of engaging in warfare with surface combatants and submarines, taking anti-aircraft measures and commanding maritime operations. The Navy’s new vessels will play an important role in Finland's defence system with core tasks until the end of the 2050s.

While the starting point has been that Pohjanmaa-class vessels will be built in Finland for reasons of security of supply the contracts will, for their part, ensure the preservation of Finnish shipbuilding expertise, particularly in terms of surface combatants and state vessels. The domestic employment effect of the contract will be about 3600 person-years. The domestic employment effect of industrial cooperation is about 75 person-years.

Pohjanmaa-class vessels to be built in Rauma

Since 2016, the Defence Forces have negotiated with Rauma Marine Constructions Oy (RMC) on the construction of Pohjanmaa-class vessels at RMC shipyard in Rauma. Before the construction contract, a letter of intent and a design contract were concluded with RMC.

The contract to construct surface combatants will include the final design and construction of four seaworthy vessels. According to the contract, RMC and its subsidiary RMC Defence Oy will build hulls of four Pohjanmaa-class vessels and integrate systems in them in cooperation with the system suppliers.

The vessels will be designed and constructed in Rauma, and Finnish and foreign companies will be subsystem suppliers and subcontractors. While the actual construction phase will be staggered over 2022-2025 the class will be fully operational by 2028.

A prerequisite for concluding the construction contract was comprehensive risk mapping and risk management work as well as cooperation at the Government level when the contract package was prepared. The stability of the yard's ownership base will be ensured and risk factors related to the ownership of the company will be managed through an agreement with the yard's owners. The completion of the ship class will be closely followed from the perspective of military performance and the yard's operational capacity.

Saab will supply the combat system

Saab was selected as the supplier of the combat systems for Pohjanmaa-class vessels. The contract includes four integrated combat systems installed on board ships, consisting of sensors, weapons and command systems. The combat system supplier also undertakes to integrate the systems which will be supplied by the Defence Forces.

At the end of 2016, the Finnish Defence Forces' Logistics Command sent requests to 12 companies to participate in the tender procedure to deliver a combat system for the Squadron 2020 vessels. Eight companies sent a request for participation; of these, Atlas Elektronik from Germany, Lockheed Martin Canada and the Swedish Saab were selected for the next stage. The Finnish Defence Forces' Logistics Command sent to these three companies a preliminary invitation to tender in 2017. Saab performed best in the comparison of the tenders.

In addition to the package to be procured from Saab, Pohjanmaa-class vessels will be equipped with a surface-to-air missile system, surface-to-surface missile system and a torpedo weapon system. Naval guns and decoy launchers will be removed from Hamina-class fast attack missile crafts and installed on the new vessels.

Propellers and propeller shafts from a domestic supplier

Minister of Defence Kaikkonen authorised the Defence Forces Logistics Command to make a contract with the Finnish company Aker Arctic Technology Oy on the design, supply and integration of propellers and propeller shafts for Pohjanmaa-class vessels. Aker Arctic Technology Oy has been developing propellers under the Defence Forces’ leadership since 2015.

Costs of constructing Pohjanmaa-class vessels

A total of EUR 1 232 million was allocated to the Squadron 2020 project in the 2018 budget. The share of the construction contract to be concluded with Rauma Marine Constructions Oy is EUR 647.6 million and the share of the propeller shaft contract with Aker Arctic Technology Oy is EUR 27 million. Price of the Saab combat system is EUR 412 million.

The total cost of the Squadron 2020 project is EUR 1 325.48 million, which includes the EUR 22 million risk reserve for joint acquisitions and the EUR 83 million for the ITO20 anti-aircraft missile system already purchased for the ship class.

The total costs are influenced by the increased price of the construction contract, the additional costs caused by the preparation and prolongation of the contract, the narrowing content of the contract, and the price reduction already taken into account but not achieved in the budget. In order to provide sufficient resources for product support and spare parts necessary for implementing the project, alterations during construction, ammunition, and project costs, the procurement authorisation needs to be increased by EUR 93.48 million in the third supplementary budget for 2019 to ensure the implementation of the Squadron 2020 Project.

The life cycle costs of Pohjanmaa-class vessels are similar to those of the vessels scheduled for decommissioning. They will be covered by the annual operating cost funding of the Defence Forces.

Finland will have service and maintenance capabilities

Minister of Defence Kaikkonen has decided to conclude an industrial cooperation agreement with Saab. The obligation of industrial cooperation for the Squadron 2020 combat system was imposed in June 2017, corresponding to at least 30 per cent of the combat system’s procurement value.

Establishing service and maintenance capabilities for vessels and their systems in Finland, industrial cooperation involves six domestic companies and the Defence Forces.


Multipurpose Corvettes for the Finnish Navy to Be Built at Rauma Shipyard
(Source: Rauma Marine Constructions; issued Sept. 19, 2019)
RAUMA, Finland --- Four new multipurpose corvettes for the Finnish Navy will be constructed at Rauma shipyard. The design phase will resume with immediate effect and construction of the first vessel will start at the shipyard in 2022.

The Finnish Government approved the procurement, valued at approximately EUR 700 million, today, September 19, 2019.

Rauma Marine Constructions Oy and the Finnish Defence Forces have come to an agreement regarding the construction of the new fleet of four multipurpose corvettes for the Finnish Navy. The Squadron 2020 project will replace a large number of the Finnish Navy’s existent fleet, consisting of seven vessels. The Finnish Government approved the procurement contract today, September 19, 2019.

The two parties will formally sign the construction agreement on September 26. The combat system, including weapons and sensors, will be provided by Saab, accompanied by necessary design and installation services by RMC.

The multipurpose corvettes will be delivered by 2026 and will be taken into operational use by the Finnish Navy in 2028. The procurement will have a considerable impact on employment, totalling around 3,600 person-years.

“This agreement is significant not only for its effect on local employment and businesses, but also on a national level, since at peak time, the project will employ some 1,000 people. Rauma Marine Constructions is a wholly Finnish-owned shipbuilding company, which continues the city of Rauma’s longstanding traditions of supplying combat vessels for the Finnish Defence Forces. Through this agreement, Finland will once again have a domestically built fleet, which supports our country’s security of supply”, says Jyrki Heinimaa, CEO, Rauma Marine Constructions.

Furthermore, according to Heinimaa, the project is also vital in strengthening the Finnish maritime industry and research conducted within the industry. RMC has, among other things, invested in production methods for light steel structures for the vessels and the agreement will also include new development and research projects.

“Projects such as Squadron 2020 enable new innovations and technology solutions to be utilised in a broader spectrum within Finnish shipbuilding”, adds Heinimaa.

Due to its strong order book, the shipyard is able to take a leading role in domestic maritime development projects. A good example is the ongoing construction of the new car and passenger ferry for Kvarken Link, which thanks to an array of innovative solutions, is the world’s first car and passenger ferry to be awarded the Clean Design certificate.

During the process of constructing the vessels, the shipyard will also develop the readiness to provide life-cycle services for the vessels following their delivery to the navy.

Ability to accommodate both combat vessels and civilian vessels

The Finnish Defence Forces is an important partner of RMC. In addition, the company’s order book of commercial civilian projects has also grown exponentially, and the company is profitable and has displayed strong growth. The agreement with the Finnish Defence Forces will bring RMC’s order book to over EUR 1 billion and create a positive impact on employment until the year 2026. The work will continue after the delivery as well, through the life-cycle services provided for the vessels.

Due to security reasons the corvettes and the commercial vessels will be built in separate locations at the shipyard. A new car and passenger ferry for the Vaasa-Uumaja route is currently under construction at the shipyard, as well as the planning of the Shuttle ferry for Tallink. RMC also announced its extended cooperation with the Meyer Turku shipyard. The cooperation has included construction blocks for cruise ships for the Turku-based shipyard and is now continuing, with RMC acquiring a licence to use the planning materials of the Shuttle’s sister ship, MS Megastar, from Meyer Turku. The materials will be used in planning the new ferry.

“Our shipyard is well equipped to handle the construction of both the civil and the governmental vessels simultaneously, which has also been successfully done in the past at Rauma shipyard. The Squadron 2020 project will naturally have its separate security arrangements and the construction is fully separated from the commercial civilian shipbuilding also through internal organisational arrangements”, notes Heinimaa.

As part of the project, the owners of RMC and the Finnish Defence Forces will also sign an agreement. The owners are committed to the project.

“We are happy that our owners have been behind this project since the beginning”, says Mikko Niini, chairman of the board at RMC.

Saab Selected as Combat System Provider for Finnish Squadron 2020 Programme
(Source: Saab; issued Sept 19, 2019)
In accordance with Finland’s Ministry of Defence’s proposition, the Government of Finland has today selected Saab as the combat system provider and integrator for the Finnish Navy’s four new Pohjanmaa-class corvettes within the Squadron 2020 programme.

Saab has not yet signed a contract or received an order relating to Squadron 2020. Finland’s Ministry of Defence has stated that the contract is scheduled to be signed on 26 September 2019 and that the order value will be 412 million Euro.

“This announcement marks a major milestone in Saab’s relationship with Finland and we look forward to continuing to support the Finnish Navy’s capabilities with our world-leading combat system expertise”, says Anders Carp, Senior Vice President and head of Saab business area Surveillance.

The contract period will be 2019-2027 and the scope will include a range of solutions, including Saab’s 9LV Combat Management System, related sensors and other systems.

All of the Finnish Navy’s current vessels feature at least one system from Saab, with the majority of vessels operating several systems from Saab.

Saab serves the global market with world-leading products, services and solutions within military defence and civil security. Saab has operations and employees on all continents around the world. Through innovative, collaborative and pragmatic thinking, Saab develops, adopts and improves new technology to meet customers’ changing needs.

The information is such that Saab AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, on 19 September 2019 at 12.33 (CET).


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