Anyone driving through Örnsköldsvik in northern Sweden can easily come across an army vehicle on the road. For example, a Beowulf, a kind of transport vehicle on caterpillar tracks, comes rushing towards spokesperson Ola Thorén’s car this Thursday afternoon. He works for combat vehicle manufacturer Hägglunds, the largest company in the town.
“We only drive it around during office hours,” says Thorén when the vehicle has passed. They have to go from the factory to the test track and back, but they make too much noise to drive through the town on the Gulf of Bothnia (55,000 inhabitants) at night. During the day it is already annoying for local residents.
However, they will have to get used to the fact that the noise will only increase in the coming years. Hägglunds is one of the many Swedish defense companies that has noticed that the world has been spending much more money on weapons in recent years, partly due to a renewed appreciation for defense among European governments after the invasion of Ukraine. It makes, among other things, the CV90 tanks, which are used on the battlefield in Ukraine after Sweden donated them (the Netherlands also owns these vehicles).
Turnover reached a record high of 567 million euros last year, almost doubling compared to the previous year. “We have four hundred tanks in our order book,” says CEO Tommy Gustafsson-Rask in a meeting room at the head office. In the corner is a bust of founder Johan Hägglunds, who started the company in 1899. “Everything is happening very quickly now,” said the director.
Total global military spending on weapons and ammunition last year amounted to 2,292 billion euros, the International Peace Institute Stockholm reported on April 22. That was an increase of almost 7 percent. In Europe, companies in France (Thales, radar systems), Germany (Rheinmetall, including tanks) and the United Kingdom (Rolls-Royce, including jet engines) have recently noticed this. These countries have large defense sectors.
Sweden is also among these countries. That country has traditionally had a diverse defense sector, including fighter jet manufacturer Saab and Hägglunds (formally part of the British BAE Systems, but largely independent). According to yet-unpublished figures from the Swedish trade association SOFF, the sector’s turnover grew to 5.5 billion euros last year, more than 24 percent than a year earlier. “And next year this will be even more,” says Robert Limmergård, chairman of SOFF.
This is good news for the companies in question, such as Hägglunds – not least because their stock prices are rising enormously. But there are also concerns, just like with many other European defense companies. Because how quickly can the capacity expand to keep track of orders? Is the industry capable of delivering what governments are asking for?
CEO BAE Systems HägglundsTommy Gustafsson-Rask We see a kind of competition in Europe to meet the standard as quickly as possible. Russia is not going away, and the war will continue for a while
“We have already seen orders increase since 2014,” says CEO Gustafsson-Rask. The first increase began with Russia’s annexation of Crimea that year. But at Hägglunds, orders have exploded since the 2022 war. Slovakia and the Czech Republic have ordered new CV90s, Sweden will order new tanks after donating fifty to Ukraine. Denmark has placed orders. And then there are also all kinds of orders for the Beowulf transport vehicles. The total order book amounts to approximately 6 billion euros.
Good news
The attitude of European governments has completely changed. Spending money on defense was unpopular for years. Now Germany says the standard that applies to NATO member countries – spending 2 percent of national budgets on defense – is just a starting point. Gustafsson-Rask: “We see a kind of competition in Europe to meet the standard as quickly as possible. Russia is not going away and the war will continue for a while. And then countries also have to supplement what they have donated.”
It is good news for Hägglunds itself – and Örnsköldsvik, which is highly dependent on the company. The defense industry was volatile for decades, the factory went from order to order and often had to deal with setbacks. Edvard Kleberg, head of the test circuit, points to a model of a tank in his office (which they themselves call an ‘infantry fighting vehicle’ here). Hägglunds designed it for Sweden in 2008, but it never came to production. “It would be eternal peace, we heard,” says Kleberg with a laugh.
In 2012, just after taking office, director Gustafsson-Rask had to immediately fire three hundred people. Over the past two and a half years, Hägglunds has grown from eight hundred to two thousand employees. Next to the head office, cranes are busy building new office buildings: everything no longer fits.
Here they think the high demand will continue. But the CEO guards against too much enthusiasm. The reason for the growth is “a catastrophe for Europe,” he hastens to say. Does he ever have the inclination to say to his clients: I told you so, don’t neglect defense? Gustafsson-Rask laughs, says no, before subtly adding: “But peace is seen as a given. Politics has not responded to Putin’s movements in a timely manner over the past fifteen years.”
No visitor is ever allowed to see the factory, it is secret. But on the test circuit you can still get acquainted with the products that Hägglunds makes. During a ride with the Beowulf – an amphibious vehicle with caterpillar tracks – test driver Marcus Noren stops the machine on a 30 percent slope. Inside, it feels more like the vehicle is driving up a dead straight wall. „A great vehicle”, says the silent Norwegians. Which also requires little training. You basically drive it exactly like a car.
When his colleague Edvard Kleberg shows the interior of a CV90 a little further on, it is striking how advanced everything is. All soldiers on board have their own screens with information. Hägglunds sees itself as high-tech: among other things, it works on innovations that make tanks invisible on infrared cameras.
The forests surrounding the test track indirectly reveal the origins of the company. Hägglunds comes from an industrial group that first built wooden trams. Because there is enough wood here, more than five hundred kilometers above Stockholm. Over decades it grew into one of the most important companies in the extensive Swedish military-industrial complex: because the country was neutral for so long, it wanted to manufacture as much as possible itself and not be dependent on other powers for the production of equipment. Now you have companies here like Saab (fighter jets, submarines), Bofors (artillery, also part of BAE Systems) and Nammo (munitions).
It is a much broader sector than in the Netherlands, for example, which mainly revolves around high-tech applications such as special cameras and radar systems. All these companies are heading for golden times, that much is clear. At least – if we manage to increase production capacity. “That is the big challenge now,” says Robert Limmergård of trade association SOFF. “There are many bottlenecks in the field of materials.” According to Limmergård, it also simply takes a very long time for a factory to be expanded.
Years of waiting for vehicles
Hägglunds boss Gustafsson-Rask also sees this problem. Due to the large number of orders, the waiting time has increased. Countries will have to wait years for their vehicles. “The chain is my biggest concern.” Hägglunds is building a second production hall and can then produce more. It is currently investing 300 million euros in increasing capacity. “But then the question remains: how many gun turrets – the rotating part on top of a tank from which shots are fired – can I get?” You can’t grow endlessly, says Gustafsson-Rask.
The tricky part: after years, government customers are suddenly prioritizing speed, says Gustafsson-Rask. “A general said to me: we used to have a lot of time but no money. Now we have a lot of money, but no time.”
The CEO thinks that a change in mentality is necessary among governments. “In the past, all countries came with 2,500 specific requirements. We want this, we want that. You had to test all that.” Now Hägglunds says: if you take a vehicle that just meets some basic requirements and is similar to what we have made before, you can get it in 2026 or 2027. “If not, sorry, it will be 2032.” Europe is simply far from having a war economy, says Gustafsson-Rask.
Meanwhile, President Zelensky of Ukraine had his own ideas for the future of Hägglunds. After a visit to Sweden, he said that a Hägglunds tank factory would be built in his country. “He said they need more than 1,000 CV90s,” says Gustafsson-Rask. In the long term, the intention is that such a factory will be built, says the director. But he also makes it clear that this is not yet a realistic plan. “The first day we pour concrete for a factory, we get a few Russian missiles on our roof.”
For the time being, it will simply have to come from the factory in Sweden. They are now more aware than ever of what kind of product they are actually making, says Gustafsson-Rask towards the end of the conversation. A large number of the vehicles they made here have rarely seen war. That is different now. The most impressive moment of his career, he says, was a meeting with Zelensky. “He said: ‘your product saves the lives of our soldiers’.”
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