Summary of the statistics:
• The industry had a turnover of nearly 48 billion SEK in 2021.
• Compared to the previous year, this is an increase of 12.9% (the second-largest increase since the end of the Cold War).
• A strong year in the Swedish market resulted in the lowest export share in two decades.
Turnover
Unlike 2020, when the market was unchanged due to the lockdown, 2021 was a significant growth year. The total turnover in 2021 (sales within defence and societal security to Swedish and foreign authorities, regardless of classification) amounted to 47,972 million SEK (compared to 42,476 million SEK the previous year). A noticeable difference from the previous year was that several medium-sized companies increased their turnover.
The statistics are influenced by a few larger projects, with the year seeing significant Swedish investments in, among others, the renovation and upgrade of Combat Vehicle 90 and Stridsvagn 122, ammunition, trucks, Gripen E, and Link-22 systems. From the historical low point in the Swedish market five years ago, when sales to Swedish customers barely reached 10 billion SEK, revenues last year were almost 25 billion SEK. The industry's turnover is, in absolute terms, the largest since 2008 (that year included large deliveries of Gripen to South Africa, combat vehicles to the Netherlands, and airborne surveillance radar).
Employees
The number of employees in member companies working with technology and expertise in societal security and defence was estimated to be about 27,600 in 2021.
Exports
Exports in 2021 amounted to 22,416 million SEK. This is over four billion SEK lower than in 2019. One reason is likely the pandemic, where travel restrictions and quarantine measures strongly affected international sales. Over the past ten years, exports have averaged about two-thirds of turnover, but with the strong Swedish market in 2021, the export ratio was unusually low. For the first time in twenty years, exports accounted for less than half of the total turnover (46.7%). However, Sweden continues to be the world's most internationalised country with a qualified technology and knowledge base. As in previous years, the statistics show individual peaks for different countries and regions.
Technology
A significant portion of the turnover continues to be product development, with about 15.4% going to research and development (R&D). In absolute terms, this is one of the largest investments in modern times, although percentage-wise lower than in previous years. Nearly half of the exports to armed forces and related authorities responsible for security were assessed to be subject to licensing according to the Military Equipment Act. The proportion of dual-use products remains high, as does an increase in civilian products and services that are not subject to licensing.
Markets
The US defence market is by far the largest non-Nordic market for small and medium-sized enterprises. Over time, the Nordic countries, the Netherlands, the United Kingdom, and Germany are the most important markets for the companies.
Analysis of market trends:
• Pandemic: Continued disruptions in the supply chain, leading to price increases.
• Geopolitical events: Increased focus on nearby partner markets.
• Defence investments: Since the Russian invasion of Ukraine in March 2014, defence budgets have continued to increase.
In 2021, companies experienced effects related to the pandemic, primarily in increased pandemic-related costs, delays in supplier deliveries, travel restrictions, absenteeism/quarantine, remote work, and adjusted work schedules. The new geopolitics also led to increased political tensions and heightened concerns about trade disputes between countries. An effect regarding changed customer behaviour is an increased focus on national capabilities that should be able to secure supply despite new uncertainties.
Since Russia's invasion of Ukraine in 2014, several key markets have seen increasing needs for defence capabilities, which over the last five years have led to significant defence investments. These increases in defence budgets were somewhat slowed by the pandemic, but the effect is now beginning to show, and in 2021, deliveries on previous orders and investments increased. During 2021, before Russia's full-scale invasion this year, several important markets announced further reinforcements of their defence budgets for the coming years.
Regarding the challenges for the supply chain, the risks remain even after the pandemic. Companies often rely on other companies to provide materials, larger components, and products, including electronics such as semiconductors. Disruptions affected deliveries in 2020 and 2021, as well as a changed inflation environment with increased raw material prices. The industry is therefore working to limit the impact of the supply crisis through, among other things, increased stockpiling. At the same time, it is clear that companies are likely to continue experiencing increases in labour and material costs at a rate higher than we have seen in recent years.