Veljan Denison

By Johan Ahlander and Tom Little

ORNSKOLDSVIK, Sweden, April 29 (Reuters) - The war in Ukraine has turned Sweden's defence industry into one of Europe's fastest-growing weapons hubs, a shift visible nowhere more clearly than in the tiny northern town of Ornskoldsvik, home to armoured vehicle maker Hagglunds.

Owned by British defence giant BAE Systems BAES.L since 2004, Hagglunds began as a family business making furniture in the late 19th century before moving on to buses, trams, planes and eventually, armoured vehicles in the 1950s.

Post-Cold War demilitarisation left the company struggling, and when Tommy Gustafsson-Rask became managing director of BAE Systems Hagglunds in 2012, his first order of duty was to cut a third of the workforce.

'IT ALL TOOK OFF' JUST BEFORE 2022

"I think the 2014 annexation of Crimea was when we saw something starting to happen," he told Reuters at the Hagglunds test track in Ornskoldsvik, adding that it all took off just before Russia's 2022 invasion of Ukraine.

"From having a typical order book of a couple of hundred million U.S. dollars, we're now at 8 billion U.S. dollars. So it's an enormous development," he said.

Sweden's arms exports have more than tripled to 28 billion crowns ($3.02 billion) in 2025, from 8 billion in 2015.

The defence industry employs around 30,000 people in Sweden, most of them at Saab SAABb.ST, maker of the Gripen fighter jet and the A-26 submarine. Saab's order backlog alone is more than 274 billion crowns.

Hagglunds has invested $300 million to expand capacity, including adding a third production line this year.

Output has surged 400% since 2020 and headcount has more than tripled to 2,600 from 800, making Hagglunds by far the biggest employer in the town of just 56,000.

BATTLE-TESTED VEHICLE DRIVES GROWTH

The cornerstone of its success is the fifth-generation Combat Vehicle 90 infantry fighting vehicle.

With a crew of three and able to carry up to eight soldiers with equipment, it has sold more than 1,300 units, with over 600 on order. That makes it one of Sweden's biggest arms export successes.

Battle-tested in Afghanistan and now used in Ukraine, Hagglunds hopes to secure orders for a further 500 CV90s for five European nations later this year.

Feedback from Ukraine has been mostly positive, though drones remain a risk. Still, no Ukrainian soldiers have died inside a CV90 and Ukrainian President Volodymyr Zelenskiy personally thanked Gustafsson-Rask during a visit to Sweden.

"He came forward, hugged me, and told me that your CV90s are saving our soldiers' lives, and I get goosebumps even now," he said.

The CV90, costing about $10 million per unit, has been sold to ten European countries.

Sweden, militarily unaligned for over two centuries before joining NATO in 2024, is the EU's seventh-largest exporter of arms, according to think tank, the Swedish International Peace Research Institute.

($1 = 9.2703 Swedish crowns)

(Reporting by Johan Ahlander
Editing by Bernadette Baum)

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