Finland Signs Strategic Partnership for Army Maintenance
The Patria Group s Finland’s biggest defense company, with product offerings that range from mortars to vehicles to aircraft. The joint venture Millog Oy is part of that group, and the firm has just signed an 8-year, EUR 484 million (currently $755 million) base partnership agreement that will transfer most of the Finnish army’s equipment maintenance at the beginning of 2009. Patria Oyj’s release says that Finnish Army equipment maintenance currently costs about EUR 100 million per year.
The partnership is best described as a partial transfer, but it does fit the general model of partnered defense maintenance contracts around the world. Front line repair shops will continue their operations as part of the Finnish Defence Forces, while the partnership agreement covers life-cycle support and depot-level vehicle repairs. Millog will work on electronic, missile and weapon systems, as well as modifications and installations to all equipment. The maintenance organisations of Materiel Command, including Electronics Centre, Vehicle Depot and Depots in Kuopio, Lievestuore and Tervola will be transferred to Millog at the beginning of 2009. Millog will use the Defence Forces’ information systems and will receive about 520 people from the military, plus another 100 who will be retired by 2013 and will work under Millog’s supervision.
Finally, Millog Oy will act as a neutral expert, helping the Army plan for the maintenance costs of related procurements. The joint venture of Patria, Insta Group, Raskone, Sisu Auto Ab and Oricopa expects annual net sales of about 70 million going forward, and by 2016 the firm expects to raise 25% of revenues from customers other than this Army partnership.