LE BOURGET, France — Saab Space is implementing a series of offbeat measures as part of a broad productivity

improvement program that the manufacturer of satellite electronics and rocket guidance and separation systems hopes will reduce costs by up to 40 percent over three years, company Chief Executive BengtMortberg said.

In addition to tinkering with process improvements for its hardware, Sweden’s largest space-hardware builder has included free bicycle repair, pedometer distribution to employees and free religious and psychological counseling as part of the productivity drive.

In a June 20 interview here at the Paris air show, Mortberg said the measures raised eyebrows at Saab Group corporate headquarters, but that the initial results suggest that they are having a measurable effect.

“We’ll know much more in the autumn when we take a formal measure of what we have achieved, but I can say already that we have seen statistically measurable differences in terms of reduced sick leave and absenteeism,” Mortberg said. “This may be something that the rest of the corporation will wish to adopt.”

Saab Space, which also owns Austrian Aerospace GmbH of Vienna, builds satellite signal generators and converters, data-handling systems and on

board computers, and also provides separation systems to U.S. and European launch-services companies.

The company recently added Space Systems/Loral of Palto Alto, Calif., to its customer list, an important addition given Loral’s recent successes in the global commercial market for telecommunications satellites.

Saab Space, which has about 510 employees, reported sales of 702 million Swedish krona ($102

million) in 2006. The company added 895 million krona in new orders in 2006.

With the addition of Loral as a customer, Saab Space has three of the four major U.S. satellite prime contractors – Boeing Satellite Systems International and Lockheed Martin Space Systems were already regular Saab Space customers – to its portfolio. The one missing contractor is Orbital Sciences Corp. of Dulles, Va., which like Loral has been one of the big winners in the recent upswing in the commercial satellite market.

In Europe, Saab Space regularly works with Astrium Satellites but only intermittently with ThalesAlenia Space, the latter having an in-house capacity that competes with Saab Space.

But the Swedish company has nonetheless won business recently from ThalesAlenia as part of the large contract to build 48 second-generation Globalstar mobile communications satellites. Saab Space will be delivering on

board antennas for the satellites to Cannes, France-based ThalesAlenia Space.

Government customers – principally the European Space Agency – accounted for 63 percent of Saab Space’s sales in 2006. That same year, U.S. customers represented just 7 percent of the company’s total sales, a figure Mortberg said does not reflect the long-term average of 15-20 percent.

The decline of the dollar on international markets is one of the factors pressuring companies like Saab Space to cut costs or risk losing business in the United States, and is one of the factors that led to the productivity improvement effort.

said Saab Space’s


resources division, seeking to contribute to the three-year effort, was the source of several of the unusual employee perquisites including free bicycle repair, the informal competition based on pedometer readings – “I’m supposed to take 10,000 steps per day,” Mortberg said – and the presence of a psychologist and religious counseling at the company’s production facilities.

“Our human resources people wanted to feel that they were contributing to the general effort,” Mortberg said. “We started out with one bicycle-repair mechanic on site on a regular basis, and now we have two because the demand was so high. The religious counselor is also fully booked, although of course I am not aware of any of the specifics of who’s visiting or why. The idea here is that people see the company cares about them and this will improve their feeling toward the company.”