BAE Systems Hägglunds will cut up to 40 percent of its staff due to lost orders from the Swedish army, raising political turbulence in Sweden.

Between 300 and 400 employees will lose their jobs at BAE Systems Hägglunds in Örnsköldsvik, according to Swedish state television’s Rapport. That equals 30 - 40 percent of the total workforce.

The cut-downs came just four days after the Swedish Defense Material Administration, FMV, awarded Finnish defense company a prestigious contract with the Swedish army including 113 Patria AMV (Armoured Modular Vehicle) and system equipment – and so turned down BAE Systems Hägglunds’ combat vehicle SEP.

The value of the order was €240 million. The decision to cut the number of employees is said to be a consequence of FMV’s decision. The reductions have not been confirmed by Hägglunds.

The choice to go with the Finnish company raised a political debate where the Social Democrats urged FMV to choose Hägglunds in order to save Swedish jobs. Besides, the Swedish taxpayers have so far invested 1 billion kronor (€91 million) in Hägglund to develop the SEP.

However, FMV said that the Finnish company simply delivers a better vehicle.

“After a comprehensive evaluation of test results, performance, economy etc, we are convinced that we have reached the best decision based on the operational requirements the Swedish Armed Forces has set”, said Peter Elmlund, project manager for the contract at the Swedish Defense Material Administration.

AB Hägglund & Söner was founded in 1899. BAE Systems AB is a Swedish defence company and a subsidiary of BAE Systems Land and Armaments, whose ultimate parent is the British defence contractor BAE Systems.