Swedish government to Saab: No Money For You!

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Presented without comment, from: http://www.nytimes.com/2009/03/23/world/europe/23saab.html?hp

Sweden Says No to Saving Saab, a National Icon
By SARAH LYALL
Published: March 22, 2009

TROLLHATTAN, Sweden ? Saab Automobile may be just another crisis-ridden car company in an industry full of them. But just as the fortunes of Flint, Mich., are permanently entangled with General Motors, so it is impossible to find anyone in this city in southwest Sweden who is not somehow connected to Saab.

Which makes it all the more wrenching that the Swedish government has responded to Saab?s desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, ?The Swedish state is not prepared to own car factories.?

Such a view might seem jarring, coming as it does from a country with a reputation for a paternalistic view of workers and companies. The ?Swedish model? for dealing with a banking crisis ? nationalizing the banks, recapitalizing them and selling them ? has been much debated lately in the United States, with free-market defenders warning of a slippery slope of Nordic socialism.

But Sweden has a right-leaning government, elected in 2006 after a long period of Social Democratic rule, that prefers market forces to state intervention and ownership. That fact has made the workers of Trollhattan wish the old socialist model were more in evidence.

?I don?t think the government knows the situation in this town, how many people depend on Saab,? said Therese Doeij, 25, a clerk at a photo shop who has several friends who work at the company. ?To them it?s just a factory. They don?t see the people behind it.?

Governments all over the world are confronting the disintegration of the global automobile market in different ways, with loans, bailouts and takeovers.

But Sweden?s approach has been particularly hard-nosed, and particularly unequivocal.

Why is the government apparently dead set against helping Saab, an iconic brand that stands as a global symbol of Sweden, with Ikea, Volvo and Abba?

That is what Paul Akerlund, the local chairman of the automobile workers? union, wonders.

?I?m a little surprised,? he said. ?They say the market should help itself, but the market has collapsed around the whole world. It?s an extraordinary situation.?

He added, with a note of accusation in his voice, ?In Germany, France and England, the government is going in to help the car manufacturers.?

Swedish officials have condemned what they see as protectionism by other European countries that have pledged to prop up their own failing car industries. They have also been scathing about General Motors, Saab?s owner, and the last thing they want is to seem to be bailing out a despised foreign company.

Struggling for its own survival, G.M. has said it will completely pull out of Saab by the end of 2009, a course that Ms. Olofsson, the enterprise minister, described as tantamount to declaring ?that they wash their hands of Saab and drop it into the laps of the Swedish taxpayers.?

She said: ?We are very disappointed in G.M., but we are not prepared to risk taxpayers? money. This is not a game of Monopoly.?

Saab lost about $343 million last year. It is now going through a Swedish process known as reorganization, a step short of bankruptcy, as it tries to persuade its creditors to prop it up while it looks for a buyer. Joe Oliver, a spokesman, said in an interview that ?around six serious investors,? from Sweden and abroad, had expressed interest.

Time is running out.

But the prospect of failure is too awful for Trollhattan?s mayor, Gert-Inge Andersson, to even contemplate. In a city of about 54,000 people, Saab employs 4,000.

?I?m being optimistic, because I can?t envision a time when Saab doesn?t exist,? Mr. Andersson said in an interview in City Hall.

His son worked at Saab for a decade; his daughter?s boyfriend works there now. ?Saab is our identity,? he said. ?We have lived with it for many years, and it?s very important to all of us.?

Saab was always known for its innovative engineering. But analysts say that in recent years, with General Motors?s emphasis on volume rather than individuality, it has lost its edge.

?Under G.M.?s ownership, they denuded the intellectual content behind the brand,? said Peter Wells, who teaches at Cardiff Business School in Wales and specializes in the automotive industry. ?Its products are not exciting enough, and Saab doesn?t have a strong brand identity anymore.?

The numbers speak all too loudly. Saab sold just 93,295 vehicles worldwide last year, 21,383 of them in the United States. As global demand plummets, the expectations for this year are even more dire. The company announced this month that it planned to lay off 750 workers in Trollhattan.

This is not a rich city. Besides Saab, the largest employer is the municipal government. The houses run mostly to modest wooden two-story structures and low-rise brick apartment buildings. But about 40 percent of the people here drive Saabs, Mayor Andersson said. On a cold evening last month, 3,000 people held a torchlight ceremony to show their support for the company.

Leave the tourist office and you come immediately to the Saab Museum. A shining, sparkling valentine to a company and an industry, it features treasures like the groundbreaking turbo engine unveiled at the 1977 Frankfurt automobile show, and the prototype of the very first Saab car, from 1947 ? Ur-Saab, its license plate says proudly. All the cars here, even the rarest and most precious, are still driven from time to time by enthusiasts.

Some 50,000 tourists visit each year, said Ola Bolander, who works at the museum. Saab sponsors a festival for its fans every other year; 20,000 came to the last one, in 2007. ?Saab has always been a bit different, a bit more interesting,? Mr. Bolander said. ?It?s gone its own way, and it?s in the heart of the Swedish people.?

Sweden has nine million people. Labor leaders say Saab?s collapse would disproportionately affect southwest Sweden, an industrial belt that is also home to Volvo. But it would reverberate through the rest of the economy, which depends heavily on industrial exports, jeopardizing perhaps tens of thousands of jobs.

Sweden is famous for its generous unemployment provisions, which include retraining for laid-off workers. But unemployment is quickly rising. Tomas Eneroth, a member of Parliament and the spokesman for industry and trade for the opposition Social Democrats, said the government?s tough line was foolish.

?The fact that they are so passive,? he said, ?is every day now making it worse and jeopardizing the possibility of having Saab still in Sweden.?

Around the corner from City Hall, Johann Riden, a sales clerk in an electronics store, said about half his customers worked either at Saab or at companies that do business with Saab.

?I have friends there, my colleagues have family there, and my friends have family there,? said Mr. Riden, 32. ?If you look around, you see Saab everywhere.?
 
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Good on them. Too bad for Saab, but hey, that's life.
 
Only ten years ago Saab was making awesome cars like the 900 Turbo and the Carlsson 9000. These days they are just making rebranded rubbish. Although it may not be their fault GM gave them the shit end of the stick, I can't blame the government.

It would a great shame for Trollhammaren though.
 
If Sweden were to split in a civil war, it wouldnt split into north and south, it'd split into west and east. Maud Olofsson is from the east and have little love for the western side, on top of that she's a greenie and hates cars (she owns a 1998 Ford Focus). She has no academic merits, finished secondary school with a average of 2,9 and earned a 2 (out of 5) in math. Her numerous small business enterprises have on thing in common, not one of them have ever produced a profit and she should therefore be an expert on bankruptcy. How she managed to get the job as enterprise minister? Well that's easy, she's a woman.

GM, Wagoner and Henderson, have not been helpful in the situation, that is clear. But they had barely given their presentation before Maud had made her mind up. GM have owned Saab for decades and never turned a profit. Yet, they have held onto Saab, which may strike one as odd. After all, it's GM. The 21 383 cars sold in the US last year are "lost" in Saabs financial reports. The profits from those never reached Saab, they were diverted to Detroit. And that is the real truth behind Saab, GM have used Saab in a way that is profitable to them, and declaring a profit in Sweden is not one of those things.

We'll see how this plays out. Right-wing goverments have a thin track record in re-elections, and Maud is famous for her ability to do a full poodle (make a drastic turnaround).
 
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I dunno if this is good or bad.

On one hand, if they do get money, and keep making Vectra ripoffs, it'll be pointless
On the other hand, if GM pulls the plug, and so does Sweden, maybe they will go back to making awesome cars for a small amount of people who "get" them...
 
GM have owned Saab for decades and never turned a profit. Yet, they have held onto Saab, which may strike one as odd. After all, it's GM.
That's why it shouldn't strike anyone as odd.

Isn't this what they did with Opel, too? Divert profits/resources gained from the smaller company and funnel it to Detroit for "the greater good"?
 
Isn't this what they did with Opel, too? Divert profits/resources gained from the smaller company and funnel it to Detroit for "the greater good"?

It is. Which is why the future looks rather bleak for them, too. German goverment (including Conservatives!) was eager to help them out - as long as it would be in form of credit guarantees, government loan, anything except directely investing in Opel... Sadly, GM shaped Opel's operation in a way no private investor wants to go near it, so the german government is out of the game, too...
...except, it's election year, so they have to keep Opel afloat until after the polls close.
 
It is a very sad news... I am for the diversity of the automobile market. So the disparition of one automaker is too much. Saab did great cars before. Now, it is GM (bad) rebrands... but if GM has done the same transformation for Saab than it did for Cadillac ? We will never know.
 
Only ten years ago Saab was making awesome cars like the 900 Turbo and the Carlsson 9000. These days they are just making rebranded rubbish. Although it may not be their fault GM gave them the shit end of the stick, I can't blame the government.

It would a great shame for Trollhammaren though.

I thought considering they were given mostly crap to work with, they did quite well. They made the Cobalt look good and go like stink anyhow.
 
What Saabs are rebranded? And what were they?

The 9-7x was basically just a rebadged Trailblazer, the 9-2x was a slightly different Subaru WRX, and though not rebranded, both the 9-3 and 9-5 were based on Vauxhalls I think.
 
The 9-7x was basically just a rebadged Trailblazer, the 9-2x was a slightly different Subaru WRX, and though not rebranded, both the 9-3 and 9-5 were based on Vauxhalls I think.

It's hard to base anything on a Vauxhall in the first place since, but even so the 9-5 is pretty much Saabs own work. 9-3 (=BLS) shares more with Vectra as it's a bit newer.
More info on the lost US cars have surfaced, the production costs were not lost, they were accounted for in Sweden. Profits ended up in Detroit. It's GM magic.
 
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The 9-7x was basically just a rebadged Trailblazer, the 9-2x was a slightly different Subaru WRX, and though not rebranded, both the 9-3 and 9-5 were based on Vauxhalls I think.

Oh, so no literal rebadgings like Manaro to GTO?
 
Nope, the 9-7x is the only example of such wickedness.
 
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