“Some companies make cars, others make history” is a strap line from Saab’s website, but it looks like Saab may be on the verge of leaving its mark in a way clearly, none of us want, as the Swedish manufacturer recently filed for what’s called ‘reorganisation’ which is effectively the same as Chapter 11 Bankruptcy protection.
Saab asked for help from the Swedish government, but that was turned down and the Swedish Industry Minister was quoted as saying “The Swedish state and taxpayers in Sweden will not own car factories. He added “Sometimes you get the impression that this is a small company, but it’s the worlds biggest automaker, so we have a right to make demands” an obvious reference to GM’s ownership of the company. GM had requested 5bn Swedish Kronor in state aid to help keep the company going until the start of 2010,
Following the Swedish government’s refusal to inject state aid, “Saab managing director Jan Ake Jonsson said reorganisation was the best way to prepare the business to become an independent entity ready for investment.”
Over a 3 month ‘reorganisation’ period, Saab will try and secure new funding from both the public and private sector. During that ‘reorganisation’ period, the company will not be allowed to pay off any of its debts which were accumulated before the arrangement was put in place.
There are still products planned for launch over the next 18 months, such as the new 9-5, 9-3X and 9-4X and Saab has a good foundation on which to build its growth, however they need funding to finish the engineering, tooling and pay for the launch costs.
It seems the ‘reorganisation’ will allow Saab the time to put these cars into the market without Saab’s situation impacting too much on GM. It’s thought therefore that this action, will avoid there being negative effects on other GM operations, which themselves are having tough enough times.
In terms of history, Saab was not originally a car maker and it was aircraft that originally rolled (or should I say flew) out of the Trollhatten factory in Sweden which was opened in 1938. With the war ending in 1945, other ideas were considered for the plant and Ideas included motorcycles, cars, commercial vehicles and even fitted kitchens!
Other Swedish companies, however, had the motorcycle market sewn up, Volvo already produced cars, and trucks were manufactured by Scania-Vabis. A Saab had to be the right size, type, construction and price – a small, affordable car. Thus, Saab had found its niche.
Production of cars started in 1949 and it took over 20 years for Saab to reach the milestone of having produced half a million cars.
GM (General Motors) took a 50% stake in Saab Automobile AB in 1990 and purchased the remainder 10 years later, making Saab wholly owned by GM by the new millennium.
Back to today’s situation, there wouldn’t be any advantage for GM to let Saab die, as it’s got a strong brand and a loyal, although small customer base. But, that said, G.M. are having problems on almost every front at the moment and have already commented that they want to “cut Saab loose by 2010” and have effectively confirmed this in a statement to the U.S. Treasury Department by saying it planned to end financial support for Saab by the end of 2010, so it looks like the two companies will definitely part but Saab will only be worth decent money, if it’s a healthy, strong, well performing company and clearly, that’s what this ‘reorganisation’ is all about.
The situation of most concern is for General Motors itself, as are they are having problems on almost every front and only this week there were more European troubles for them, this time it’s with its Opel division after G.M. had stated that they would need “more than” the $2.3 billion in loan guarantees which it had already discussed with the German government. A bailout for Opel is politically contentious in Germany, with politicians calling for strict conditions on the package. Some have even called for Opel to be taken out of American hands and that’s understandable, but Opel is so tightly integrated into the G.M. supply and technology chain and it’s just so difficult to see how that could ever happen. However, a reorganization plan for Opel, is in the offing with details likely to be announced in early March, but who knows what that means?
Hopefully, Saab, who employs around 4,000 staff, is going to get through this situation and this voluntary credit protection action seems to have been taken, to buy them time and to avoid pressure on its parent, during this difficult time.
Saab have made some weird somewhat quirky cars in the past, Saab has (like its Swedish competitor Volvo) been at the forefront of technology that’s made all of our lives safer as many of the ideas first pioneered by Saab are on almost every car we buy now. Saab deserves to stay in business and I am sure you, like me, wish them well in the testing times they have ahead.
