What looks now like Saab‘s eventual demise is presenting the Swedish government with a fairly large headache – not to mention the automaker’s thousands of staff – just a week before Christmas.
Saab CEO Victor Muller filed for bankruptcy this morning (19 December) – on the very day the Vanersborg District Court was due to hear his request to stay in voluntary reorganisation – potentially throwing its significant workforce into redundancy days before the Western world’s largest holiday.
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But despite the Swedish government describing the situation as “horrific” to me today, Saab’s downfall cannot have come as too much of a surprise to them or anyone. The automaker’s end has been trailed for months, if not frankly, years, since General Motors decided to relinquish control but not without attaching some pretty hefty strings to the deal.
Swedish government ministers are now making a hasty journey up from their Stockholm citadels to Trollhattan in the next couple of days, promising they will do all they can, even mentioning nearby Volvo that could potentially take on skilled engineers, but there is no disguising the fact this is a grim time for the Western Sweden region.
Apart from the very human cost of potential mass redundancies at Saab, there is a further knock-on effect to Saab’s failure – that of its heroically patient suppliers.
In fairness, they had no choice but to be patient – there was no point in attempting to push for Saab’s bankruptcy any earlier – there was simply no money in the kitty to pay the EUR150m (US$195m) – double that figure now according to European automotive supplier body CLEPA CEO, Lars Holmqvist.
“It is a disaster for the Swedish supplier industry that one of the OEMs has gone away,” Scandinavian supplier body FKG managing director Frederik Sidahl, told just-auto today from Stockholm where he has been in urgent talks with government officials. “There is no money back, there is zero of course, we are [the] last in the chain.”
What appears to have triggered the rapidly moving chain of events today was a weekend statement from GM, that it could not support the new proposals made by potential Chinese investor Youngman.
“Saab’s various new alternative proposals are not meaningfully different from what was originally proposed to General Motors and rejected,” said GM financial news spokesman James Cain.
“Each proposal results either directly or indirectly in the transfer of control and/or ownership of the company in a manner that would be detrimental to GM and its shareholders. As such, GM cannot support any of these proposed alternatives.”
GM. Regarded by many in Sweden as the villain of the piece here, it has gone very quiet today, perhaps realising the dramatic impact its obstinate stance could have had on Youngman. But in reality, what else could the US automaker do?
It has a close relationship with SAIC Motor in China, so why would it allow its technology to be potentially used by another Chinese company? Caught between a rock and a hard place, Saab needed that technology and without unilaterally launching some completely new product with all the gargantuan investment – that it doesn’t have – the Swedes were relying on GM to see their point of view.
Saab has been sinking in a monumental sea of debt for some considerable time, with the Swedish National Debt Office (SNDO) previously telling just-auto the European Investment Bank (EIB) would likely seek to recover the EUR270m loan it made to Saab, should the worst happen.
However, as guarantor of that loan, the SNDO now becomes Saab’s largest creditor, but with pledges in both the parts business and tools manufacture, the government could realise these straight away and recoup its money.
Several other suitors could now come calling, perhaps having waited for Saab’s eventual demise, although it remains unclear just what there is left to sell.
In July this year, Saab obtained approval from the SNDO, the EIB and the Swedish government for the sale and lease back of Saab property, with a consortium of Swedish real estate investors led by Hemfosa Fastigheter and including among others, Brinova Fastigheter, Peab and Weland Fastigheter, purchasing 50.1% of the shares in Saab Property for SEK255m, reflecting an adjustment to the transaction price for a one year lease free period.
Untangling all the deals, loans and guarantees is going to prove an enormous challenge, while the global economy is hardly looking rosy for a bankrupt carmaker to be snapped up.
Although who knows? One thing about Saab is its sheer unpredictability as it has lurched from crisis to crisis during the past two years – and stuck around a lot longer – if not actually producing many cars – than most had anticipated.
It’s pantomime season here in the UK at the moment – perhaps a uniquely British phenomenon that consists of much-loved tales and fables adapted for the stage.
It’s traditional to have a villain in the drama that is routinely booed and hissed every time they make an appearance on stage.
GM is perhaps being cast unfairly as that villain, but it is going to be portrayed as that for some time in the Western Sweden town of Trollhattan.
