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SWEDEN: Suppliers to receive payment up front as Saab looks to exit reorganisation

By Simon Warburton | 4 November 2011

Scandinavian supplier organisation FKG says Saab will need to pay up front before delivery in order for its members to do business again with the automaker as it looks to exit bankruptcy protection.

Saab's 1,000 or so suppliers are owed around EUR150m (US$208m) with non-payment from the automaker triggering the long-running crisis for the manufacturer, but even if proposed Chinese investment is forthcoming new payment methods seem inevitable.

"We will not [allow] a situation where even the debt increases from the level from today," FKG managing director Frederik Fidahl told just-auto from Sweden.

"That means if they don't start to pay us we need money up front. That is a rule when a company is in reconstruction, by Swedish law."

Despite the new payment environment, the FKG managing director nonetheless added cash injection from Youngman and Pang Da was a "great step forward for the Swedish automotive industry - the industry is in need of two car manufacturers," he said.

Fidhal was at this week's creditors meeting in Vanersborg near Saab's Trollhattan factory and said both Youngman and Pang Da CEOs addressed the 250 or so strong audience, including many suppliers to stress their commitment to their MoU.

The supplier chief also addressed the issue that has risen close to the top of the Saab agenda as it tries to exit reorganisation, namely what will former owner General Motors do, although the US giant's increasing involvement with China may have an influence.

"One of their [GM's] big markets is China, so any fuss with the NDRC [National Development and Reform Commission]...this is a delicate matter for them."

Although FKG estimates none of its members will go bankrupt as a result of chronically late payments, Fidahl conceded it was "not a good situation for a lot of them - they are on the edge" - but the fact Saab has been at a standstill for six months means many have found alternative work.

FKG added Saab would reveal details of its payment plan to suppliers by mid-November.