SWEDEN: Government offers infrastructure improvements and R&D funds for GM plant bid

By just-auto.com editorial team | 2 November 2004

The Swedish government on Tuesday moved to bolster Saab Automobile AB's lure to parent General Motors by agreeing to use state money to improve road and rail access to the company's last remaining automotive plant in the country.

Besides agreeing to improve infrastructure leading to and around the Saab plant in Trollhaettan, the Swedish government also agreed to make more money available for research and development, the Associated Press (AP) reported.

"By this investment, the ability to compete for Trollhaettan and western Sweden is strengthened further, which is positive for all of Sweden," trade minister Thomas Oestros reportedly said. "The whole vehicle industry is important to us and Sweden as a whole, with 150,000 people employed by the industry in one way or the other."

The bid was officially handed to General Motors on Monday, AP added.

The news agency noted that GM said last month that only one of its European plants should be used to produce midsize cars, a task currently divided between Trollhaettan [which builds Saab's 9-3] and the Opel plant in Ruesselsheim, Germany [which builds the Opel/Vauxhall/Holden Vectra on the same platform as the 9-3]. The decision sparked a fierce contest between the two plants.

The losing plant risks massive layoffs, or perhaps even a complete shutdown, the Associated Press said.

While both the Swedish and German governments are prohibited by EU regulations from offering subsidies, Sven-Erik Soeder, state secretary for the industry and employment ministry, reportedly said that Sweden could invest more money in improved infrastructure, product research and development in order to convince GM to keep production in Trollhaettan, the report said.

According to AP, details of the government plan include widening the main road to Trollhaettan, turning it into a highway and laying an extra railroad track to the city, making it easier to deliver parts to the factory and ship cars out of it. These projects, already planned, will be given top priority.

"I think that Saab is very well qualified, has very good staff, a very good production, they are effective and has a very strong research and development," Oestrom reportedly said. He conceded that the final decision will come from GM, which told AP it received the reports from the Opel and Saab plants on Monday.

AP said GM, which plans to cut as many as 12,000 jobs in the next two years in Europe, will analyse both reports before making any recommendations. A final decision is not expected until early 2005.

The Saab plant employs close to 6,000 workers and produces more than 100,000 cars annually. More than 500 workers are scheduled to be laid off, the Associated Press added.