• Sweden edition
 
SAAB CASH CRISIS
Holding back wages 'last resort': experts

Holding back wages 'last resort': experts

Published: 23 Jun 2011 15:02 GMT+02:00
Updated: 23 Jun 2011 15:02 GMT+02:00

The future of disaster-riddled carmaker Saab doesn’t look bright, according to several analysts, who say that holding back salaries is a company’s very last way out.

“Generally you could say that what is important for a company on the brink of disaster is to pay its taxes and its employees,“ said Per Åhlström, professor at Stockholm School of Economics (Handelshögskolan), to news agency TT.

He makes the assessment that the cash-strapped carmaker is in “a very tight spot”.

“It doesn’t look like they are getting the backing they need. What is important for Saab at the moment is to find backing to give the company a respite in order to get sales going,” he said.

According to Ferdinand Dudenhöffer, auto analyst at the Duisburg-Essen University, Saab has little chance of ever becoming a financially stable carmaker again.

“The situation has deteriorated for Saab over the last two, three or even ten years. I see no solution to the problems," he said in an interview with Swedish business paper Dagens Industri.

Dudenhöffer also said that he doesn’t think that Saab would be able to compete on a market that today is dominated by brands like Volvo and BMW.

Luxury carmakers Ferrari and Rolls Royce don’t leave much room for Saab to try to battle for the exclusive market either, according to Dudenhöffer.

“There really is no place for the Saab business model on the market, “ he said.

Dudenhöffer also doubts that the Chinese co-operation will be the answer to Saab’s dilemma.

“I don’t know if they have the ability to give Saab a cash injection. But even if they can, sums like €50 million won’t suffice to turn Saab around,” he said.

And the latest developments in the Saab saga imply that things have reached rock bottom, according to experts.

“The very last thing that a company in crisis stop paying are taxes and salaries,” said Peter Törngren, who acted as a liquidator to Saab last year.

But as he no longer has any special insight in the automaker’s finances, Törngren can’t say how close to the brink the company really is.

On Thursday Saab's main union IF Metall called on the government to intervene, saying Thursday's announcement was "the worst case scenario for our members in

Trollhättan".

But minister for enterprise Maud Olofsson reiterated that the government would not step in to finance help for the beleaguered automaker.

"It is Saab which has the responsibility and must find the financial solution," she said.

Prime Minister Fredrik Reinfeldt meanwhile said he sympathised with Saab

employees, who received the news at the eve of Midsummer weekend, one of Sweden's most celebrated holidays.

Saab's owner and leadership must "answer how to make Saab profitable so

that it can survive," he said, stressing the Swedish government had been supportive when it came to development opportunities and making loan structures possible.

TT/The Local/rm (news@thelocal.se)

Don't miss...X
Left Right

Your comments about this article

16:40 June 23, 2011 by millionmileman
Dear Swedish Government,

Saab is not asking for endless welfare just enough to kick-start the factory to so the cars that people have been ordered can be produced. Then the workers can spend their wages, keeping the Swedish economy going.

The alternative is skilled workers on welfare until they start running out of other peoples' Kronas. Other businesses will suffer and there you have the downward spiral that has gripped the US economy for the past 2 years. Americans are just not spending and that includes Swedish products.

What makes Sweden great is its innovative industries. This is why Israel's (with a similar population) economy has not been affected by the Great Recession. The Government got out of the business of regulating and holding back, allowing them to flourish with a stellar GNP.

LQQK at Greece. All I can think of are Kalamata Olives. I certainly do not want to be left with only knäckebröd from IKEA.

Wake up!
17:15 June 23, 2011 by Twiceshy
Dear millionmileman

Stop trying to prop up an unprofitable business. Ever heard of throwing money into a black hole?

What makes this particular instance of Saab needing money different from the other times it happened?

Those workers you mention are currently wasting their time working on a company which will go bankrupt anyway, when they could be out there training for jobs which generate actual profits, or starting up their own productive businesses.
18:13 June 23, 2011 by RobinHood
@Millionmileman

"Saab is not asking for endless welfare ...." Yes it is! It took billions off GM, and hundreds of millions off various banks which it will never repay. It is about to "borrow" millions more from its own employees; another loan which it will never repay. When it defaults, it will take millions more off the Swedish taxpayers for loans foolishly guaranteed by the Swedish government, and incredibly, it wants the taxpayers to stump up billions more to keep it afloat. Saab has been on welfare for 20 years, and no one wants to buy its products.

If you think it's such a great company, make the receiver in bankruptcy an offer. You should be able to pick up the entire company for about 500 SEK in a couple of weeks. Good luck with it.
20:07 June 23, 2011 by Great Scott
I would rather see money going to some form of parachute pay for the workers than the billions that are going in the form of tax breaks for the well off.

This is not just about 2 or 3000 people at Saab, but also its supply chain which is most probably triple that amount. I don't think it's a case of if, but when Saab goes, beware of the tidal wave.

Also remember it's easy to say train for another job, but you must consider some of these people are too old to train. On top of that Sweden already has an extremely high unemployment rate.

The best any one can hope is that the Chinese take over Saab and keep some production in Sweden.
20:08 June 23, 2011 by spy
Robin Hood

Actually you are wrong on many levels:

1) Saab didn't take millions from GM - GM were actually managing Saab as a brand and if there was a loss it was down to GM themselves

2) Yes Saab does owe millions to banks - but frankly what big company doesn't have loans - Saab's are secured so the banks have limited risk

3) Yes I agree Saab has behaved irresponsibly with regard to its suppliers and more recently its employees - clearly this is extremely bad management

4) The Swedish taxpayer is unlikely to suffer directly - if it all goes wrong the National Debt Office already have security against Saab assets - although they will have to burden the cost of around 15,000 lost jobs

5) You may be surprised to learn that there are in excess of 10,000 new car orders - so it is clear some people want to buy their cars

6) You are wrong to think that the entire company could be bought up after going bust - If the company does go into liquidation many of the cars' IP rights will revert to GM and the Saab name will revert to Saab AB..... So we may yet see a scramble to save the brand before it dies....

A note to the Swedish government and EIB: If you had approved Antonov Saab would not be in this mess....
09:16 June 24, 2011 by Arcticeric
Saab has been on life support for quite some time ... please, be kind, pull the plug.
Today's headlines
Sweden scraps 'new start zones' after EU input
Integration Minister Erik Ullenhag visits a school in Tensta, one of the neighbourhoods mentioned when he and his colleagues first floated the new start zone proposal. File: TT

Sweden scraps 'new start zones' after EU input

Sweden has abandoned a plan to ease taxes for small companies in blighted areas after the European Commission challenged its legality. READ () »

'Easter eggs an invitation to spread germs'
A typical Swedish Easter egg. Photo: Jessica Gow/TT

'Easter eggs an invitation to spread germs'

A Swedish microbiologist has warned that traditional Swedish Easter eggs laden with candy are an open invitation to the spread of bacteria and viruses. "Is this really a good idea?" he asked. READ () »

Jammed truck snarls Stockholm rush hour
Photo: Anders Wiklund/TT

Jammed truck snarls Stockholm rush hour

PICTURES: A truck got wedged inside a tunnel in central Stockholm on Thursday, with authorities concerned the accident may have damaged cables in the tunnel's ceiling. READ () »

Kids in Victorian garb mark Swedish Easter
A Swedish Easter witch holding daffodils. File photo: TT

Kids in Victorian garb mark Swedish Easter

In India, I'd notice Easter only from the traffic jam outside the churches, but here witches, egg hunts, and feathers mark the Christian holiday. The Local's Deepti Vashisht brings you the various shades of Swedish Easter. READ () »

Swedish MP ordered chemtrail probe
Chemtrails?: Shutterstock.

Swedish MP ordered chemtrail probe

A Swedish MP who launched an official government investigation into the existence of chemtrails tells The Local why he thinks Swedes deserve the truth, even if it may leave some conspiracy theorists unsatisfied. READ () »

PM pleads ignorance of Vattenfall's Nuon bid
Fredrik Reinfeldt answers the constitutional affairs committee's questions. Photo: TT

PM pleads ignorance of Vattenfall's Nuon bid

Sweden's prime minister on Thursday said Vattenfall itself, not its owners the Swedish state, had responsibility for the loss-making Nuon deal. READ () »

'Kockums submarine raid may be illegal': lawyer
Photo: TT

'Kockums submarine raid may be illegal': lawyer

A Swedish lawyer says the Swedish military may have broken the law when it raided the Malmö premises of German defence giant Thyssen Krupp. READ () »

Good weather could blight Easter traffic
Easter traffic two years ago on the E4 motorway. File: Jessica Gow/TT

Good weather could blight Easter traffic

Traffic experts have cautioned Swedes heading to the countryside for what should be a sunny Easter, warning that the most serious accidents often take place when the weather is clement. READ () »

Saab offers Gripen lease to Malaysia
Jas Gripen jets in flight. File photo: TT

Saab offers Gripen lease to Malaysia

Swedish defence giant Saab has offered to rent out fighter jets to Malaysia. READ () »

What's On in Sweden

What's On in Sweden

Check out what's happening with The Local's guide to the main attractions and events in Stockholm, Gothenburg and Malmö - in association with DoToday. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Society
Swedish supermarket Ica pulls contested Easter commercial off air
Kungahuset
Society
Swedish royals set baptism date for princess
finest.se
Gallery
People-watching April 16
Politics
Who's the prime minister's heir?
Alfie Atkins
Society
Are children's books the key to families integrating in Sweden?
National
'Sweden Dem protests cater to party's martyr image'
National
'Swedish research grants were fantastic, but now it's like Australia'
Society
Only in Sweden: The ten problems you'd never encounter elsewhere
National
Swedes stopped to take my picture, but didn't look me in the eyes
Business & Money
A swipe of the hand replaced cash and cards in Lund
YouTube
Features
Video: Oliver Gee finds out how to embrace The Swedish Hug
TT
National
Abba duo hints at reunion
Advertisement:
Private
National
Flash mobs hug it out across Sweden
Finest.se
Gallery
People-watching April 11-13
TT
Politics
Swedes to give six-hour workday a go
TT
Society
Aussie choir member wows Abba in Sweden
YouTube
Society
Stockholm magic a surprise YouTube hit
Fastighetsbyrån
Society
Gallery: The Local's Property of the Week
Private
Society
Swedes find 200-year-old gravestone in living room
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
Deepti Vashisht
Features
Deepti Vashisht dissects the magic of Sweden's personal ID number
Shutterstock
Society
Ten signs you've been in Sweden too long
Society
Jimi Fritze heard every word when doctors discussed taking his organs
Society
A Swedish farmer explains why the new bestiality ban is 'pointless'
ESL
Sponsored Article
Learning Swedish the easy way
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Blog Update: The Diplomatic Dispatch

28 October 15:16

The Green Growth Group Summit »

"Today on the 28 October in Brussels, a large group of key EU Ministers and business people, including UK Secretary of State for Energy and Climate Change Edward Davey, and Swedish Environment Minister Lena Ek, will meet to discuss green growth. They all have a stake in resolving a challenge which, although it is crucial..." READ »

754
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com