Holding back wages 'last resort': experts

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.

• Saab lacks funds to pay staff wages (23 Jun 11)
• Saab to staff: go home for two more weeks (21 Jun 11)
• 'Patience running out for Saab abroad': suppliers (16 Jun 11)

“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.