Saab submits bid as government boosts Trollhättan

The Saab leadership finally submitted its bid to produce all of GM Europe's medium range cars uncomfortably close to the deadline of midnight on Monday. It concluded a week of intense negotiations between company bosses and unions at the Trollhättan factory as Saab sought to win production in a straight fight against GM's Opel plant in Russelsheim, Germany.

The Saab bid received welcome government support as prime minister, Göran Persson, personally met with GM Europe chief, Fritz Henderson, in Zurich on Friday. Then on Tuesday, the government announced an investment package of 2.4 billion crowns to the Trollhättan region.

It isn’t entirely clear what the purpose of Persson’s intervention was, but he seemed satisfied with the meeting, and even said a further meeting would take place “later on”.

“We got the chance to discuss the prospects for Swedish car production and what a government can do to maximise those prospects, ” Persson told the press.

His press officer, Anna Helsén, added that GM Europe had given an assurance that decisions concerning their restructuring would be conducted in a transparent and objective manner.

Meanwhile, unions and Saab bosses were locked in discussions until the eleventh hour on Monday to decide on the details of the company’s bid. The equation wasn’t straightforward: an increase in production from 40 to 60 cars per hour, to a higher standard and at lower cost. It was reckoned that this would entail 20% savings this year, following 20% savings last year.

The answer seems to have been the introduction of a third shift at the plant, which would mean 108 hours of production per week. Unions have compromised and agreed to the limited use of temporary workers and fixed term contracts to introduce more flexibility. They’ve also agreed to the use of recruitment companies and workers from other unions. They’ve allowed the possibility of office staff working for short periods on the production line.

The only time production will be allowed to stop is for major maintenance. Shift changes and breaks will be organised to avoid interruptions.

In return, the unions have increased their shift bonus from 1.65% to 7.38%.

According to an analysis by the Center for Automotive Research in Gelsenkirchen, Germany, it would be 800 Euros cheaper to produce an Opel Vectra in Trollhättan than in Russelsheim. That could change if the German unions agree to increase their working week from 35 to 40 hours with no commensurate pay increase.

Both company and union bosses seemed satisfied with the bid. Saab chief, Peter Augustsson, said:

“We have a good plan to develop quality and efficiency. Our employees are working like Trojans to improve the business. It feels as though there’s a real fighting spirit on the factory floor.”

Chresten Nielsen, shop steward for the Metall union, described the purpose of the negotiations thus:

“It’s a question of covering up any temporary gaps so that production doesn’t have to stop.”

On Tuesday, once the bid had been submitted, the government revealed the extent of their investment package for the Trollhättan region. It’s thought to be a potentially key intervention, although the government were stressing it didn’t amount to a state subsidy – illegal under EU competition laws.

The 2.4 billion crowns will mostly go on developing road and rail links between Trollhättan and Gothenburg – particularly the port. Part of the sum is also earmarked for research projects in the motor industry and programmes to train more workers for the car industry.

The investment is not conditional on Saab beating Opel and most of the money is being diverted to Trollhättan from other regions and projects. It’s thought that road projects elsewhere in Sweden will be delayed in favour of the widening of the main Gothenburg-Trollhättan road, route 45.

The government does not believe the factory will close if Saab loses.

New Minister of Commerce, Thomas Östros, told the press as he announced the package:

“If GM decide to expand production at Trollhättan, they must hire an extra 1800 workers and another 500 subcontractors will be needed in Sweden… These [government] investments strengthen the competitiveness of Trollhättan and West Sweden.”

GM are expected to make their decision in the first quarter of next year.

Sources: Svenska Dagbladet, Dagens Nyheter, Göteborgs-Posten

Source: Svenska Dagbladet