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Unpaid bills halt Saab car production

TT/AFP/The Local · 30 Mar 2011, 11:57

Published: 30 Mar 2011 07:17 GMT+02:00
Updated: 30 Mar 2011 11:57 GMT+02:00

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Rather than shipping supplies to Saab's Trollhättan factory, DB Schenker is holding most of the deliveries as collateral.

"We're now sending out a few deliveries which Saab is paying for. They can choose and it's primarily items which are essential for production," Schenker spokesperson Pierre Olsson told the TT news agency.

"But we're not going to release all deliveries before we get paid in full."

Olsson couldn't say exactly how many trucks loaded with goods destined for Saab remain still.

"We don’t want to get paid more. However, we haven't gotten paid in a long time. We're talking about significant amounts, in the millions, and for such a long time that it's become critical. We can't continue with losses indefinitely," he said.

Schenker took the decision to stop deliveries earlier in the week, causing a production stoppage at Saab's Tröllhättan factory on Tuesday.

Speaking with TT on Tuesday, Saab spokersperson Eric Geers refused to elaborate on the payment problems or a stoppage on the assembly line.

"We have 800 suppliers and I can't comment on our relations," he said.

"But, with so many suppliers, it's not strange that there can be stoppages."

But Håkan Skött, chair of the Trollhättan factory chapter of the IF Metall union, confirmed that production was halted because of problems with the delivery of supplies.

"I don't know how long the stoppage lasted, but there was a stop," he told TT.

Schenker's Olsson regretted that Saab had been behind on payments.

"We're not doing this to be mean. We don't want things to go badly for Saab. Personally, I think it would be really sad if Saab went bankrupt, but at the same time, we need to get paid," he said.

Svenåke Berglie, head of Fordonskomponentgruppen (FKG), a trade association representing Scandinavian auto industry suppliers, said that Saab has had trouble paying its suppliers on time.

"Saab has lagged in its payments and we've urged the company to rectify the matter. Clearly it's a problem when suppliers aren't paid on time," he told TT.

"All companies can have cash flow problems from time to time. However, Saab is a company that is being watched and they need to get things in order."

At the same time advertising agency Lowe Brindfors has cancelled all of its ongoing work for Saab because of unpaid bills.

Saab hasn't paid some of the agency's invoices from December, according to the Resumé newspaper.

"It's a significant sum, but out of respect for Saab, we're not going to say what it is," Lowe Brindfors CEO Bjarte Eide told Resumé.

Saab production lines were up and running as usual on Wednesday, according to spokesperson Thomas Schulz.

Reports that Saab had trouble paying its bills caused shares in the Swedish automaker's owner, Spyker, to dip in Wednesday morning trading in Amsterdam.

Spyker assured that Saab "has sufficient means to meet its immediate liquidity needs."

However the market was not assuaged and Spyker's share price slumped by 9.4 percent in early trading to 3.86 euros.

"Certain suppliers halted supplies to Saab Automobile pending discussions about payments and supply terms," Spyker said in its statement.

Saab Automobile continues to work on longer term solutions to further strengthen its financial position and improve its capital structure.

"Saab Automobile expects to resolve these issues in the short term, also to prevent any further disruptions in supply," it added.

Story continues below…

The company "continues to work on longer term solutions to further strengthen its financial position and improve its capital structure."

The incident comes the week after Saab announced that its managing director Jan-Åke Jonsson was leaving for personal reasons.

Spyker also announced Friday that its losses had multiplied in 2010, soaring to €218 million ($309 million) for the year, against a loss of €23 million in 2009.

US General Motors owned Saab for 20 years but the Swedish company never made a profit during that period. In 2009, output plunged to 38,756 vehicles from 93,000 in 2008.

Spyker came in early last year and bought Saab off GM for $400 million.

Despite all the problems Spyker still has high ambitions for Saab,

Spyker hopes to boost production way up 80,000 this year, though the constructor still expects annual losses before a return to the black in 2012.

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

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Your comments about this article

07:54 March 30, 2011 by ingka
So to sum this up

- there has been a production stop. But apperantely not for long.

- all companies in the world (especially production companyies btw) have cash flow problems.

- we know that Saab is struggling, so would we expect them not to have cash flow problems

Mood making ... these kind of press releases ! Maybe it's new to a lot of people, but production stops happen all the time, in any factory around the world.

The only real news is the Advertising agency which quit, and I agree that's concerning
08:57 March 30, 2011 by RobinHood
So to sum this up:

Saab can't pay all its suppliers.

Some suppliers have stopped delivering goods and services to Saab. One refuses to supply Saab at all.

Saab had to stop its line yesterday because suppliers won't deliver.

Saab thinks line stops at car companies because suppliers won't deliver is "not strange".

The CEO unexpectedly quit last week, on very short notice. Technical project managers (the essense of a car company) are leaving in droves.

Anyone familiar with the end of Rover, knows the routine. Saab insiders, watch for outrageously high management charges being paid to offshore companies, and the transfer of valuable Saab assets to non-Saab companies. Swedish government insiders, Google Rover urgently. Then you'll only have to pretend to be suprised.
10:19 March 30, 2011 by Staffs
I have absoluely no sympathy for the suppliers. They all got shafted several years ago and yet they keep on coming back like lambs to the slaughter, offering goods and services on credit.

The suppliers are showing unbridled greed, or complete naivety, because all of them who are supplying on credit will lose some money when Saab inevitably collapses in a sea of red ink.
10:45 March 30, 2011 by Twiceshy
Where are all those Spyker defenders now?
11:11 March 30, 2011 by Nemesis
As I said previously, SAAB should have been given Koenigsegg, lock stock and barrel. At least then if it failed, it would do so in a honest manner.

This is looking more and more like a repeat of the De Lorean and Rover fiasco's.
13:08 March 30, 2011 by Keith #5083
It is the height of BAD management not to at least be arriving at some suitable agreement with suppliers and deliverers. Even if they're only getting 50% on outstanding debt and then cash payments on deliveries, most suppliers would allow the time for credit repayment of the outstanding balance.

Not to be paying anything is an abuse of supppliers' good will and a very,very bad sign about the financial position of the company. In effect, suppliers have been the 'credit line bankers'.

Not a good sign at all.
16:37 March 30, 2011 by millionmileman
It is interesting that so many European and some US auto makers have halted production because of a scarcity of Japanese parts. This was a surprise.
18:14 March 30, 2011 by ooh456
Anyone who thought all this wouldn't end badly is stupid. Selling to a rich Chinese company was the only way forward.
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