Swedes suspicious of General Motors in fight for Saab

by Andrew Clark guardian.co.uk, Monday 21 December 2009 21.14 GMT
 

In the carmaking city of Trollhättan near Sweden's rugged south-west coast, a fight for the future of Saab is going down to the wire. And in the eyes of many Swedes, it should never have come to this. There is suspicion that an American multinational has proved far too eager to sacrifice a part of European manufacturing heritage.




General Motors has consistently refused to disclose why talks towards a sale of the loss-making Saab have been so difficult, initially with Sweden's Koenigsegg and more recently in on-off negotiations with the Dutch supercar maker Spyker. Some believe that GM would prefer to wind down Saab, bringing down the curtain on the marque's 62-year history and destroying thousands of jobs, than sell it.



A significant dilemma for GM is that if it sells Saab, then potentially valuable, commercially sensitive technology could find its way into the hands of a competitor that might, ultimately, emerge as a viable rival – particularly in untapped emerging markets with long-term potential such as Russia and China.



"The worst nightmare is where your intellectual property comes back and competes against you," says David Cole, chairman of the Michigan-based Centre for Automotive Research. "The general belief is that with innovation becoming the critical factor in the motor industry, protecting your intellectual property has never been more important."



Technological hub


Saab has failed to make a profit since 2001, losing 3bn kronor (£255m) last year on sales of 93,000 vehicles. But the carmaker is a technological hub in Scandinavia; it is at the centre of an engineering cluster in western Sweden, surrounded by partner companies, consultant firms and suppliers making parts both for Saab and its rival Volvo. Having been under US ownership since 1990, Saab contains a wealth of valuable product and process expertise shared with GM's American brands.



Matts Carlsson, an analyst at Sweden's Gothenburg Management Institute, told Swedish radio that GM may have little desire to let this survive: "They are probably figuring that they would rather take the cost associated with shutting down [Saab] so as to not end up with competition in five, 10 years."



He added that GM's behaviour amounted to a message to Saab's employees, telling them: "We don't want to have to face you in a future competitive situation."



Sources close to GM say the US company will not sell Saab unless it is satisfied that the buyer is viable and adequately financed – insiders say it would be wrong to dump Saab's 3,400 employees in a house of cards. Those sniffing around Saab may, at first glance, appear unlikely rivals to the largest US automotive corporation. But Koenigsegg had financial backing from China's Beijing Automotive, which ended up buying the rights to some of Saab's older models last week. And Spyker's largest investor is a Russian bank, Convers Group, headed by Alexander Antonov, a well-heeled tycoon who was shot seven times in an assassination attempt in March. Another Spyker backer is Mubadala Development, a sovereign wealth fund from Abu Dhabi that has the resources, ultimately, to make a splash on the international stage.



Wary of public opinion, GM is not owning up to any reluctance to sell. In a conference call with international media on Friday, GM's vice-president of corporate planning, John Smith, stonewalled persistent questioning about the "obstacles" that GM claimed had jeopardised negotiations with Spyker. In frustration, one Swedish journalist asked: "You're winding down one of the most famous businesses in Sweden. How is it that you can't tell us what happened and what issues arose?"



Anxiety to protect intellectual property was also a factor behind GM's abrupt decision last month to keep Germany's Opel and Britain's Vauxhall, scrapping a planned sale of its European operation at the 11th hour. The potential buyer, a consortium led by Canada's Magna International, contained backing from a state-owned Russian bank, Sberbank. Industry sources believe that GM was less than enthusiastic about allowing Russian access to Opel's technology centre in Rüsselsheim, near Frankfurt. Similarly, Ford's sale of Volvo to China's Zhejiang Geely automotive was held up for weeks over intellectual property sticking points.



To Saab's employees and customers, GM's cold feet are deeply frustrating. One car owners' website, SaabsUnited, is urging readers to email GM's chairman, Ed Whitacre, directly to demand "full consideration" of new offers for the brand. Among more than 500 comments appended, one reader's letter to Whitacre said: "As an American in upstate New York (a conservative), I don't like the way this is looking for us. We are basically talking about telling a town they are closing down a few days before Christmas."



Minuscule volume



For all the last-ditch appeals, however, industry experts stress that it will be a huge challenge for any buyer to make Saab viable. "Saab's total volume is minuscule; it doesn't have brand clarity and it borrows technology from elsewhere," says Craig Fitzgerald, an analyst at Plante & Moran in Michigan, who argues that 90,000 vehicles a year is simply too small a production line to compete on a global scale. "Can you develop enough capacity to have a thriving long-term branded business from those kinds of volumes?"



Even in Sweden, some take a sanguine view of the popular outcry at the possibility of Saab closing.



"Emotionally, Swedes tend to own Saab in the heart," says Martin Sköld, an assistant professor at the Stockholm School of Economics. "Which is interesting because not so many Swedes have been so positive as to support Saab by buying cars over the years."

Is it the end?

Perhaps the most innovative car manufacturer faces the danger of extintion. Victimized by the american pursue for growth, GM's bankruptcy seems to be lethal for SAAB. In the era of low-cost and globalization, economies of scale and toxic bonds, nouns like tradition, herritage, culture and alternative way of life have no meaning. The owners of a SAAB vehicle are a nieche market. They have their own attitude towards life. College professors, artists, and people that rarely wear suits, drive a SAAB. Of course this only happened in the '80s films but showed that SAABs are different, distinctive, idiosyncratic, anything than mainstream (BBC Top Gear).  Perhaps some don't share the same idea. The U.S. goverment decided to save the mess that GM created and help the brand restructure. Perhaps GM's management was forced to throw-off the SAAB burden, a promissing venture that turned out to be a nightmare and sealed the fate of the Swedish Pride. According to Tom Krisher and Dee-Ann Durbin (Associated Press): Analysts say GM, which bought half of Saab in 1990 for $600 million and the rest for $125 million in 2000, was unable to differentiate the brand from its other products or find a sales niche. In addition GM sold only 7,441 Saabs in the U.S., a 62 percent drop from the same period in 2008. The most ironic aspect of the whole story is that SAAB was planning to launch two revolutionary models, that would definetely change the course of the brand. Some say that Culture always prevails in the end. But on this occasion this seems very difficult. Keep your fingers crossed.