There’s been radio silence from Saab’s Trollhattan HQ over the last couple of months. The production lines have been silent for weeks and the company’s white collar workers have only just been paid for July - nine days late.
Saab’s white collar union had even started bankruptcy proceedings against the company, mainly to ensure the white collar workers were classed as ‘creditors’ should the company fold in the next couple of weeks. Saab isn’t suffering a cash-flow crisis, it seems that its cash-flow has virtually dried-up. No cars means no cash.
This week Saab’s bosses said that they had sold a 17 percent stake in the company to the GEM Global Yield Fund Ltd, but city estimates reckoned that the deal would raise no more than £5m, a sum which will hardly tide the company over for much longer. Alarmingly, a report on a Chinese website claims that Saab’s Chinese investors cannot make any further investments, while Saab is ‘in financial trouble’.
Since GM decided to sell-off the company in 2009, Saab has had numerous near-death experiences, but always managed to avoid the graveyard. Saab’s current difficulty lies in the fact that it couldn’t generate enough cash to keep the manufacturing operation rolling, with the 9-5 estate and 9-4x SUV coming on line too late to make a difference.
Ironically, work on the new 9-3 and Phoenix Platform is probably still going ahead, because this work is being funded by a ‘ringfenced’ European Investment Bank loan.Perhaps Saab could do what The Times newspaper did back in the late 1970s during an industrial dispute. Close down the manufacturing operations for a year and then re-open next autumn with the new 9-3 and refreshed 9-5 running down the production lines. Although manufacturing staff would have to be laid off, there’s a good chance that most could be re-hired in a year’s time. Of course, that would leave dealers with no new cars to sell, but maybe second-hand and servicing work would help most hang on for a year.
Such desperate measures - or, more likely, complete collapse, followed by Chinese investor Youngman picking up the pieces - were looking increasingly likely this week. And then, as if by magic, Saab’s shares jumped 28 percent yesterday after the Swedish business daily Dagens Industri claimed that a ‘big US investor’ was about to get involved in Saab, helping restart the factory. A deal could be announced in days, apparently. Maybe Saab bosses have, once again, avoided the car maker being towed off to the great scrapyard in the sky.