By on December 11, 2009

Who's holding the holding company?

Corresponding with news that Ford and Geely are close to closing the Volvo deal, Volvo’s unions have expressed skepticism towards Geely, even going so far as to ask that the company be investigated. An ownership company based in tax havens, a history of trademark theft, and minimal transparancy have all worried unions within Volvo. Swedish Engineers at Volvo and the Metalworkers have expressed worries over the lack of information regarding Volvo’s future within Geely. “There’s a great information vacuum” says Magnus Sundemo of the Engineers. “We know very little about what the consequences will be if or when Geely takes over Volvo – We need to have more information, and we need reasonable time to examine the information” he continues.


There are several questions around Geely according to the union, one being the company structure. The company Ford has chosen as the preferred bidder, and possibly buyers of Volvo, is Zhejiang Geely Holding Group – a privately held Chinese Company, which in turn owns Proper Glory Holding (what a name!) registered in Virgin Islands (they must have some humor at Geely…). Proper Glory owns 51% of Geely Automotive Holdings Ltd, the car manufacturers. Geely Automotive is listed at the Hong Kong Stock Exchange, and has its HQ in the Cayman Islands. A further eight subsidiaries are registered in Cayman Islands, and seven more in The Virgin Islands.
“This in not something that enhances the image of a ‘nice’ company, and the question is where Volvo is positioned in this structure. An unlisted company in Cayman Islands needs no tranparancy, and no accountability. That worries” says Magnus Sundemo, who also complains about the lack of good information around the financing of the deal.

In a meeting between Volvos unions and Geely management last week, the unions demanded there’d be hired a special employee-consultant to examine the deal. He should be granted 200,000 euros and 5-6 weeks to be able to examine the deal properly. Volvo management granted 50.000 euros and 2-3 weeks.

Volvo’s Olle Axelson comments: “Volvo and Ford have already answered all questions asked. These are just repeated questions.” John Fleming, CO at Volvo says he understands Volvo employees’ concerns, but assures them that Ford has been a good parent to Volvo, and is certain that Geely will be too. “Otherwise, we wouldn’t have chosen them. – But nothing has been decided yet.”

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16 Comments on “Volvo Unions Call For Geely Investigation...”


  • avatar
    rnc

    Not happening, I can understand where the union is doing (hoping to push ford to sell to a more friendly (western) company), but at this point, this would be big (negative) news in China,  Ford’s choice is to piss off the chinese and a billion potential customers or the swedes and 10 million.

    Ford is playing the correct angle.  Ford made sure that the JLR sales was as favorable to England as possible b/c England is a big market for them, don’t think the same applies for sweden, plus if anything if you look at what Tata has done with JLR they have poured even more money into it to make sure it works, I imagine that Geely will do the same, they don’t want the failure (and connotations that would bring in China) hanging over them, perhaps the union should be careful about what it’s wishing for.

  • avatar
    NickR

    I hope the deal breaks down just so they can prevent that car from being manufactured. What an eyesore. Looks like someone tried to turn a Ford Granada into a RR Phantom.

  • avatar
    panzerfaust

    LMAO, a union rep who wants to work for a ‘nice’ company. Ford needs to bring some of these not so transparent Cayman Island types to intimidate the UAW for them.

  • avatar
    porschespeed

    Because things have gone so well at the ‘transparent’ companies…

    They should be happy to have a job, no matter how temporary.  The Volvoids would rather not work for the Chinese. Shocking. Will the Chinese screw them? Of course.

    We entered into this pact with the ChiComs when we decided it was better to give someone a disproportionate volume of our economy in return for the short-term thrill of some quick cash (for the rich) and some cheap stuff for the rest of us.

  • avatar
    fincar1

    Hmmm…that’s an interesting corporate structure that Geely has. Usually one sees that sort of thing in companies that specialize in gambling over the internet. Perhaps it has something to do with keeping corporate cash far from communist hands.

  • avatar
    MikeInCanada

    Here we go again with another example of a workers union not really understanding the predicament that they are in…. Complaining about business ownership structures instead of trying to protect their ‘actual’ core competencies. Hint: It’s not union guys bolting together cars.
     
    Even if Geely was owned by a bunch of vegan nuns much less an opaque holding company headquartered in a tax haven the end result is still going to be the same.

    Slowly but surely, everything of value is going to be transferred to the Chinese operations.
     
    This is not some evil, secret plot.  Rather it is Business Fundamentals 101.  Just as gravity pulls on things back down, high costs companies –  without an economic ‘moat’ don’t do so well against low cost companies – as else being equal.
     
    Now yes, it is obvious that a Volvo and Geely are anything but equal in quality and engineering so you have to ask yourself what will happen first:  Geely improves the quality of its cars or Volvo will reduce their cost of manufacturing.

    • 0 avatar
      CRConrad

      “Hint: It’s not union guys bolting together cars.”
       
      Maybe not over in Yankland (or its subsidiary on the northern plains), but in Sweden, AFAIK, it is union guys — and gals — who bolt together the cars.

  • avatar
    wsn

    They complained for so many years that Chinese companies steal trademarks and designs. And this time, a Chinese company is actually willing to pay for it. And they are still not happy? Why?

    • 0 avatar
      MrDot

      They aren’t happy because they realize, like anyone with half a brain would, that Geely are eventually going to crate everything up and ship it back to China.  They may say they aren’t, and they may make some deals with the Swedish government (in exchange for some $$) to not do anything for a few years, but the end result is the same.
      The writing is on the wall for the union.  But at least they can try to make the process as painfully public as possible.

    • 0 avatar
      wsn

      What’s wrong with “crate everything up and ship it back to China?” After all, they paid for it.
       
      They complained about the Chinese shipping stuff to their shores and now they complain the other way around.
       
       

    • 0 avatar
      CRConrad

      wsn: “They complained about the Chinese shipping stuff to their shores and now they complain the other way around.”
       
      It’s not the other way around, it’s almost exactly the same thing: Shipping stuff to the West is the earlier form of shipping jobs to China; it’s just that now they’re doing it directly, in stead of indirectly.

  • avatar
    Kyle Schellenberg

    The Chinese are looking for credibility in the auto marketplace.  I don’t see them changing whatever successes Volvo has had in the past (ie. cheapening the brand).
     
    The change in ownership will likely be transparent to the average Volvo shopper.

  • avatar
    mtymsi

    My guess is U.S. Volvo sales will experience a steep decline if/when Geely buys them. Volvo demographics are associated with astute and aware buyers and I don’t think most of them will be willing to risk a purchase under Chinese ownership as they are well aware the reason there are no Chinese vehicles sold in the U.S. is because the level of quality is not acceptable. I realize that Volvo will still be assembled in Sweden vs. cars built in China but I don’t see anything positive to a U.S. buyer in Geely’s ownership, only negative. With Volvo sales what they are today under Ford’s ownership I think Geely brings a dark cloud to the brand which has lost its way in the market under Ford stewardship.

    • 0 avatar
      pcsario

      People said the same things about JLR: “We’re talking about wealthy car buyers who have internet access, laugh at the quality of Indian cars blah blah blah”.
      No one cares.
      BTW, Volvo is in the shithole right now because of no one but themselves.  If anything,  Ford was way too nice with them.  What with Ford tolerating Volvo spend an eternity to develop the C30 after the S40 was introduced, taking ages to complete the XC60, delaying the decision to renew the S60 forever, etc.  None of those decisions were Ford’s.

  • avatar
    bmoredlj

    A Chinese automaker, up to no good?

    Naaaw…

  • avatar
    Geo. Levecque

    These workers have every right to be worried for there future, which after all the Machinery an everything else is transferred to China, it won’t be the same Volvo for sure!
    I would suggest that the Workers get together and try buying out China, hardly likely I know but while they still have “jobs”, I can see a lot of unemployed Swedish workers in the future, not a nice scene and what can Volvo owners expect here  in North America?


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