By on June 18, 2011

Foreign suppliers could produce the final nail in the coffin of struggling Saab, the head of a European supplier association fears. “I think that the patience has more or less run out,” Lars Holmqvist, CEO of CLEPA, the European Association of Automotive Suppliers, said to Swedish news agency TT [via The Local]

Foreign suppliers “probably have less feeling for Saab than many Swedish companies which have grown up with Saab in a different way. Many also have a personal connection to Saab because they might have driven one at some point in their life. But the foreign suppliers are tougher,” Holmqvist, himself a Swede, told TT.

Except for a few days when the lines were moving, impressing foreign dignitaries, production at Trollhättan has been at a still stand for ten weeks.  Victor Muller’s pledge that “we will definitely ensure that [a production stop] will not happen again” was good for two weeks. Then it happened again.

It is easy for foreign suppliers to drop the ball on Saab. Most of them are swamped with orders and have a hard time making their largest customers happy. Even if Saab would run at planned production volumes, Saab’s orders would not create rapid eye movement in the best of times.

According to Holmqvist, patience of foreign suppliers is running out. Says Holmqvist:

“This is partly due to a lot of empty promises that have turned to nothing and partly due to lack of information. No consideration has been taken of these suppliers, they feel duped and therefore Saab is now standing there with a factory at a standstill.”

Holmqvist’s prognosis for Saab is damning:

“I am surprised that they have managed this far. I don’t think Saab will make it.”

Meanwhile, over at Sobsunited, it’s already news that Saab paid its taxes on time. Not that Saab has to pay any taxes on any profits. However, there were some $5.5 million in payroll taxes and deductions due (which gives you an idea of the cost of letting the workforce sit idle.) Somehow someone at the Swedish tax office had leaked to the press that Saab hadn’t paid the taxman.  On Friday afternoon, the money hit the government’s account. As long as prompt payment of withholdings is news in Sweden, we shall continue our coverage of the sobstory.  If Holmqvist is right, it won’t be long.

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23 Comments on “Dark Days In Trollhättan: Foreign Suppliers Ready To Pull The Plug On Saab...”


  • avatar
    mazder3

    To all of Saab’s suppliers: Please, for the love of all that is Holy, stop supplying Saab. If you sell them parts, they’ll just go into cars that nobody will buy. Just let Saab die already!!!
    Thank You,
    mazder3

    • 0 avatar
      hreardon

      +1.

      As I said in a previous post: please, just let them die with a little bit of dignity already.

    • 0 avatar
      HerrKaLeun

      I’m just surprised any supplier still gives them a line of credit. Don’t they read the news? Their CFOs should be fired for giving a line of credit to Saab… normally it takes a long time of good relationship to get a line of credit. Once news of not paying (or actually not paying) hit the supplier, they demand cash on delivery once all former debt is paid.

      • 0 avatar
        Robert.Walter

        Some suppliers, buy insurance for their receivables, so in the event a customer goes bust, the insurance covers all or part of the unpaid amounts.

        How do I know this? Because in the run-up to Carmegeddon, in situations where we were both a 1st and 2nd tiers supplier (determined by logistics and system integrator relationships), our insurers began to look at the financial developments at some of our customers (e.g. and inter alia: Lear, Visteon, Internationl Automotive Components, Arvin Meritor, and all the OEMs …) and realized that with my company having had payment terms, depending upon the different OEM and/or 1st-tier customer, of 45, 50, 60 days that the risk of non-performance on the part of our customers (i.e. not getting paid for product delivered) was increasing … so they began to either cancel, or not renew policies … when this happened, I began to re-negotiate much, much, shorter payment terms … usually 30 days, or in the isolated case of a distressed Ford supplier 10 days, and in the case of a less-distressed (but weakening) Chrysler supplier COD (in this case, neither the Tier-1, nor Chrysler, believed we would stop shipment, and believed their threats of legal action were meritorious, that is, until the second truck sent to pick-up parts was sent away empty (and the buffer-stock at the Tier-1 and Chrysler was depleted) that they finally agreed to our new terms.

        Point being, the suppliers will continue to supply as long as the insurance holds out…

        One other comment, in some cases, as our inurance policies were cancled, or dramatically changed as to be unaffordable or useless, I was made to think that I wouldn’t want my home fire insurance from these companies … at the first sign of smoke, they raise your rates, at the first sign of flame, they cancel your policy…

      • 0 avatar
        HerrKaLeun

        Robert.Walter: interesting information you provided. I assume by now no insurance will insure Saab supplies… or the rats would be astronomical.

        Unlike home fire insurance, the risk here is very much dependent on the specific client and therefore the insurance runs away. with fire insurance the risk is the same for everyone. I know having fire sprinklers and fire alarm system make s a difference, but if the facility is similar, the rates will be similar.

    • 0 avatar
      Seán Moloney

      Many Swedish suppliers have already stated that if Saab goes under, so will they. And this would affect Volvo, as both companies use many of the same suppliers.

      “There are dozens of suppliers that will disappear if Saab disappears. They can not continue to supply only to Volvo. It would obviously be problematic for Volvo”, says Kjell Nilsson, CEO of Semcon.

      So as you can see, there would be quite a large rise in the unemployment levels in Sweden if Saab were to close up shop. Though it appears that the Swedish government would prefer all of its industry to close up as they have made it public knowledge that they wish the Swedish state to move from an industrial state to an administrative state. Ie, an unsustainable economy that has no skilled labour workforce, and relies solely on the need of the surrounding economies to employ their services.

  • avatar
    Robert.Walter

    “Foreign Suppliers”? Um, isn’t that like almost all of them?

    Odd juxtaposition:
    – Toyota can’t produce because they have 30 suppliers that still can’t (tsunami), whilst
    – SAAB can’t produce because they have (probably only) 30 suppliers who still will.

  • avatar
    gslippy

    Isuzu sold 7098 cars in the US in 2007, two years before they left the US market.

    Saab sold 5446 cars in the US in 2010. The top ten US car makes sold more than that every week in 2010, so Saab’s departure will barely make a ripple in a quiet pond. Ford sells amost that many cars every day.

    Saab – please, just file some papers.

    • 0 avatar
      Sam P

      Seriously. Let Saab die with some dignity. I wish the company had just been wound down when GM decided to divest itself of Saab and the Muller/Spyker zombie automaker saga had never happened.

  • avatar

    YA by ALL means. Ve MUST continue to feed ze german auto superiority myth and propel them to continued record sales. Wake me vhen de war is ova.

  • avatar
    saabista63

    fred,

    danke schön for ze flowers. Zey deserve ze roses and ze toolips, too.

    Your posting was fun to read – which I can’t say is true for some of the other postings here.
    Whatever is going to happen to SAAB, they sure don’t need encouraging calls for the administration of last rites.
    We’ll see if the doomsday prophets will be proved right this time – although two or three of SAAB’s nine lives should be left to pass THIS crisis, too.

  • avatar
    John Horner

    “However, there were some $5.5 million in payroll taxes and deductions due … ”

    Most of which is money that Saab deducted from employee paychecks, but had neglected to hand over to the government.

    Someone, PLEASE, play taps for Saab and give it a proper burial. Saab hasn’t been a viable automaker for at least twenty years now. Enough.

  • avatar
    Bryce

    Kill SAB now nobody wants the cars and if they did SAABs can be bought with other badges any way no loss its been a dead brand coasting since 89

  • avatar
    dreadnought

    I’m not a Saabista, never owned one of their cars, but…..

    Why are people so offended that this company still exists? It’s the weirdest thing I’ve ever seen. Some kind of bizarre purist impulse, I guess. Are you some kind of automotive Daleks, or something?

    Have any of you bailed them out through your tax dollars? Been stiffed as a bond holder, or as a winning plaintiff in a lawsuit, only to see your damages dismissed? I suspect the answer is no.

    Dead brand coasting? Obviously people were buying the cars for the 20 years or so that GM owned them, so they weren’t a “dead” brand, were they? The market is the market, not blog posters or commenters, who pass judgment, but the market as a whole, in all it’s facets. There are no such thing as “dead brands walking”, only dead brands and live brands.

    I get a kick out of all the people who are so “sick” of the whole saga, but yet obviously feel the need to read every posting on this blog, and then, paradoxically, waste their own time posting about how “sick” they are of the whole story, I mean if you’re so “sick” of the story, which I take to mean that you are bored with it, then why don’t you just ignore it?

    Let them die with dignity? What does that mean? Like I would have any better memories of them if they went out of business when GM dumped them, or something? Huh? I mean, if you dislike the company, or its cars so much, why would you care what kind of “memory” they leave behind, anyway? Personally, I don’t care.

    If they go out of business, they go out of business, and that is a decision of the marketplace. But it is their owners and operators responsibility, to their employees, to their shareholders, and to their customers, to try to save their company, even if the odds are stacked well against them. Just as an observer, and a fan of the free market, I’d be offended if they didn’t.

    • 0 avatar
      CJinSD

      I’m not sure what the motivation or meaning of dying with dignity is when it comes to Saab. I saw a Trailblazer with a Saab grill sitting on a consignment lot yesterday, so that ship has sailed. I disagree with you about whether or not they are a zombie brand. Production ceased of the cars that were made in Sweden a while ago, but the dealers around here are still drowning in inventory that nobody wants, including their newest and most ambitious model. The only Saab that might still be in production is a Mexican GM crossover that has styling cues adopted from when Saab dealers sold small Subarus. Attempting to keep the brand alive now amounts to throwing away money. If the plant or workforce have something to offer, perhaps they should look for an opportunity to produce someone else’s niche models.

    • 0 avatar
      HerrKaLeun

      “Have any of you bailed them out through your tax dollars? Been stiffed as a bond holder, or as a winning plaintiff in a lawsuit, only to see your damages dismissed? I suspect the answer is no.”

      I only can speak for us that live in the US and Canada and pay taxes here: yes we have been stiffed twice already, and didn’t even volunteer to “invest” our money.

      • 0 avatar
        mhadi

        The whole “let them die with dignity” idea is ludicrous – it’s a business with the livelihoods of many on the line. It’s not a living being to “pull the plug”. If they can produce cars and if people will buy them, all the better. If they cannot, then they will cease production sooner or later, like so many other historically signficant businesses that went before them.

        However I find it difficult to fathom that anyone in North America or Europe would buy a SAAB at this point.

        As far as I know, GM did not invest any public money from Canada or the U.S. into SAAB. A condition of the bailout was that no money flowed to foreign owned companies. Correct me if I am mistaken.

  • avatar
    Bryce

    The market made up its mind in the 80s since then SAAB is nothing but a rebadged Opel/Vauxhall sold at an unjustifiable price point hence its current problem go now before you become a complete joke.

  • avatar
    Lorenzo

    There’s no way SAAB can die with dignity. The chance for that was lost when GM refused to pay the cost of shutting it down.

  • avatar
    George B

    The core Saab cars, 9-3 and 9-5, are overpriced GM Epsilon cars. Not horrible, but also not special enough to justify their high price. What’s sad is the Opel designed Epsilon cars like the 2008 to present Malibu are so much better than the N platform 1997-2003 Malibu and the J platform Cavalier. When GM cars loose the effects of Opel and Saab, will they be as bland as the GM cars designed in the US in the 80s and 90s? I won’t miss the Saab brand, but I may miss the ways platform sharing with Saab forced Chevrolet to improve.

  • avatar
    saabista63

    What SAAB has successfully built on GM platforms were – and are – cars that have been attempting to make the best of limitations that were not the fault of the engineers who designed them.
    In all cases, these cars were off mainstream and had a number of qualities that were hard to beat – at the cost of weaknesses resulting mostly from cost cutting and synergies.
    Usually, in the course of their exceptionally long model cycles many of these weaknesses could be straightened out and the cars have achieved a sort of maturity much appreciated by the people who actually drove them – but unfortunately hardly perceived by the large majority of those who never did.
    There you have all of SAAB’s troubles.
    But except for the 9-7 and the 9-2, SAABs have never been rebadged, and they were designed by people who knew – and still know – their jobs.
    Otherwise, explain how the SAAB 9-3 Sedan could be – according to a new study by the IIHS recently presented here on TTAC – the safest in the class of 4-door midsize cars – in real life, not only in crash tests.

    Now, at a moment when many of these rather unlucky circumstances could be changed to the better, the aftermath of a troubled takeover is hitting home.

    • 0 avatar
      John Horner

      “Now, at a moment when many of these rather unlucky circumstances could be changed to the better, the aftermath of a troubled takeover is hitting home.”

      Which troubled take over are you talking about? GM bought a very, very sick company when the Swedes finally concluded that they couldn’t go it alone. GM then proceeded to do a terrible job with what they had bought, but the company was already in deep strategic trouble.

      • 0 avatar
        mhadi

        Neither the parent company SAAB-Scania, nor that of Volvo AB wanted to keep their car divisions – hence they sold them off. The original SAAB and Volvo parent companies are highly profitable.

        One wonders that if the foolish Americans had not bought SAAB or Volvo and no buyer could be found, whether the Swedes would have simply shut down their unprofitable car divisions and continue to focus on where the real money was: Aerospace, Trucks, Heavy machinery, and Marine. Unlike Daimler-Benz or Volkswagen for example, both SAAB and Volvo are not originally car companies; producing cars is not their main business, and never was.

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