Supplier President: Saab's Days Are Numbered"

Last week, a small Swedish parts supplier by the name of SwePart did not want to wait any longer and asked a Swedish court to declare a key Saab subsidiary, Saab Automobile Tools, bankrupt. Bankruptcy of the subsidiary would have meant the end for Saab as well. Hectic activity ensued. On Friday afternoon, there was an announcement that the matter had been settled and the bankruptcy petition was withdrawn. Expect a run on the bankruptcy court in the coming days and weeks.

Victor Muller had thought the creditors would hold out because in a bankruptcy, they would only see pennies on the dollar (or rather öre on the kronor) and that they would not dare to make such a move, because they want to remain in Saab’s good graces.

Muller was wrong. Obviously, many suppliers have lost all hope for future business with a manufacturer that had been closed since April and that had reneged on its promises many times. Muller’s offers of payment plans have gone nowhere. Suppliers don’t wat more Saab business. They want to get paid and move on. Seeing that the threat of bankruptcy can shake loose some money, more will go the same route as SwePart.

This sentiment is echoed by Lars Holmqvist, a Swede who is president of the European parts supplier’s association CLEPA. He gave a damning interview to the Swedish Expressen.

“Saab’s days are numbered,” said Holmqvist, who gives Saab only a month or two.

“Suppliers won’t supply any longer. They have grown tired. They believed the promises made by Muller, but now nobody believes anymore.”

The suppliers lost faith in the viability of Saab. Loss of future business is no threat for them if they think there is no future business. Says Holmqvist:

“With 30 years of experience in the business, I ca say that you cannot make money building production cars if your volume is not at least 100,000 to 200,000 cars a year. They compete with manufacturers that sell 300,000 to 400,000 cars a year – I am amazed that they survived so long.”

Expressen readers also mostly abandoned all hope. In an on-line poll with the question “Do you think that Saab will survive?” 77 percent answered no, 19 percent answered yes and 4 percent don’t know.

And I am not surprised that the suppliers have abandoned all hope. In this business, orders for a few thousand parts are considered a nuisance, and you are referred to the next parts wholesaler. Capacities in the business are tight, and paying jobs are easy to come by.

Saabs remaining money is being wasted by paying workers to stay at home, doing nothing. This also has only one purpose: To avoid bankruptcy. When Saab could not meet payroll in June, the unions started collecting the paperwork for bankruptcy proceedings. Muller scrounged up more money, and salaries were paid. This month’s salaries also will be paid, but start of production has been delayed again.

If threatening bankruptcy works for the unions, if it works for a small supplier, expect several other suppliers to try the same. Except that now it won’t be small sums. Holmqvist figures payable to suppliers to be “between 800 million and 1.2 billion.” No Chinese car dealer or busmaker will come up with that kind of money.