The loyalty of the engineers at Saab

On Tuesday this week I gave you a translation of an article from Göteborgs-posten written by the current and the previous head of the labor union of the engineers at Saab. In this article the two writers wrote about their and their colleagues' conviction that Saab has a future.

With all the turmoil that has surrounded Saab the last six months, one would expect many engineers to look for a new and more secure job. In Sweden there is a big demand for engineers. The unemployment rate for engineers is only around 1 per cent! In March Volvo announced that they would hire 900 new engineers in Gothenburg, which is only 100 km south of Trollhättan. Saab has hundreds of experienced engineers, of whom many have international experience from the GM era. But when Volvo started recruiting, it was easier said than done. Comments from recruiters at Volvo have indicated that an unexpected low number of Saab engineers have applied for the positions at Volvo. And Volvo has been forced to look abroad for engineers. Also in Västerås in Sweden 27 companies are cooperating to try to tempt foreign engineers to come to Sweden.

According to Svenska Dagbladet, which yesterday had an article about the engineers at Saab, the professional association (akademikerföreningen) at Saab, in which a majority of the engineers are organized, tells the newspaper that according to their figures the turnover rate among the employees at Saab has been under 15 per cent during 2011. The lowest turnover which the association has registered previously is 5 per cent and the highest is 14 per cent. I would say that under 15 per cent is amazing and yet another sign that the workers at Saab truly love their jobs and their company.

But why do the engineers stay when they can't be sure that they will get their wage payment on time and they can get a new job in no time?

Per Bränneby, the head of the Swedish Association of Graduate Engineers (Sveriges Ingenjörer) at Saab, tells Svenska Dagbladet that despite an incredibly good labor market for engineers, he isn't tempted at looking for work elsewhere. According to him, the loyalty of the Saab workers stem from their belief in Saab's business plan, the hope of a solution and the love of the Saab products.

"We believe that in the end Muller will fix this. Here [at Saab] we are given the opportunity to be involved in decisions and to work with a broad number of tasks as an engineer. That's what makes Saab special as a workplace," Per Bränneby says to Svenska Dagbladet.

September wages paid and Spyker sports car division being sold

Correction about the wage guarantee and wage payment for October

Yesterday it was reported by TTELA that even the wages for September have now been paid to the Saab employees. Which is of course great news for both the employees and Saab as a whole. Both the August and the September wages have been paid by the Västra Götaland County Administrative Board, but Saab will have to pay this money back to the County Administrative later on as this is only seen as a temporary loan.

TTELA reports that the blue collar labor union IF Metall has now formally withdrawn the bankruptcy filing against Saab since the August wages have been paid. So that's one legal issue less to worry about for Saab. The bankruptcy filings from the labour unions Unionen and Ledarna, as well as the one from the supplier Takata-Petr, still remains but has been declared pending due to the reconstruction. One can however expect that the filings from the two labor unions will be withdrawn now that wages have been paid in full to all employees.

Now that also the September wages have been paid, some of Saab's employees may have reached the limit of the state wage guarantee (SEK 171,200) but it seems that Saab will contribute with money so that also these employees will be secured full wage payment for next month, October.

Also in the news from yesterday is the report from Financial Times that Swedish Automobile has sold or is in the process of selling Spyker Automotive (Spyker Sports Car division) to an American Connecticut-based private equity firm named North Street Capital LP. Earlier this year Swedish Auto made a deal to sell Spyker to the Russian banker Vladimir Antonov for a EUR 15 million cash payment and up to EUR 17 million in future profits, but that deal fell through. Now it looks like another buyer has emerged. It is presently unknown what the sale price is, but any money will be very much welcome into the Swedish Automobile accounts.

Swedish Automobile has now issued a press release confirming that a conditional agreement has been reached with North Street Capital LP about the main terms of the sale of the Spyker sportscar business. The sale sum of approximately EUR 32 million will be used to redeem Swedish Automobile's debt to Tenaci Capital B.V., to which the Spyker assets are pledged to.

Swedish Automobile does however stress that there can be no assurance that the sale negotiations can be completed successfully.

This is where the bureaucrats will determine Saab's future

Swedish newspaper Sydsvenskan has a very interesting article today about China's National Reform and Development Commission and the decision the commission will have to make about Pang Da and Youngman's plan to become part owners of Saab.


Below is a translation.

This is where the bureaucrats will determine Saab's future

It's at the Chinese super-agency NDRC where Saab's fate will be decided. The authorities shall decide if Youngman and Pang Da will be allowed to invest in the Swedish carmaker. Ola Wong from Sydsvenskan is seeking answers to questions about how they look at Saab's future in China.

Picture from Sydsvenskan

On the South Yuetan street 38 in Beijing the National Reform and Development Commission, the NDRC, has its headquarters. There the bureaucrats are in ther process of deciding on if the Chinese companies Youngman and Pang Da will be allowed to invest in the bleeding Saab. The question is when and if an approval from the commission will come.


But it is not easy to get answers to such questions. NDRC is a closed organization. Sydsvenskan's reporter has repeatedly tried to get interviews with officials. When I go there I am not admitted into the building. An official says that we need to send a telefax with an interview requests. No one responds to our telefax.


As soon as I take out the camera an official comes and says that it is forbidden to take pictures of the building.


NDRC's mission is to enforce the Communist Party's plans for the country. But the question is how Saab fits in. Even industry experts and diplomats are uncertain. Saab's fate can be summarized in two points:


Can Saab provide China the technology they need?


Are the conditions there to make this a successful business and beneficial to China?


Youngman's CEO Rachel Pang said in early September that they expect the NDRC to make a decision within a month. That would mean no later than 15 October.


- The process with the NDRC is going very well, Rachel Pang said in an email on Monday, but she would not answer if she knows when the decision will come.


NDRC is not bound by any deadline, says Namrita Chow, senior analyst for the consulting company IHS Automotive in Shanghai.


- It took them almost a year to approve the recent joint venture between Chinese Changan and French PSA Peugeot Citroën.


Even the Volvo-Geely approval took about a year, Michael Ning, a spokesman for Volvo cars in China says in an email.


For others NDRC just gives a refusal. Such was the case when Sichuan Tenzhong wanted to buy American Hummer. The planning commission did not think the giant fuel consumer fit China. On the other hand they like environmental friendly vehicles. It is one of seven strategic industries identified in China's current five year plan.


- At present it is difficult to convince authorities that Saab affair is a good idea, says Dominik Declercq, chief representative in Beijing for the industry association European Automobile Manufacturers Association.


- One possibility is maybe if they can demonstrate that Saab has the technology to give China an environmental friendly vehicle, or that they promise to build a pure Chinese brand next to Saab says Declerq.


According to NDRC's latest guidelines foreign automotive investment is no longer encouraged. There are 40-50 players in the Chinese car market. In Europe, by comparison, there is less than 10. NDRC would like to see a move towards the situation in Europe.


- NDRC wants to reduce the number of car manufacturers in China and consolidate. The question is whether technology from Sweden is so interesting that they are willing to open for Saab, says Declerq, which adds that this is only speculation on his part.


Michal Meidan, China expert at consulting firm Eurasia Group, is more hopeful.


- There is a broad support for automakers to invest abroad, especially as the domestic market is cooling off.


She believes that would could block the deal is objections from Sweden.


- If the transaction is financially sound and there is no risk of political backlash, it will probably go through, says Meidan.


The reason that the situation is so unclear is that even the bureaucrats at the NDRC have been overwhelmed by development.


- They have themselves simply not so much experience of the regulatory framework, says an anonymous diplomat.


Ten years ago China had virtually no foreign investment. Now it's over $ 60 billion. That is a huge increase, says the diplomat.


- With regard to consumer products like cars, it is quite easy to count how many such acquisitions that have taken place.


During the financial crisis in 2008, China's foreign acquisitions increased quickly. In 2009, China became the third largest global investor in corporate acquisitions and mergers.


Now that the Western companies have once again been put on sale many expect a similar onslaught. China sits on a huge pile of foreign currency. Instead of building the pile higher it is better to finance the purchase of companies and natural resources abroad. The money can be channeled through state banks and investment funds.


But at the same time the authorities have been criticized after a series of bad business transactions. For example, state owned China Rail Construction lost $ 4.1 billion on a railway project in Mecca, Saudi Arabia. State owned Covec saw $ 400 million in losses in the construction of a motorway in Poland before they were forced to pull out. The Embassy report "China does business" refers to many, up to half of the major Chinese international acquisitions and mergers have been unsuccessful.


NDRC do not want to see more failures. They will therefore examine Youngman and Pang Da’s muscles and budget carefully. In addition, two quite different authorities in the Chinese bureaucracy jungle – the Ministry of Trade, Mofcom, and the State Administration of Foreign Exchange, Safe, must also give the thumbs up before Saab can get the money.


The great and decisive obstacle for Saab however, is currently on South Yuetan street 38 in Beijing.

I would like remind you about my own comments from yesterday regarding so called experts and analysts opinions on whether the NDRC will approve the investment or not:


It is only Saab, the Chinese partners Youngman and Pang Da and the Chinese authorities who have all the information. It is only these stakeholders who know what Saab can contribute to Youngman and Pang Da. It is only these stakeholders who have full insight into the technology that Saab has developed. If the deal will contribute to the Chinese automotive industry, the deal will be allowed. The so called experts have a very limited insight into all this, but still they assert the expertise to foresee political decisions in China.


And I would also like to add that Youngman, who is probably the stakeholder that is in closest contact with the decisions makers in China, still is convinced that the deal will go through. Why would they else transfer EUR 70 million to Saab this week?

Saab among cheapest to repair

The Swedish insurance company Länsförsäkring has just released a report with statistics over breakdown of machinery covered by insurances taken out at Länsförsäkring. The survey is done on the basis of 10,328 reported breakdowns. For anyone interested in statistics and cars, the report is very interesting!


Let's first look at the overall view.

Saab is better than the average car and better than the premium brands and competitors Jaguar, Audi, BMW, Alfa Romeo and Cadillac. Only two European brands, Mercedes and Volvo, are better than Saab, in addition to many Asian brands.


Let's go deeper into the numbers.

Here we can see that Saab's breakdowns are mostly connected to engine and electrics/electronics and to some degree the heat and ventilation system. And if we dig even deeper into Saab's electrics/electronics breakdown, the report says that a repeated problem for the Saab 9-3 with a diesel engine has been the generator (alternator, dynamo), which according to the report can indicate a problem with the construction. Furhermore, many of the engine breakdowns are due to the Saab 9-5 having a repeated problem with the turbo. The risk of getting a problem with the turbo is five times bigger in a Saab 9-5 than the average car with a turbo.

Then let's look at the average cost of repairing the breakdown.

The graph shows that in Sweden Saab is among the absolute cheapest cars to repair if it breaks down. The average cost of repairing a breakdown on a Saab costs only approx. SEK 11,000, while repairing Volvo costs approx SEK 12,500, a Mercedes or a BMW approx SEK 18,000 and an Audi approx SEK 20,000.

And finally, I am happy to report that no Saab is among the 20 car models with the highest breakdown frequency. But on the list we can find models from Alfa Romeo, BMW, Landrover, Volkswagen and Porsche among others.

Don't count Saab out

Saab must have the best employees a company possibly can have. They stick with the company through thick and thin. One group of these great employees is the engineers. Earlier this year when Volvo were hiring engineers in the hundreds, they didn't receive that many applications from the Saab engineers. Despite the uncertain future at Saab, the engineers stuck with the company. And that makes me believe that they must have an incredibly interesting job, great colleagues and they must be very proud to be working at Saab. The past weeks when the labor unions felt forced to file for bankruptcy in Saab, the only labor union which never filed for bankruptcy was the one of the engineers. That's how much they love their company!

Today two of these engineers have written a reader's letter published in today's Göteborgs-posten. Below is a translation. And at the end I have included a comment of my own.

 

Do not count Saab out
There are many who prematurely have counted Saab out. Our view is that these people will be wrong. There are a number of circumstances that will make Saab an attractive brand and car in the future, writes Per Bränneby and Hakan Danielsson, Swedish engineers.

What is it that makes it possible for Saab to restart by going through a reconstruction?

The explanation must be sought in the history, which also gives a clue about the future. We engineers have recently gone through a very difficult balancing act. Our members, like other employees, were unpaid on several occasions. Nevertheless, we have during the same number of occasions refrained from completing the process of bankruptcy. The reason is our belief in the product we have developed and which in many respects has especially good technical characteristics.

The separation from GM gave many of us the necessary confidence in the future to complete a number of the future-oriented development projects. Our loyalty can be simply explained by the fact that we want to see the car in which we put so much energy also drive out on the roads. We want the picky consumers to experience the driving characteristics we have developed.

Overlooked values
There are many who have done analysis of Saab as a company. What these and others who describe the future overlook is the fact that GM kept Saab for more than 20 years - despite the fact that the company, as they describe it, has almost never made a profit. What they often overlook are the values Saab contributed to GM in the vital areas of development through all these years.

Saab is important for the overall automotive cluster in Sweden. It is recognized by both the suppliers as well as by the three other major vehicle manufacturers. And the automotive industry is in turn important for Sweden. Its importance is about ten times bigger for Sweden, compared with an EU average. We have therefore been surprised how quick the consequences of Saab disappearing have been brushed aside.

The government's lack of commitment
The Swedish government's commitment has broken down and efforts was made relatively late. Let us just recall that the Minister of Enterprise very early stated that wind power is an option to Saab. This was, to say the least, not a good signal. And just before Christmas 2009, they were actively planning for Saab to be closed down instead of making the necessary contacts with the U.S. government.

Now all this is thankfully history. Saab's most important asset is now a devoted staff and a range of products that are perceived as very modern, appealing and attractive. The time we won by entering the reconstruction must be used in a very active way so that the production can be resumed as soon as possible. Capital will now be supplied by Chinese car companies.

Why are the Chinese interested in becoming part owners of Saab? They simply see what we at Saab see. A small company with limited resources which can produce competitive cars.

Most efficient in Europe
In recent years we have been trained to solve our tasks in all departments with ever-diminishing resources. We have learned what is absolutely necessary to keep and what we can rationalize away. Now we go through a reconstruction in which we with experience tune the organization. When our new partners become part of the company, we not only have one of Europe's most efficient production facilities and an innovative technology development department, but also the remaining will be a very competitive administration.

In addition to this we now require a full commitment from the authorities, political representatives and other stakeholders so that we can succeed. We have everything to gain by maintaining a strong automotive industry in Sweden.

By Per Bränneby
Head of the Association of University Graduates / Graduate Engineers Saab Automobile

Håkan Danielsson
Former head of the Association of University Graduates / Graduate Engineers Saab Automobile 1988 - 2010

I would like to add some of my own thoughts. Thoughts about Saab's deal with the Chinese companies.

Now and then we can read statements and analysis by so called experts saying that the deal with the Chinese will never be approved by Chinese authorities. But I would like to remind you all about the following:

It is only Saab, the Chinese partners Youngman and Pang Da and the Chinese authorities who have all the information. It is only these stakeholders who know what Saab can contribute to Youngman and Pang Da. It is only these stakeholders who have full insight into the technology that Saab has developed. If the deal will contribute to the Chinese automotive industry, the deal will be allowed. The so called experts have a very limited insight into all this, but still they assert the expertise to foresee political decisions in China.

And I would also like to add that Youngman, who is probably the stakeholder that is in closest contact with the decisions makers in China, still is convinced that the deal will go through. Why would they else transfer EUR 70 million to Saab this week?

So please forget the opinions of the so called experts. Listen to the employees at Saab and listen to your own common sense.

Saab museum collection to be kept intact

Last week we got reports that the Swedish Debt Enforcement Agency, Kronofogden, had visited the Saab Museum. There the Debt Enforcement Agency put small stickers on the cars and other exhibition objects saying that the cars and objects were assessed by the Debt Enforcement Agency and could not be moved or sold.

When Saab entered reconstruction last week, the job of the Debt Enforcement Agency was halted and Saab's assets, including the museum cars, are safe for the time being. But Saab still needs to find a way to come to agreements with its creditors during the reconstruction, or else the Debt Enforcement Agency will be back at the museum to take the cars.

Head of the museum, Peter Bäckström, tells TTELA that the whole collection of 109 cars, 22 engines and a number of other exhibition objects were assessed. But he is pleased to say that the museum is still open and the visitors can hardly see that the Debt Enforcement Agency has been there. The only evidence is the small stickers.

Picture from TTELA

But maybe most important, the Debt Enforcement Agency has assured Bäckström that if the Debt Enforcement Agency is forced to sell the collection, it will be sold as a whole and not in pieces. Then one can hope that the municipality of Trollhättan, a public museum or maybe a foundation of some sort will buy the collection and keep it intact and in Trollhättan. I guess that is bad news only if you dream about getting your very own Aero-X! ;)

Saab 9-4X perfect for a small family

Over at Boston Herald there is a nice review of the  new Saab 9-4X. And according to the writer this car might be perfect for a small family:

For the well-to-do small family, this new luxury compact SUV might just be the ticket. Besides being stylish, comfortable and smooth riding, you probably won't hear a peep out of your backseat passengers thanks to the impressive entertainment center option that is available for this top-of-the-line model.

For the whole review visit Boston Herald. Below is their video review.  






Thanks to Curt for the link!

August wages finally on the way

According to TTELA, Västra Götaland County Administrative Board (länsstyrelsen) gave its bank the task of transfering the wages to the reconstruction administrator yesterday and the wages should therefore be on the adminsitrator's account today. The amount transferred is SEK 78 million and cover wages to 300 employees at Saab Powertrain and 3,071 employees at Saab Automobile.

When the employees will have the wage on their accounts depends on how fast the transfers between the different banks are carried out.

"I can not promise a definite date right now. What I can promise is that those who are working on this issue are doing their best so that the employees will receive the wage payment as quickly as possible," Gunilla Gustavs from Saab's information department told TTELA.

As soon as the August wages are paid, then the wages for September is around the corner.

.... and now, Friday afternoon, TTELA reports that many of the employees have now received their pay. And on Monday the pay for September is due.

Personally I am very happy for the employees. I can't even imagine how living a whole month without a pay check has been like!

Saab museum car collection saved by the bell

When the Court of Appeal allowed Saab to enter reconstruction yesterday, it do not just secure the employees the wages and Saab time to sort out the financial worries.

Now Dagens Industri reports that the Swedish Debt Enforcement Agency had already been at the Saab car museum preparing to collect assets that could be sold to cover debt. And at the museum the Debt Enforcement Agency found approx. 100 cars, 22 engines and other exhibition objects valued to SEK 5 million. But then the court allowed a reconstruction and the work of the Debt Enforcement Agency was stopped. If Saab does not go through a successful reconstruction and can secure enough funds to pay its suppliers, these cars can still end up being sold. The Debt Enforcement agency has so far received 136 collection claims that totals SEK 216.6 million. But so far all these claims have been stopped due to the reconstruction. Thank God!

Cost slashing and changes in management

When Saab as part of the reconstruction process meets its creditors at the creditors' meeting 31 October, the company will present an efficiency plan. Internally this plan has been named Cheetah. Reason being that the cheetah is a quick animal and Saab needs to quickly cut costs and improve efficiency.

Head of the Cheetah project is Johan Formgren, who is Executive Director Human Resources. The target is to reduce total costs by 15 percent and to reach this target, the fixed and flexible costs need to be reduced by 25 per cent.

During the coming weeks staffing, purchased services, marketing costs, etc. will be reviewed, both in operations in Sweden and outside Sweden.

Five teams will report their cut costing sugguestions to the project management. There will be four functional teams:

1) Production, including purchasing.
2) Product development, including both Vehicle Engineering and Powertrain.
3) Sales, marketing, after market and communication.
4) Administration.

In addition there will also be a cross functional team.

The project leader expects more than 100 cost cutting suggestions from the teams.




But that's not all the changes that's coming. To Dagens Industri Saab's acting CEO, Victor Muller, says that there will also be changes in the management. Muller is said to be especially dissatisfied with sales and marketing. And in the whole organization both the top and mid-level managers will be reviewed.

"We're planing big changes in the organization, from the top to the bottom", Muller said.

One obvious change is that Victor Muller will step aside and only resume as Chairman of Saab. Two candidates that Dagens Industri's sources mention as favourites for the position as CEO is Martin Larsson, who is Executive Director New Business Development, and Gunnar Brunius, who is Vice President Purchasing & Manufacturing. Both have made a tremendous contribution to Saab these past months, and thus made a good impression on Victor Muller.

Here's what Saab Media writes about Martin Larsson and Gunnar Brunius:

Gunnar Brunius
August 23, 1961, Gothenburg – male – Swedish

Mr. Brunius joined Saab in 1981 and started out in the Body Shop. After moving to the Paint Shop as a Project Engineer, he rose through the ranks and became Manager of the Paint Shop in 1998. In 2006 he was appointed head of Saab’s assembly plant. As Vice President Purchasing & Manufacturing, Mr. Brunius among other things oversees the manufacturing process of the Saab 9-3 and Saab 9-5 at Saab’s plant in Trollhättan, Sweden.

Martin Larsson
September 20, 1969, Trollhättan – male – Swedish

Mr. Larsson joined Saab Automobile in 2003, after establishing a decade-long career in engineering with Opel, Suzuki and GM Europe. In 2005 he was appointed Purchasing Director for Sweden. In his current role as Executive Director New Business Development, Mr. Larsson is among other things responsible for developing new business partnerships. He obtained degrees in Engineering, Mechanics, Economics and Law from the Thayer School of Engineering at Dartmouth College in New Hampshire, the Royal Institute of Technology in Stockholm and the University of Stockholm. Mr. Larsson is married and a father of three.

New valuable Saab technology

Today Swedish news site NyTeknik has several articles about Saab's upcoming technology. Here is a summary of the main points.

Phoenix modular technology

The technology that will be the basis for Saab's future models, the Phoenix platform, has now been in development since november 2008. It is a very flexible technology which can be used on anything from sports cars to SUVs, and of course on both the next generation 9-3 and 9-5.

For Saab it will be a big advantage to be able to use the same technology on all its vehicles, compared to today when the three models 9-3, 9-4X and 9-5 all use a different technological basis. The new platform will for instance allow for cars to have different track width on the rear axle, but still share a lot of components.

According to Mats Fägerhag at Saab, some points that will makes the Phoenix unique are:

• Knowledge of the Scania modul approach
• Extremely good driving and winter characteristics, which set high demands on the suspension, drivetrain, steering, instruments and ergonomics.
• A new hybrid system for good fuel economy.
• A new level of crash safety

Diagram from NyTeknik 

A valuable asset

Mats Fägerhag tells NyTeknik that the Phoenix platform is worth billions of Swedish kronor. As an example, Martin Sköld who is a researcher taking a doctorate on platforms at the business school in Stockholm, says that there are platforms internationally that are valued between SEK 3 billion and SEK 27 billion.

Last week Saab announced that the company would loan SEK 640 million from Chinese Youngman using non-exclusive rights to the Phoenix platform as collateral. But there is reason to believe that because Youngman is an important future partner and part owner, the price was set lower than the market value.

According to NyTeknik, Saab has so far not had licensing of the Phoenix technology as part of its strategy. But the company will now when the business plan is revised, also consider selling rights to this new technology. Possible buyers could be companies based in China and India.

Electric rear axle

In September of last year Saab announced that the company had developed a rear axle with an electric motor. This innovation would give four wheel drive to front wheel drive cars without the fuel penalty. This innovation together with a number of Saab engineers were transfered over to a new company, E-AAM Driveline Systems, owned by Saab and American Axle & Manufacturing.

The new company will sell this technology to several automotive manufacturers, not just Saab. The electric axle can be scaled from 15kW to 90kW and can thus be used in both a mild-hybrid as well as a plug-in hybrid using the same basic unit.

Now marketing manager Magnus Rydell reveals to NyTeknik that the company has already secured a handful of contracts and the production for the first two customers will start in 2013.

Saab enters into reconstruction, but then what?

Earlier today the Court of Appeal for Western Sweden ruled that Saab Automobile AB, Saab Automobile Tools AB and Saab Automobile Powertrain AB would be allowed to enter a voluntary reconstruction. According to the court, this was not an easy decision, and one of the judges did in fact not agree. In the court's ruling, the court does to a large degree support Saab's point of view that the District Court went far beyond what the law requires when assessing Saab's possibility to go through a successful reconstruction. According to the Court of Appeal, the investment planned by Chinese Youngman and Pang Da of SEK 2.2 billion, should be enough to restart production and thus be reason to allow a reconstruction.

Later today Vänersborg District Court appointed Guy Lofalk to be the administrator of the reconstruction. Lofalk was also the administrator when Saab went through a reconstruction in 2009 and was Saab preferred administrator also this time.

Now that Saab enters into reconstruction, all bankruptcy filings and the collection of debt done by the Swedish Debt Enforcement Agency will be stopped. Either Saab sorts out these issues during the reconstruction, or Saab will have to face them again once the company exits reconstruction. The expectation is of course that these issues are sorted out.

The problem for Saab the past months have been to get enough money to make wage payments and also to get enough money to pay suppliers and restart production.

Let's look at the wage payments first. Now during the reconstruction the wages will be paid by the Swedish state. That means that Saab will not have to use its money on wage payments. But Saab must repay the Swedish state at a later point, so it is in fact just a "loan". But nonetheless, it means that Saab can use its current money and resources on focusing on paying suppliers and restarting production.

Saab has announced that the company now will "launched an efficiency improvement initiative as part of a broader review of the company's business plan for 2012 and beyond". And writes that "headcount reductions cannot be ruled out". A reconstruction allows the company to reduce the number of employees, as well as ask for a write down of debt. Saab has said earlier that it aims at fully pay its suppliers, but a reduction of workers is now not ruled out.

And restarting production must be the number one priority. To generate incomes, Saab needs to produce and sell cars. On 31 October Saab will meet its creditors and present the plan for continued life. It is the administrator and the creditors who shall assess if it is probable that Saab can get through this ordeal. If they can not see a future for Saab, then the reconstruction will be ended and Saab will once again face bankruptcy filings. On the other hand, if they decide that there is a future for Saab, then an agreement which let's Saab restart production is needed. Saab has said earlier that it can pay 25 per cent of the debt outstanding to the suppliers now, and the remaining in November when the Chinese investments are expected to be finalized.

A reconstruction can last for several months, and can be extended with three months each time, but can never last more than one year. It is expected that Saab will keep the reconstruction as short as possible. Which probably means that the company will want to exit reconstruction as soon as the investments from Youngman and Pang Da have been finalized and a restart in production is set.

But be aware that the Chinese investments and Saab's survival still depends on China's National Development and Reform Commission (NDRC), China's top economic planning body, approving the investments from Youngman and Pang Da. An approval that is expected in the beginning of November.

Court of Appeal approve Saab's application for voluntary reconstruction

Today the Court of Appeal for Western Sweden announced that it has approved Saab's application for voluntary reconstruction.

This means that Saab will be protected against it's creditors and the wages to the employees will be paid by the state. In other words bankruptcy is avoided for now.

A good day for Saab, its employees and all its fans!

Saab may pay wages through foreign company

On Monday it was reported that Chinese Youngman has promised Saab SEK 640 million by the end of this week. Where half of the money is supposed to go to paying wages and half to paying suppliers. But a problem has been that the Swedish Debt Enforcement Agency has the right to take any money on Saab's Swedish accounts amounting to the collection demands the Enforcement Agency has received from creditors.

If Saab is allowed a reconstruction by the Court of Appeal or Western Sweden, then this problem will be solved as the wages will be paid by the state guarantee and the work of the Enforcement Agency well be freezed as long as Saab is in reconstruction. But if the court denies Saab a reconstruction, then what to do to secure that half of the money will go to wages and not to the creditors through the Enforcement agency?

Today Dagens Industri writes that in that case Saab will pay the wages through a foreign company, probably a Dutch company, and thus avoid the Debt Enforcement Agency. A method which is not prohibited by Swedish law. 

Saab disputes bankruptcy filings

Saab has annouced a press release where the company disputes the bankruptcy filings handed in to the Vänersborg District Court by two labour unions at Saab last week. The company claims that the payment problems are only temporary and that a solution is nearby. Therefore the company is not insolvent.

The bankruptcy hearings concerning these two filings is supposed to be held on Monday 26 September. Earlier today also a third labor union at Saab went to the court with a bankruptcy filing.

For me it is diffucult to interpret Saab's dispute as anything else than an attempt to buy some time. The August wages to the employees of Saab is almost one month over due and the money which Saab is counting on is still not received and most of the money, if not all, even requires an approval from Chinese authorities. An approval that is highly uncertain. In other words, it is unclear if Saab with certainty will receive funds to cover wages.

Blue-collar labor union file for bankruptcy

This afternoon the blue-collar labor union at Saab, IF Metall, went to Vänersborg District Court and asked that the court declare Saab bankrupt. This was an expected move by the union and necassary in order to secure its members wages through the state wage guarantee.

This means that all the unions at Saab, except for the engineers' union have asked the court to declare Saab bankrupt. The engineers' union has decided to wait so far, but will soon also be forced to file to secure its members wage through the wage guarantee.

Court of Appeal will look at Saab's case

Latest news from the Court of Appeal for Western Sweden is that the court has decided to look at Saab's application for a voluntary reconstruction. This means that the court will look at the ruling of Vänersborg District Court and the application from Saab and then come with a ruling whether to allow Saab to enter into reconstruction or not.

According to the court, a ruling is expected within a few days. We can hope this means that a ruling can be made this week.

SEK 640 million from Youngman by the end of this week?

Today the Court of Appeal for Western Sweden will most likely decide whether to look into Saab's reconstruction appeal or not. If the court chooses not to, then the bankruptcy hearings next Monday will be Saab's next stop. But now Dagens Industri reports that Youngman has promised to contribute SEK 640 million by the end of this week, which would take care of the bankruptcy threat and make next Monday's hearings a formality.

These SEK 640 million is probably the EUR 70 million loan Saab announed last Monday. But this loan has been reported to be conditional to Saab being allowed a reconstruction. Now it looks like this condition may have been lifted.

According to Dagens Industri, half of the SEK 640 million is supposed to be wage payments for August, September and October. The first wage payment is planned for next Monday, which would take care of the bankruptcy threat from the labor unions.

Last week we got reports that also the Japanese supplier Takata-Petri has asked the court to declare bankruptcy in Saab. These hearings will most likely be held a couple of weeks from now. The question is if Saab can come to an arrangement with this supplier outside the court.

The remaining of the SEK 640 million once the money for the wages are put aside, can be used to pay suppliers. This would cover about 25 per cent of Saab's due debt, and one can hope that this will be enough for Saab to reach agreements with both the Japanese supplier, as well as the suppliers which has gone to the Swedish Debt Enforcement Agency with their demands.

But first let's see if the Court of Appeal will look at Saab's reconstruction case. A decision is expected this afteroon, or possibly tomorrow.

Some weekend reading

Weekend is here once again. Two days with more or less a time out for us Saab enthusiasts. So what's better than sinking our teeth into a Saab 9-5 review and an article that gives a good summary of the past 20 years.


First we have a nice review of the new 9-5:

The 2011 9-5 could be Saab's saving grace; it's a classy, comfortable, and well-designed flagship, with a lot more character than most luxury sport sedans 

Check it out over at Pittsburgh Post-Gazette /  The Car Connection.


And secondly, the summary of the past 20 years of Saab: 

...the company wowed auto-show audiences with a succession of intriguing concept cars, a couple of which might have helped turned things around had GM had the nerve to produce them. First was the 2001 9-X, a Kamm-tailed hatchback that appeared sexy, unusual and very Saab, followed by the 9-3X crossover coupe a year later that was even more desirable.

That is so true! Just imagine if Saab would be allowed to produce the Saab 9-3X crossover concept!

This car would have been a great success back in the early 2000. BMW and Audi had nothing like this. Saab would have gotten a great head start. The only down side is that Saab would probably be still owned by GM...

Check out the 20 year summary at edmunds AutoObserver.

Thanks to Curt for both the links! 

One bankruptcy request withdraws, and four new handed in

The supplier Edithouse Filmworks AB which on Wednesday handed in a request for Saab to be put into bankruptcy to Vänersborg District Court has now withdrawn the request according to Dagens Industri.

Yesterday the CEO of Edithouse Filmworks, Niclas Bergman, said that they were ging to meet Saab yesterday afternoon. And now it looks like they have had a good talk and come to an agreement.

This means that there was one less bankruptcy filing for Saab to worry about. The two bvankruptcy filings from the labor unions Ledarna and Unionen remains.

And then a little later today Dagens Industri reports that four new bankruptcy requests have been filed with Vänersborg District Court. This time it is the Japanese supplier Takata-Petri with its divisons in Germany, Romania and Poland that is behind the four requests. The debts in question amount to EUR 1.9 million.

Four new filings are bad news of course, but on the other hand, this does not change anything. Saab needs to be allowed a reconstruction to survive. A reconstruction would stop the bankruptcy hearings concerning the unpaid wages that will start in just 10 days and also the hearings concerning these four new filings that will be held a couple of weeks from now.


A piece of encouraging news about the future is the report that the Chairman of the blue-collar labor union IF Metall, Stefan Löfven, together with head of IF Metall at Saab, Håkan Skött, met the CEO of Pang Da, Pang Qinghua, in Frankfurt yesterday. And when Swedish media talked with the men afterwards, they were both very pleased with the meeting.

"There is no question about it, they are very serious and are in this for the long run. For me it is obvious that they want to make a real effort," said Löfven to Swedish news agency TT.

"They feel very strongly for the brand and believe that everything will be sorted out and that we are headed for a good future. They are interested in following us into that future," Håkan Skött told TTELA.

When asked what impression Pang Qinghua made as a person, Skött said:

"We only talked about business and it is hard to say after just meeting him for the first time. But he was very outspoken on the issues we dicussed. I hope there will be more occasions to meet him."

Youngman cool on SEK 8 billion investment

Yesterday Swedish media reported that Youngman and Pang Da would be willing to invest SEK 8 billion in Saab. Now just-auto reports that Youngman's Rachel Pang emphasises that they have made no plans or decisions concerning such an investment.

"We don't have any plans about EUR 800 million. If Saab needs this money to develop new models, that means they have the plan for this money," Rachel Pang told just-auto.

"We will invest EUR 136 million into Saab and in the future, with Saab, Youngman and Pang Da, we will be the shareholders of Saab. We will discuss the business plan and then we will help Saab to get more finance. That could come from banks, from the Chinese joint venture companies," Pang continued.

In addition to the EUR 136 million from Youngman, Pang Da has agreed to invest EUR 109 million.

Also Saab spokeswoman would not say that the Chinese plan to invest SEK 8 billion.

"What Youngman and I believe Pang Da have said is they expect to be investing more money over and above the EUR 245 million," Saab spokeswoman told just-auto.

More on the appeal and the latest bankruptcy request

According to TTELA, the Court of Appeal for Western Sweden has now confirmed that the decision whether the court will reevaluated Saab's reconstruction request or not, will not be reached until Monday next week. If the court decide to reevaluate Saab's request, then the court will need an unknown number of days to reach a decision whether the court will allow a reconstruction or not.


Also from TTELA is the news that the undisclosed company that went to the Vänersborg District Court yesterday and asked that the court declare Saab bankrupt, is the company Edithouse Filmworks AB. It is unknown why the company has taken this step since it is very unlikely that any supplier or service provider will receive a single Swedisk krona if Saab is put into bankruptcy. The CEO of Edithouse Filmworks, Niclas Bergman, says that they will have a meeting with Saab today.


The last piece of news is from DN, and is a report that the head of the Swedish association of automotive suppliers (FKG), Fredrik Sidahl, do not believe that Saab will be able to restart production this year.

"Victor Muller is unfortunately a time optimist. Regardless of what he says, it is not possible to restart production on this side of the year," Fredrik Sidahl told DN.

First the reconstruction will take several weeks and then the suppliers need time to get ready to restart.

"The EUR 70 million which Saab's owner and CEO Victor Muller has promised will come to Saab from the Chinese partners in a "bridge loan" is only sufficient to pay employee wages and electricity for a few months," says Fredrik Sidahl.

Bits and pieces from yesterday

Let's start today by catching up with yesterday.


Yesterday we got several reports that now also a undisclosed company has gone to the court and asked that the court declare Saab bankrupt. The outstanding amount that the company wants is SEK 1,181,500. All I can say is that if this company succeed in putting Saab into bankruptcy, then the company can say goodbye to this money.


Yesterday we also got to know that the Court of Appeal for Western Sweden, which is handling Saab's appeal on the reconstruction rejection , has said that a decision whether the court will reopen the case or not should not be expected until Friday or maybe even Monday next week.

Last but not least, Dagens Industri reports that Chinese Youngman and Pang Da are willing to invest more than SEK 8 billion (approx. EUR 900 million) in Saab!

"We are ready to invest SEK 8 billion in Saab when we have become part owners of the company. But it will of course not all happen immediately, but step by step," says Rachel Pang, CEO of Youngman cars to DI.

The long-term investments will be aimed at starting a Saab manufacturing plant in China, building up a sales and service organization, to develop three new models, build a technology center for Saab in China and secure the production in Trollhättan.

But first the NDRC will of course have to approve Youngman and Pang Da's plans to become part owners in Saab.

"I feel a fundamental support from the NDRC in our investment in Saab Automobile," Rachel Pang says.

What will happen today?

Today before lunch time, the Court of Appeal for Western Sweden will received Saab's appeal on Vänersborg District Court's rejection of Saab's reconstruction application.

Saab handed in this appeal 20 minutes too late on Monday for the appeal to reach the Court of Appeal already yesterday. But with yesterday's news that the provincial division of the Development and Reform Commission (PDRC) of China yesterday had approved Youngman and Pang Da's plans to invest in Saab, one can speculate that maybe Saab deliberately handed in the appeal 20 minutes late. Now the court will know that the deal is one step closer to be finalized, and the court will also see that the timetable for the approval holds up.

The first the the court will decide is whether to look at the case or not. The court may decide to reject the appeal all together, but this being such a big and unusual case, we can hope that the court will decide to look at it. A decision should not be expected until tomorrow. If the court decide to look at the case, the creditors will be given an opportunity to express their opinion. And after that the court will decide whether to allow reconstruction or not. TTELA writes that according to the court, this can take a week or a month. It is impossible to say.

At the same time Vänersborg District Court is working on the unions request to declare Saab bankrupt. Saab has been called to hearings 26 September.

As reported yesterday, experts in Swedish law say that whatever comes first of a reconstruction and a bankruptcy is the ruling that applies. In other words, this can become a tight race. The unions have however said that if necessary they will postpone the bankruptcy proceeding in order to let the Court of Appeal first rule on the reconstruction.

So stay tuned!

Saab one step closer to Chinese millions

Today the local department of the National Development and Reform Commission (NDRC) in the Zhejiang province approved Youngman and Pang Da's plans to invest EUR 245 million in Saab's parent company Swedish Automobile and thus become major shareholders of Saab and its parent company.

Two down, and still a few to go. But we are on the way!

Interview with Victor Muller from yesterday

Svenska Dagbladet met with Victor Muller at the Frankfurt airport yesterday and did an exclusive interview with him. Here is a quick translation:



Muller believes Saab will pull through

Bankruptcy or not - that is the question. It all depends on China and the Court of Appeal's decision on a new reconstruction.

- I am convinced that we will pull through and the answer will come during this week, says Victor Muller in an exclusive interview with SvD in Frankfurt.


This is the day when Saab is requested to be declared bankrupt. Victor Muller is visible from a long distance at Frankfurt airport. Tall, wearing a dark blue suit and blue tie, he is fiddling with his two mobile phones simultaneously.

The real reason that Unionen chose to press the button seems simple - it would take longer to get the payroll money from the national wage guarantee if the unions requested Saab in bankruptcy than if the Saab board did the same.

For Victor Muller a bankruptcy is not an option. He raises his voice.

- I do not understand why they did it. We have our bridge financing now and it's so close, he says emphatically.

Cecilia Fahlberg is still holding all doors open and will allow Saab to take precedence in the legal line with its appeal.

Isn't the problem that it is 17 days since you should have paid the salaries to your employees?

- The fact that we have not paid the salaries is the biggest stone in my heart. But I am still surprised .... We are so close.

The issue that overshadows all the decisions on Saab's future is in Beijing. Saab's fix is the following: Saab must wait for decisions from the super-department NDRC in Beijing to get the SEK 2,2 billion from its Chinese partner companies. As SvD Näringsliv could tell on Saturday, the deal has been given the okay at the local level, the next few days a decision is expected on the provincial level. Thereafter, it may take additional time before the NDRC in Beijing decides. And to be clear - Saab's entire future depends on the decision in Beijing.

Imagine that I am a child - tell me why the appeal will succeed when the District Court said no?

- We have now done everything in our power to serve the right information. We have said that a decision from the NDRC will come by 1 November. The big difference is that we now have bridge financing in place - it is conditional to that we are allowed the reconstruction.

What will you do if the decision is no?

- On that I will not speculate now. Now all the focus is that this will go through.

Is it true that you have submitted a complete application [to the NDRC] as late as August?

- We have worked really hard. It is a complex process that begins at the local level. Everything is in the appeal.

What happens if you are allowed a reconstruction?

- Then we will be alright. Then we are protected. Wages can be paid. And with the bridge loan we will try to restart production.

That is the reason he is in Frankfurt - he has kept yet another blazing speech to convince CLEPA, the European suppliers' organization, not to put Saab in bankruptcy.

Do you have the suppliers on your side?

- I do not know, there will be new negotiations. But they are extremely interested in us not going bankrupt.

Saab must be able to pay salaries within a few days. Yesterday a bridge financing materialized in the form of a messy press release, where, somewhat simplified, a bank lends almost SEK 700 million so that Youngman can get access to Saab's new trump card, the Phoenix platform.

- We worked day and night all weekend with teams in Stockholm, Trollhättan, Beijing and with Youngman and Pang Da.

But he will not say which bank is lending the money.

Is it Vladimir Antonov?

-No, he can not, but because not everything is finalized, I can not say who.

So the bottom line - what chance does Saab have with the NDRC in China.

-I am totally convinced that it will go well. All the signals I get from Youngman and Pang Da indicate that. That's why I continue to struggle.

Have you thought about giving up?

- No way. But I am disappointed in the Swedish media.

He lits up - looks like a little boy when he asks if I'm going to the car show.

- It is so sad. We should have been here, but of course we can not use EUR 1,2 million.

Wrap up of a wild day

Welcome to another day in the life of Saab. But first let's wrap up yesterday which was a wild day.

First we got the great news that Saab is securing EUR 70 million in bridge funding by getting a loan from an international bank (probably German and probably Deutsche bank). Chinese Youngman will guarantee the loan. The price Saab has to pay is putting up non-exclusive rights to the Pheonix technology as collateral. Later in the day it became known that this EUR 70 million loan will take approx. two weeks to be finalized, in other words, Saab won't have the money until 26 September.

Then two hours later two of the four labour unions at Saab went to the Vänersborg District Court asking the court to declare Saab bankrupt. The reason being unpaid wages for August. According to the court it will need approx. two weeks to prepare and the bankruptcy hearings will be held 26 September. In the meantime the unions can withdraw their requests. But for them to withdraw the request, Saab needs to pay the wages.

In the afternoon Saab filed their appeal to the Vänersborg District Court's rejection of Saab's application from last week to enter into voluntary reconstruction. This appeal was unfortunately handed in 20 minutes too late to be part of yesterday's shipment of post to the Court of Appeal for Western Sweden. This means that the Court of Appeal will not receive the appeal until Wednesday morning. We can expect that the Court of Appeal will make a decision whether to look at the case fairly quick, and if it decides to look at the case, we can hope to get a decision whether to allow reconstruction or not on Thursday maybe.

From the documents Saab handed in to the court, we learned that Chinese companies Pang Da and Youngman are very serious about investing in Saab and making Saab a profitable company. In addition to the EUR 245 million in initial equity investment, the companies have agreed to contribute additional capital when needed.

We also learned that Saab has developed a new extended range electric vehicle concept. A technology that would reduce the CO2 emissions of the Saab 9-3 to only 50 g CO2/km.

In other words another crazy Saab day.

The big question now is if the Court of Appeal will allow Saab to enter reconstruction and if it does, which ruling will come first, bankruptcy or reconstruction? According to "legal experts", the first ruling will be the one that applies. And if the Court of Appeal rejects Saab appeal, then the question is if the EUR 70 million will come quick enough to avoid bankruptcy.

So fasten your seatbelts, the ride has just begun!

New Saab extended range electric vehicle technology

In Saab's application to the Court of Appeal for Western Sweden Saab reveals that the company has a pending patent on a new extended range electric vehicle concept that will reduce the CO2 emissions considerably. With this technology the Saab 9-3 would emit less than 50 g CO2 / km.

It's a full hybrid concept with different drive modes, e.g. pure electric propulsion, propulsion purely by the internal combustion engine, or a combination of the two.

Saab's appeal now available online

Saab's appeal to the Court of Appeal for Western Sweden on the rejection of Saab's application for voluntary reconstruction is now available online.


This post will be updated with interesting information from this new application.

• The application has grown from 14 pages handed in to the District Court to 26 pages handed in to the Court of Appeal. 
• In addition to the EUR 245 million initial investment by Pang Da and Youngman in Saab, the two Chinese companies have in the shareholders agreement agreed to contribute additional capital when needed.
• The signals from the Chinese authorities on the deal between Saab and Pang Da / Youngman has been consistently positive. 
• EUR 70 million in bridge funding from Youngman is expeced to be received within two weeks.
• International banks are interested in taking over Saab's existing loans (I assume this means the European Investment Bank loan) which makes it possible to secure more funding since the current loans tie up more collateral than needed.
• Saab does not agree that it is the court's task to assess if a reconstruction will be successful. That is the task of the administration and the creditors.
• Saab questions how the District Court can be qualified to assess the damage to the Saab brand and goodwill.
• The application includes letters of support from Pang Da and Youngman where the Chinese confirm their intentions to invest in Saab and that they expect the plans to be approved by Chinese authorities and that they expect no delays in the approval process.
• Youngman confirms that they will provide EUR 70 million bridge funding together with a German bank (Deutsche Bank has been rumored earlier)
• The letter from Youngman includes an overview over the approval process in China. The final approval is expected 8 November.
• Saab has developed a new extended range electric vehicle technology. Read more in next blog post.
• The new modular architecture (the Phoenix technology) to be used on all future vehicles will reduced future development cost by 30 - 50 percent and may lead to development time for new vehicles to be reduced to only one year.
• The yearly cost in the development department has been reduced by SEK 400 million the last two years.
• Quality improvements have lead to 20 percent less in warranty costs.