The Swedish government will not take stakes in either Saab or Volvo from General Motors or Ford, nor does it plan more aid for either Swedish automaker, a senior official said Jan. 15 at the Detroit Auto Show. “They (GM and Ford) have to take the full responsibility for the actions that have to be taken to secure good futures for the brands of Saab and Volvo.”
“I made it clear to General Motors and Ford that under no circumstances will there be a way that the Swedish government - the Swedish state - would become an owner of either Volvo or Saab. They (GM and Ford) have to take the full responsibility for the actions that have to be taken to secure good futures for the brands of Saab and Volvo,” Göran Hägglund, state secretary of the Swedish Industry Ministry, told reporters at the auto show.
As the troubled auto industry continues to seek loans and other guarantees to forestall a possible collapse, GM and Ford found an ally in an unusual place. Consul General Lennart Johansson of the Swedish Consulate in Detroit is an outspoken supporter of U.S. and Swedish industry. He believes misconceptions, far more than slumbering markets, are behind many of the problems automakers currently face - none more than GM subsidiary Saab and Ford-owned Volvo.
“I think the idea that the automakers created their own problems reflects some people’s opinion and I think that (the U.S.) Congress is not that well educated on what is happening,” Johansson said. “This is how I see it: First of all GM and Ford bought Saab and Volvo, which were good companies with good management and good people and still are. These companies helped GM and Ford to improve current cars in many aspects not the least in safety.”
During Congressional hearings on a $25 billion bailout for U.S. automakers, many Congressmen grilled GM boss Rick Wagoner about the automaker’s continued production of gas-guzzling sports utility vehicles and trucks rather than smaller, more economical cars. Johansson said those questions routinely missed the mark.
“We have enjoyed $1.50 gasoline in America for many years. I have been here for 31 years, so I know what it’s been like,” Johansson said. “There is no public transportation like there is in other countries. Mothers take their kids to games or school in vans or SUVs because small economy cars just aren’t very practical. There hasn’t been a need for tiny cars that are better with fuel, not until gas prices went up to $4 a gallon.”
Johansson said the fact the top-selling U.S. vehicle is the Ford F150 pickup truck shows it isn’t the automakers that need to change, but the market.
“Right now, pickup trucks fit many Americans' profile,” he said. “It’s what many people want. When it comes to cars, Detroit is making cars that are on par or better than foreign cars in fuel economy.” My three children drive pickup trucks and SUV’s because they are safer and have room for their children and with the weather in Michigan they are 4-wheel drive and I must say that I feel better knowing that they are safer on the road in these vehicles.”
The Swedish consul general is an unabashed supporter of the U.S. and the Swedish auto industry. He said both remain critical to their nations’ overall economic health.
“One assembler in a car factory feeds seven to nine people in society because of all the components that go into a car these days,” he said. “The car industry has been forced to become incredibly productive. The cost to remodel a kitchen is as much as two or three small cars. It shows remodeling has not at all developed to a high level of productivity like the auto industry.”
Johansson met with members of the Swedish United Auto Workers as well as members of the Swedish government that were in Detroit Jan. 15 for the annual Detroit Auto Show. He said he agrees with the government decision not to buy stakes in either Saab or Volvo, but also said he believes the Swedish government could step in to help in other ways.
“The government could guarantee loans to Saab and Volvo,” he said. “In this way, creditors know they will get their money back because the government is guaranteeing the loans.”
Swedish Industry Minister Göran Hägglund reiterated the center-right government’s stance on buying stakes in either Saab or Volvo, but left the door open to other forms of aid. Sweden guaranteed $3.2 billion in loans for the two companies in December.
Johansson said an often overlooked fact is the automakers themselves have been restructuring for over a decade.
“What has been going on here in the auto industry is a very serious downsizing program and restructuring program,” he said. “We have lost 600,000 jobs in Michigan in the past 9 years out of a 10 million population in the state. It is having a negative impact to be sure but it was the necessary steps. The automakers had to reduce its work force.” Johansson is working closely with the Michigan governor and her staff to bring alternative energy technology to Michigan. Sweden is far ahead of USA in using renewable energy. He is working with the governor to create “win-win partnerships” between Sweden and Michigan. Last summer, the governor signed a new law called “Center of Energy Excellence”, which simply is the Swedish triple helix model how industry, government and academia are working together. This law was strongly supported by both parties and became successful from day one. Under the new law six companies of which two from Sweden have received grants to establish business in these centers with more to come. The governor’s goal is to make Michigan the first self-sustainable state in USA.
First things first Johansson also said the global credit crisis, which started when U.S. mortgage-backed securities turned sour along with the American real estate market, are having an equally hard impact on Detroit.
“Most people buy their car with a loan, but now no one can get a loan, or if they can, they are afraid to spend the money,” he said. “That is the first thing we need to do to get the auto industry back into health – to fix the economic problems and get credit flowing again.”
Speaking out for the auto industry is nothing new for the Detroit consul. Johansson said as Sweden’s official representative in the Motor City, he said part of his job is “to understand auto industry and also to arrange visits from the Swedish government, industry and academia with car companies, research organizations and universities and with (Michigan Gov. Jennifer) Granholm. I am here to be Sweden’s ears and eyes.”
He also dismissed some of the negative publicity the city of Detroit receives from the American press as a dying city home to a dying industry.
“I am very proud to live and work in Michigan. I think Detroit is a great city that has a strong future,” Johansson said. “Take a look at the Swedish presence in Michigan. Right now we have 46 companies here and have created thousands of new jobs. Michigan is a great state. It’s very similar to Sweden and I don’t think neither Michigan nor the city is dying. Detroit is a tough city and once this crisis is over, the auto industry will emerge smaller, leaner, and stronger than ever.”
Pickup trucks fit many Americans' profile,” Consul General Johansson said. “It’s what many people want." Photo: Bo Zaunders