At least one city in the United States can more than sympathize with the plight of a town in western Sweden.
The citizens of Detroit know all too well the impact of the global recession on the automobile industry.
TROLLHÄTTAN, Sweden –As the Big Three automakers – General Motors, Chrysler and Ford – continue to hemorrhage jobs and their sales continue to plummet, Detroit stands on the brink of becoming a ghost town, home only to empty factories and unemployed workers.
Although hopes in many camps are still high about the future of Sweden's "other car," Trollhättan, Sweden suddenly stands the same risk after Saab, a division of GM, officially filed for protection from bankruptcy Feb. 20. The move enraged the town of 45,000. Former Saab employee Mona-Britt Olsson said one person is to blame.
“(Swedish Industry Minister) Maud Olofsson is not very popular here these days,” said Olsson, 67, who worked for Saab for 30 years before retiring. “She probably shouldn’t walk alone here at night.”
The Saab factory, which assembles the Saab 9-3 and 9-5 models, sits on the outskirts of Trollhättan. Shifts and production have been cut back since the end of last year to about 300 cars a day from more than 500.
Saab had to temporarily halt production yesterday after customs froze deliveries from warehouses because Saab lacked credit to pay tariffs, customs spokesman Hans Ohlsson said.
Local anger grew after the government said it may be willing to help Volvo Cars, Saab’s Swedish rival. Volvo’s parent, Ford, put the company up for sale and is set to get government guarantees for European Investment Bank loans, Prime Minister Fredrik Reinfeldt said Feb. 24. Volvo is a “different” story because Ford is cooperating in the sale, he said.
It doesn’t sit well with Saab workers.
“We’re extremely frustrated at the government’s way of acting,” said Paul Åkerlund of the IF Metall union at Saab. “I don’t understand why we should be treated differently.”
Sweden has pledged 1.5 trillion kronor ($170 billion) in loan guarantees for its banks and has made as much as 50 billion kronor available to recapitalize Swedish lenders as part of a plan to unlock lending and ease the nation’s first recession in 15 years. Last year, the state gave loans to D. Carnegie & Co., Sweden’s largest independent investment bank, and then took ownership of the company after Carnegie lost its license.
As Trollhättan locals cry foul, Olofsson says the state will not take ownership or pump money into an automaker that has been unprofitable 19 of the past 20 years. Olofsson visited Trollhättan Feb. 23 to meet Saab management. Åkerlund said she dodged the factory shop floor to avoid disgruntled workers.
“People here are equally angry with GM as they are with the government,” said Trollhättan resident Karin Tobiasson, 59. “The government gave Volvo support, why not also help Saab?”
Polls, however, show a majority of Swedes support the government’s stance. Half of 1,000 people in a Sifo survey for the Aftonbladet newspaper on Feb. 19 said the government shouldn’t commit taxpayers’ money to Saab.
Saab’s unclear future has weighed on sales and production. Saab says it must sell 150,000 cars a year to have a functioning business. Last year, Saab sold fewer than 100,000 vehicles. Dealers say part of the blame is Saab itself.
“As long as there’s not a clear solution to GM’s and Saab’s problems, people will defer buying Saabs,” said Thomas Hobro, 32, head of sales at car dealer Vallentuna Motor AB outside Stockholm, where sales are slumping 25 percent this quarter.
For Trollhättan, the clock is apparently ticking toward what most residents fear is a local Armageddon.
“Saab is my heart,” said Olsson. “It means everything for Trollhättan -- Saab must survive.”