Saab Automobile are currently undergoing a process whereby they're looking for a new owner.
Saab's seemingly too-small size - something that's made them something of an object of ridicule under General Motors - has served them well during this process. Saab's comparatively small size, combined with their worldwide network and history of engineering and innovation, has attracted plenty of interest: 27 parties to begin with and about a dozen visitors to the factory.
Saab have begun the process of paring down these numbers to just two three, with whom they'll have some more in-depth negotiations.
We've made plenty of well educated guesses at who these interested parties are. Representatives from Koenigsegg have been spotted on site. Same with Geely (regardless of what they might file with their local stock exchange). Swedish power group Vattenfall were spoken of early in proceedings and there were at least two seriously interested groups from the United States.
I've recently heard from several well placed sources that at least one of these groups is related to vehicle manufacturing.
You'll be surprised.
AM General are based in South Bend, indiana, and they're the company that makes the original Humvee military vehicle.
It's my undertanding that AM General, however, are not looking to be Saab's parent company. If things fall the way they propose, they would be Saab's sibling.
Several sources have indicated to me that one of the US based bidders is a private investment company based in New York called The Renco Group, which is the parent company of AM General.
Renco have companies operating in several different fields and in several different parts of the world. From their own website:
Welcome to the Renco Group Inc.We are a private holding company that invests in companies across a range of industries where we see the promise of quality and growth. Our long-term commitments through various business environments have provided our companies with the stability and support needed to enable management teams to maximize the inherent values of their companies.
We focus on helping all of our companies experience strong financial returns by supporting capital investment and retaining skilled and experienced management with appropriate incentives.
Our affiliated operating companies, which specialize in mining, mineral recovery, metals production and fabrication, and automotive assembly and fleet support are united in their commitment to environmental responsibility, to ensuring the health and safety of their employees, and to respecting and protecting the communities in which they are located. Through unwavering efforts to comply with government and industry standards, significant investment in innovative technologies and processes, and ongoing dialog with community members, each has made great advancements in these areas in recent years and is expected to continue to do so.
The Renco Group have several different companies under their umbrella.
AM General LLC is famous for producing the Humvee and HUMMER® motor vehicles. The company specializes in high-quality military and special-purpose vehicles and diesel engines to power its top-of-the-line trucks.
Baron Drawn Steel Corporation is a full-range producer of cold-drawn bar steel products.
The Doe Run Company is a privately held natural resources company and the largest integrated lead producer in the Western Hemisphere dedicated to environmentally responsible mineral and metal production. The Doe Run Company operates the world's largest single site lead recycling facility located in Missouri.
Doe Run Peru is a mining and metals company that employs some 3,000 people at its operations in Peru's central Andes. The company has run the La Oroya metallurgical complex since 1997 and the Cobriza mine in Huancavelica province since 1998. Together they produce high-quality refined metals while at the same time working to operate in a socially and environmentally responsible way.
Unarco Material Handling is a premier manufacturer, designer and producer of racks and material handling systems for warehouses, distribution centers, manufacturing facilities and retail stores. Unarco is based in Springfield, Tennessee
US Magnesium is the only producer of magnesium in the U.S. The company specializes in producing pure and alloy magnesium and other byproducts. US Magnesium obtains the majority of its raw materials from the Great Salt Lake and a smaller portion from its magnesium recycling process.
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Whilst Renco's business are varied, quite industrial, well described and most likely quite successful, their record isn't as squeaky clean as you'd like it to be, though it's getting better.
Renco's owner is a guy named Ira Rennert. A quck search on Mr Rennert indicates a truckload of money, but in association with that is a trail of junk bonds, bankruptcies and questionable environmental practices.
To be fair, recent times have seen Mr Rennert's companies clean up a lot of their environmental undoings.
A quick lookup on Wikipedia revealed the following:
Rennert was awarded the The Awful Truth Man of Year Award in 1999 by filmmaker Michael Moore, based on a 1996 EPA Report which lists Magnesium Corp Of America as the top single polluting industrial facility in the United States and a second EPA report from the same year which lists Renco Group Inc. as the top most polluting parent company (based on total on-site and off-site releases). However, as described below, Rennert's companies have all made significant environmental improvements since being acquired by Rennert and Renco and the particular emissions highlighted by Moore have since been reduced by more than 95%.
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So what of Renco's bid for Saab?
Whilst their reputation could be judged as dubious, Renco's interest in Saab is at the least, interesting.
The most prominent link is AM General. Saab began back in the 1930's as a company needed due to Swedish military requirements. AM General had a similar birth, rooted back in the early 1900's as the company that eventually produced the Willys Jeep.
They have experience in producing motor vehicles, albeit vehicles at the complete opposite end of the physical and philosophical spectrum.
Perhaps the most positive part is that they understand vehicle manufacturing, the need for technology and development.
And perhaps the most perplexing part is the question as to why a US based industrial group that only makes one automotive product is interested in a Swedish car company.
I'm unsure as to the status of Renco's bid, but am quite confident in the information related to me - that they are a bidder.
http://good-times.webshots.com/photo/2664443500061904185jYZPdB
crazayyyytown.
and there's more...
The Awful Truth Man of the Year may be buying Saab? A major polluter? Legal squabbles and bankruptcies? Junk Bond King? Please tell me you are kidding.
The Military Hummer? How does that fit Saab? Gun turret optional?
Wow, this group sounds like a mix between Gordon Gekko and Darth Vader!
Just googled Mr Rennert.: Check out his Wikipedia. Very troubling.
Same guy that built a HUGE and very controversial 100,000+ square foot house in the Hamptons?
Same guy who looted the WCI steel pension fund back in the mid 1990's and left the workers broke?
Hard to believe the Swedish government would be supportive with this record.
Hard to believe they are interested in Saab.
Hard to believe that JAJ and the team picked these guys.
I see some hummers in the driveway...is that a 9-3? lol
No way this guy buys Saab.
Sounds like he got the cash by stealing it FROM his investments.
Sounds like he needs a shed load of ethics.
How can you balance looting pension funds and environmental abuse with longevity of investment? I still choose not to buy petrol from Exxon.
I would never buy a car from a group with such a record. I would never even consider buying a Hummer. Count me out.
And about the pollution. Just how much do Renco's companies pollute compared to similar companies?
When I buy a product I research the product and the company producing the product. Checking the quality and the consumer service offered by the company. I do not research the parent company or the other companies the parent company owns. If I did, I couldn't use electrity, I couldn't drive my car, I couldn't buy a new TV etc.
At the moment the general consensus here on SU seems to be that the Chinese, Fiat and now this US investment company isn't welcome. Do we want Saab to survive or don't we? Only if Saab is bought by Koenigsegg? As mentioned here earlier, beggers can't be choosers. Both Fiat's and Renco's interest in Saab makes me optimistic for Saab's future.
You may choose to purchase a Saab from such an entity. I respect that. I choose not to, not ever.
As far as longevity, GM has owned control of Saab since 1990, longevity personified. That alone doesn't make we want to buy one. In fact, that owner alone would make me pull up from buying one.
You make an interesting point on the "beggars can't be choosers" thought. I will support management's choice 100%. Hard to believe management wants this group. That said, if they pick em, they have my support - it's their jobs (and 5,000 others) on the line. Hard to believe Swedish government will support too.
Color me an optimist but there has to be a better Buyer out there.
There is still some great potential in that brand, if they can get some reasonable product out there. That goes double if Chrysler kills the Wrangler.
Hummer's history is somewhat similar to Saab's. They started with the best vehicle in their class, and then GM made them sell tarted-up pickup trucks. Many people on this Earth would give up a large part of their yearly income for a solid, economical and reliable truck. There's no reason why SUVs have to be heavy, expensive, fragile and thirsty. I say they go back to the original Willys design and add 80 years of science.
Rennert started off working on Wall Street, but he didn't stay there long. He was censured by the NASD on several occasions in the early 1960s and had his license revoked in 1964, a move that effectively banned him from working in the securities industry. Undeterred, the Brooklyn-born investor moved on to the unregulated world of private equity, amassing a collection of unpopular businesses in the 1970s and 1980s through his holding company, Renco. Often using junk bonds to finance his steel, magnesium, coal, and lead companies, Rennert made more than a billion dollars over the years, but clouds of controversy have always hovered overhead. A number of his companies have gone bankrupt leaving creditors and bondholders in the lurch, and he's amassed a contentious environmental record—an issue that led to a $900 million fine in 2001. (Rennert managed to avoid paying the staggering amount by sending the subsidiary involved in the alleged toxic dumping dispute into bankruptcy.) More recently, he's created an uproar in Peru, where one of Renco's facilities is believed to be responsible for widespread environmental damage.
Rennert may be best known, though, for purchasing AM General, the not-so-environmentally-friendly company that manufactures the Hummer SUV and Humvee military vehicles. He bought the company for $133 million in 1992 by putting down just $10 million in cash; he hit the mother lode in 2004 when he sold a 70 percent stake to Ron Perelman's MacAndrews & Forbes for close to $1 billion.
I won't be buying a car from any company this fellow owns. Not ever.
Here is a small taste from from a google search:
http://www.huffingtonpost.com/dennis-obrien/la-oroya-a-poisoned-town_b_130448.html
Not Saab material.
Super Duper.
Can't wait for the "Glowing" reviews on future products. < sorry, couldn't help myself.
So get off that high horse. The gasoline your Saab runs on fills the pockets of companies with a pretty disgusting environmental and humanitarian track record. Perhaps you should cycle. :)
Was making a joke as I thought you were. Didn't mean to offend in the least.
I don't make moral equivalents. Saab Aircraft, sins or not, hasn't been reported as a candidate to my knowledge. If they were, their history might interest me. I don't care as much as you who founded Saab, I care who buys Saab. That may affect my next buying decision.
If you have a soft spot for the folks mentioned in this post, or don't care about their record, so be it.
And since you don't know me or my horse, I do cycle when possible and, like most, have little choice but to use gasoline.
Renco would represent their investors, no more, no less. It would be a money play. Saab may do well with that type of ownership, yet they may not.
To answer the question above, Renco has owned AM General a relatively short period -- perhaps 8 or 10 years. They saved a company that couldn't survive on its own, and brought that company into new markets through an ingenious deal with GM. Savvy marketing and growth strategies got them there.
As far as the metals manufacturing rap(s), there are plenty of "sins" to go around, but in at least a few of the cases the reason that Renco took ownership was that the previous owners couldn't afford to invest in newer technologies that would reduce emissions and raise quality. Michael Moore conveniently leaves out the back story most of the time when he wishes to make accusations.
Renco doesn't thrill me as a prospective owner, nor do they particularly scare me. They are at least predictable: squeeze out the cash, quickly strip away the parts that can't survive, aggressively build market share and enter new markets to increase equity value. Sell off all or part of the company or borrow against its value and start the process over again.
Pros: Quick, have money, will find new ways to sell Saab-branded products
Cons: Ruthless, will force Saab to quit popular things and will force Saab to start uncomfortable things in order to sell most Saab stuff they can.
Middle-of-the-pack contender from an enthusiast's point-of-view.
Bernard: AM General still "owns" the Hummer name and some of the designs, I believe. I think that if they wait around, they'll get Hummer things for almost nothing. Jeep is the most healthy thing about Chrysler, the Wrangler stays and even grows with "value engineering" from the Fiat parts bin. That's my take.
H1s and H2s were made at AMG's factory whereas H3s are made elsewhere. They stopped H1s a while ago and H2s have plummeted since the H3 came out.
I'm not sure about what level of influence AMG would have in GM's sale of the Hummer brand. Possibly nothing. They're pretty much just a manufacturer of a GM owned vehicle now.
But the Hummer thing doesn't concern me. Renco only own part of AMG now anyway. It's the Doe Run Peru thing that worries me.
DRP have definitely reduced the emissions from that plant; now they're only 4-times the level regarded as hazardous. As you say, though, I think DRP were up against it right from the beginning as there was 50 years of smelting in that region before Renco bought the factory, and that smelting was completely non-monitored (which is why they got it so cheap - on a promise that they'd clean it up).
The issue - can Saab maintain a platform of environmental responsibility with these guys as owners? You and I might be able to segregate one from the other, but will the mainstream market if the media paints it a certain way.
The 9-2x was, by objective standards, a great car. But it's regarded as a terrible Saab. One thing to one person, a different thing all together for another.
(I've been reading up on this Renco thing.....)
The question is: have they cleaned up their act?
Our own personal opinions do not count for much.
Whale beef is the most delicious meat there is. The whales hunted by us Norwegians are plentiful and we only cull a few animals each year using very humane hunting methods (we stopped using grenade harpoons). Yet Greenpeace makes you all think we are hunting them into extinction.
Same thing here. If SAAB gets an owner with a bad reputation, they might suffer the consequences. :(
And there is a couple of those among the bidders.. Koenigsegg with it´s owner and Vattenfall. Maybe the norwegians is in there together with either Vattenfall or Koenigseggs owner.
Tom
Perelman's greatest sin is serial marriages, which I am can forgive even if Ellen Barkin cannot.
So, if the bid is AM General, I guess the worst concern is whether Perelman will re-introduce Swedish female models in Saab ads, pushing Revlon cosmetics at the same time.
AM General builds the military Humvees and the Hummers for GM. The Humvees are a very stable cash-producing business. Not such a bad option for Saab to be part of an inherently profitable business.
There is no guarantee anyone will put much into Saab, no matter how deep the pockets, after a price is paid to GM. If that weren't the case, why borrow from Sweden?
Happy Mothers Day!