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Press Release: On the temporarily production Stop

June 9, 2011 in News

Saab Automobile Temporarily Suspends Production Pending More Stable Inflow Of Components

Trollhättan, Sweden: Saab Automobile today decided to temporarily suspend production at its production facility in Trollhättan. The seven-week production stop in April and May has not just affected Saab Automobile, but particularly also its supplier base. While Saab Automobile booked lots of progress and reached agreements with the vast majority of its supplier base, negotiations with a number of suppliers on payment and delivery terms are still ongoing. These negotiations are expected to be finalized shortly.

Saab Automobile is working on a number of initiatives to secure further short and medium-term funding.

As communicated in the press release of May 27th, Saab Automobile anticipated production hiccups in the start-up phase which Saab Automobile has in fact experienced in the last few days. In order to avoid disruptions as a result of irregular inflows of certain components and parts, Saab Automobile has decided to temporary suspend production and will resume production as soon as possible once it has secured a more stable inflow of components and parts together with its supplier base.

Victor Muller, Chairman and CEO of Saab Automobile, said: “We anticipated that we would not see a smooth inflow of supplies as from the day we restarted production, May 27th, and communicated that in our press release of that day. We have a few thousand suppliers worldwide with each of whom we have to reach acceptable terms and conditions to resume production of parts and subsequent deliveries. Many suppliers are located outside Europe and re-stocking inevitably takes time.

“Thus far we have reached agreements with the vast majority of our suppliers and we are confident that we will reach agreement with all remaining suppliers in the coming days, thereby stabilizing our operations and our production in particular. However, it is not to be excluded that we will see production hiccups in the near future until the supply chain is fully back to normal. I reiterate our appreciation for our suppliers who are working with us constructively to come to terms and put our production back on track. At this moment, we have almost 10,000 orders on hand, including those for the Saab 9-4X which is currently being built in Mexico.”

You can call it what you want, but I see a great improvement in how Saab is handling the situation compared with the last time.

And a small remark from my side, on Tuesday the CEO of Plastal, Mr. Per-Eve Wendel, said that he would be visiting Saab on Wednesday. I see it as a positive outcome of that meeting the fact that I haven’t read anything about him since then.

59 responses to Press Release: On the temporarily production Stop

  1. Finally a quite neutral position as news should always be :)

  2. This makes sense.

    It’s inefficient and expensive to keep starting and stopping a production line simply because of parts shortages.

    It also leads to warranty issues later on, as some cars can out with some small bits missing.

  3. I only hope the media will cover it, when SAAB is doing good too…
    Nowadays they only bring the bad news, and always ‘forget’ to mention the good stuff…

  4. `Saab Automobile is working on a number of initiatives to secure further short and medium-term funding.`
    Meanwhile, here in the UK, BMW have just announced a £500,000,000 investment in their UK plants, and earlier this week Nissan announced an investment of £190,000,000 in their UK plants.
    I hope that there is still enough cash left in the Automobile world for SAAB to be thrown a few scraps, because clearly the big boys don`t seem to be interested.
    But I`m still collecting my MY12 SE Sportwagon tomorrow and at the same time returning the MY11 on loan to me by SAAB GB for the last 10 weeks (because they cocked up my order) – be interesting to compare – note to B 125 AAB, SILENT?

    • BMW are splitting the funding between the Mini plant in Swindon and their Engine Plant at Hams Hall (near Birmingham).

      The Engine plant was built when BMW still owned Rover, and was not completed until they had disposed of Rover.

      It’s an impressive plant complete with automated machining centres and Automatic Guided Vehicles. I did some of the software design for the Bought In Finished Goods conveyor systems back in ’99.

      I guess it is due for an upgrade, possibly to allow for the new generation of BMW engines that Saab will be using in the future.

    • Sounds to me that Saab UK were pretty quick to try and correct the problem though , if they have let you have a car for that long?

    • The Hams Hall plant is being expanded to build engines for Saab so yup, Saab is being thrown “a few scraps”. FWIK, the former Saab Powertrain are also working with BMW on improving the Prince engine for the next generation and fix its issues using their experience.

  5. It looks like GM wants to sell Opel…

    http://www.spiegel.de/wirtschaft/unternehmen/0,1518,767489,00.html

    …to Chinese automakers or to Volkswagen…oh boy…

    • The Wall Street Journal is reporting this as well, quoting German trade magazine Auto Bild as the source.

      Presumably this will include the Vauxhall brand as well.

      If this rumour is true, then there will be some knock on impact with Saab with respect to GM IP.

      If a Chinese company buys Opel/Vauxhall, they may be interested in Saab as well. Likewise with VAG.

      Interesting times ahead possibly?

      • Bild is something like Sun, which means not credible at all.
        VAG needs the market share of Opel but not the Brand, and they are not that stupid.

        And why should GM be willing to sell Opel to the Chinese when the GMEurope Buicks are doing so well in China??

  6. It looks like some sort of excuse. Initially, VM said that Saab is good, a lot of money, the financial situation is excellent. Then go (sudden, huh?) JAJ, then (again, suddenly) come to an end at the Saab money. Plant stands. All say it’s temporary difficulties. In fact – no money. And get nowhere. Now justified, “there is no spare parts.” Who continue to believe? The farther, the less hope that the plant will survive. Or that the general will is something to produce and sell (and this is not pessimism). And in exactly the same Russia will never be in sales.

    • I’m willing to give Saab top management the benefit of doubt on this one, based on the whipping they took last time for making lame excuses. This slowdown seems plausible — other plants sometimes have similar slowdowns — and the parts situation was bound to be sketchy.

      Without guarantees that Saab would survive, there was no reason for suppliers to continue making Saab parts during the last slowdown. This makes sense….

      • I agree.

        There was no guarantee that Saab would have survived the 7 week shutdown. Given the demise of the Phoenix Rover Group in the past, component suppliers would not want to make any more parts in order to stem their losses.

        It would be interesting to find out which components that Saab is having trouble with. I read an article on the Web somewhere today where VM was quoted as saying that some suppliers are demanding cash up front. If this is the case, and these suppliers provide major high capital components then this would put a serious strain on Cash flow, hence the need to negotiate. I just hope it’s not GM regarding engines, as I believe they are shipped from Australia and that would add further delay.

  7. Wonder if PANG DA is still happy considering the latest news regarding production halt?
    Was getting the factory going for a short time just to impress them?
    Hmmmmmmmm……..

    • I wonder if Pang Da doesn’t have a direct line to Saab?
      Yes, you may be right, but I think Pang Da knows what is happening and even which are the parts that are missing.
      They are not part owners, but I think that they keep an eye on Saab, night and day.

    • I think it unlikely that Pang Da has been kept in the dark about anything. This is not a surprising stoppage and Saab dealt with it via an appropriate press release. Next.

  8. I’m worried that just one angry supplier might throw a monkey wrench into the works for some simple but necessary part, not caring what happens to Saab. And, switching suppliers would take much too long.

    • This is very true for just about any automaker. This is why the most successful automakers maintain brilliant relationships with their suppliers – and this is what Saab needs to work on, and seems succeeding with. The Swedish suppliers are back on board, time for the others. Or perhaps re-sourcing, this can be problematic, but very positive in the long run.

  9. What a mess. Sorry but its starting to look like a bunch of amateurs are Saab’s brass right now.

    Several large scale media outlets have now picked up one this, including TTAC and Jalopnik.

    Loyalty can only take you so far…

    • Excuse my ignorance, but what is “TTAC and Jalopnik”? Situated in Sweden and not following every little piece, world wide, I don’t have the faintest idea what that is. And I’m quite happy not following every little speculation about this or that; there is a saying; they didn’t know what to believe, so they believed.

      I understand that companies need to communicate, but people, the recipients of the info also needs to take step back and not scrutinize every word, and look at the broader picture.

      The fact is that Saab said, when they started that there could be small interrupts during the startup process and the following weeks, or similar.

      Then what is the problem with some here? That they should’ve done better than what they said could be the case at the start (at the end of May)? They had negotiated with several suppliers, started the production as soon as possible, and, my guess, kept on with the negotiations with the rest of the suppliers. As I mentioned in another comment; they have JIT suppliers and batch suppliers; one guess could be that they ran out of some parts from a batch supplier before the negotiations with that supplier had finished (the nature of JIT means that they probably started with those…); or something completely different.

      As to “andys” comment above; it is very difficult and requires quite a lot of skill to give information to the media, partners, customers, stakeholders in general etc. Especially the info that’s public, when every word is scrutinized. Saab, being independent for only slightly over a year, is now in that situation where many are interested to examine every little step, completely forgetting that negotiations etc. are going on all the time, in every company.

      Some comments from readers of the Swedish media, in the Swedish media, and even here, are completely ridiculous; Saab has now several new products ready for launch, or just being launched, and other products in the pipe, as well as some face lifted models (quite a bit more than cosmetics…); their timing for being independent couldn’t have been better. As mentioned in an article in GP (Swedish daily newspaper), linked to the other day here at SU, none of the Swedish “big wigs” in the automotive industry thinks that they should give up now.

      There is a time and place for everything; this is not close to “the point of no return”! Thus I agree with WM.

  10. There is a concept or principle in aviation known as
    “the point of no return”
    and…. we are getting v-e-r-y close to that point…..

  11. The Parts are not only missing at the production-line, but also at the dealers. Meanwhile hundred of different parts are not deliverable and we have troubles to repair and service our customers cars.

    • Just had my 2008 9-5 wagon serviced. There doesn’t seem to be an issue with obtaining service parts in the UK.

      However the warranty is another issue. Saab GB (or Saab in general) has tightened up on what is covered and what is not.

      One of the auto-dimming side mirrors had packed up and Saab will not replace it under warranty. At £240 for the glass and the significant increase in parts prices, I’m not a happy Saab customer right now and I’m thinking of ditching the two 9-5′s and just running the old 900V6 and 9-3 convertible.

      I just might take another look at the Dodge Avenger and also price up a Chrysler C300 Wagon and a Jeep Patriot.

      Grumpy Saab driver with empty wallet!

      • I just might take another look at the Dodge Avenger and also price up a Chrysler C300 Wagon and a Jeep Patriot.

        Oh, the horror…..

        • Oh yes……

          I said I was Grumpy!

          I had a PT Cruiser from 2007 to 2009 and it was great fun, practical and well equipped for the money, though in petrol form it was very thirsty. Oh and the dealer was hopeless. Chopped it in for a 2009 9-3 wagon, which I shortly (4 months) chopped in for a 2009 9-5 sedan.

          On a more serious note though, my wife really does fancy a Patriot. We had a test drive in one before we bought the ’09 9-3 wagon. If the dealer hadn’t offered silly money for the Cruiser then we probably would have bought it. Got a better deal from Saab on the 9-3 Wagon (got that at trade price). The 9-3 had a 6 speed box, which gave great economy on the highway, but down the twisty English country lanes it was hopeless as you could never find the right gear for the corner. So we chopped it in for another 9-5, a turbo edition diesel with a 5 speed box – perfect.

          Ah, I’m beginning to calm down, and return to the Saab zone. No trips to the Jeep dealer on the horizon.

          • Ah, I forgot that Chrysler seems to have a different reputation in the UK and Europe in general. Here, they are the absolutely bottom of the barrel when it comes to quality and reliaibility.

          • PT Cruiser? The un-coolest car ever made! You must stay with Saab! I like Wranglers, though. Similar fan base-loyalty. Ever read a Consumer Reports article on them? They pan them… shows you how far the CU consumer is from the REAL consumer.

      • Wait, you’re sick of warranty issues and you’re thinking of buying a Jeep or Chrysler?? Yipes!!

        One of my favorite reviews of a Jeep vehicle from the past year or two was where the reviewer was listing all the things wrong with his (new) Jeep vehicle. One of the more annoying things was that the gas cap tether broke on the first or second use, which prompted the writer to note that clearly Chrysler had not even mastered gas-cap-to-tether technology.

      • will Dodge, Chrysler, Jeep cover the same items? if the part is not covered then pay up if you want it replaced, this is the new post gfc auto world,

  12. When I bought my 04 conv, the power door lock switch on the passenger side was missing. I guess they were running out of parts even then.
    I have been waiting for 2 weeks for an inside door handle now.

  13. WM said on June 9, 2011

    Point of no return? Amateurs?

    SAAB pre-announced production disruptions when the Pang Da deal was signed; this should not be a surprise to anyone.

    And TTAC as a “large scale media outlet”? That’s a joke, right?

    This is not about liquidity this time, and they did set expectations that this would happen again. What more could they possibly have done, short of forecasting the exact moment they would run out of widget “a”?

  14. Saab are not at PNR supplier negotiations where always going to be two-phase.
    The line was re-statted early just to get it going some bins were empty it was known that at some point the line would have to stop again but in that time some cars have been finished and some others have been started.

    People are working hard to cover off the other issues with a large scale re-start to high rate production.
    The order books are full already for 12 weeks at high rate.

    I do not think this is the end I am sure VM and his team will find a way to re-start supplier shipments.

    I am not predicing that Saab dies anytime soon-and if that is the sad case then I am sure someone at Saab will eventually tell us with or without our predictions of doom.

    Keep Calm and Carry on-Supporting Saab and its workers in anyway you can.

    TK

  15. I think the comments are very emotional. The company is in a very difficult situation and I think everyone in T-hattan is trying to solve the situation. What if we wait?

  16. I think we are overlooking the seriousness of this.

    Saab find themselves needing to sell their current product for prices that the customer believes is excessive bearing in mind the Opel technology and the future risks. The result is that Saabs are only being sold at significantly discounted prices – and this will continue for the forseeable future.

    There are various causes of these factory shutdowns, mainly being the non payment of suppliers accounts.

    Suppliers are at the mercy of world raw material prices which also influence their sub suppliers and that will influence their business plans. Expect them to want better prices to restart deliveries.

    The impact at retail level is even worse. Customers are unable to order the model they want, so accept a compromise. Compromises cost Saab money in bigger discounts.

    Many customers only have a small window to buy a car. Leases and finance deals generally have fixed expiry dates – these people MUST replace their car fairly quickly.

    Some of these former Saab buyers may find that they prefer their new Volvo, Audi, etc etc and never return to Saab.

    Dealers cannot plan their ongoing strategy if orders are not delivered within a reasonable time.

    Saab risks that loyal dealers (and some remaining private importers) will abandon the brand. Many dealers have total investments of €3m+ – and today they can earn a better return elsewhere.

    Industry insiders don’t see Saab recovering from these shutdowns and dealers / importers / leasing companies are well aware of this.

    VM is increasingly being seen as a Walter Mitty who is out of his depth and desperately shooting from the hip. He currently says ” We have a few thousand suppliers worldwide”. He has been talking about fully funded business plans when it was clearly not so and in the past referred to hundreds of suppliers.

    Saab will not be able to recruit the top flight management staff they need. Increasingly the most talented personnel will leave.

    The only solution is a massive investment and merger with a major player. None of the US or European companies need Saab, the Japanese have created their own premium brands. Arguably, the Chinese are not ready to handle premium products. They are happy to pick up the crumbs for low cost, however, which explains their current interest ( VM has said he is talking to 3 and sometimes 12 Chinese companies).

    This is a critical time.

    Peter

  17. I’ve said it before I am saying it now: The only realistic option for SAAB now is to be acquired by some Chinese company, as it happened to Volvo. Sorry but the time of enthusiastic entrepreneurship by VM/VA is over. We can now discuss who is guilty EIB, Swedish government, but that will not save SAAB. SAAB needs a big money tap behind them, in order to regain trust from the suppliers, and which is most important, buyers.
    There might be a Chinese company interested in buying, but they want total control and I guess that VM and VA still don’t want to sell. But I feel that the time is running out now.

  18. There might be a Chinese company interested in buying, but they want total control and I guess that VM and VA still don’t want to sell.

    Even if that were an option, would it not still have to go through the EIB? As I’ve read, any major ownership change would still have to go through them.

    • Correct!!
      Everything over ten percent must be approved by the EIB.

      • True. But if the money tap is big enough, the loan could be payed back, and then EIB could keep their, anyway silent, mouth shout. Same ius valid for the “waiting for EIB and GM” Swedish government.

  19. What I think is at the back of this is there are a lot of suppliers who have been severely punished for parts delays by other manufacturers for parts delays, which are the result of the the earthquake in Japan. BMW were extremely annoyed that they could not get ecu and plastic parts and its more than a co-incidence that the SAAB issue kicked off around the same time. I hope SAAB does not turn into the next Rover, and the Longbridge situation was very different – there was not the global support of the brand.
    Its also a point of interest that volvo is very quiet and the crap they are churning out would hint that they need to do something pretty radical to keep ahead of the game, ad there are no signs of that. I can say, hand on heart, the c30 I ended up getting as a result of not being able to order a9-3 at the time, is the worst car I have ever owned! So message to VM, please make sure the new 9-3 is ready and finance is sorted out for 2013 when I change it !

    • Your information about Volvo is probably not true!
      May:
      1. US 7,363 +58%
      2. Sweden 5,257 +44%
      3. China 4,109 + 82%
      Global sales for month may were 41,465 up 42% from the same period a year later.
      Volvo so far this year has sold 185,995 cars up 20% from the same period a year later.
      One would have wished that Saab could show the same numbers!!!

  20. To put all this confidence talk in context, it may be worth reading this Autonews article about Opel:

    http://europe.autonews.com/apps/pbcs.dll/article?AID=/20110609/ANE/306099880/1193

  21. I hope this all gets sorted out soon as i’m waiting on my new MY12 9-3 SE here in the UK , all we can do at the moment is keep our fingers crossed

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