Victor step down?
October 21, 2011 in Editorial
There is a lot of talk in the comments today from people who think that Victor Muller should step down from Saab, that he has done his part and that enough is enough…
Well my question to all of you is, who do you know in the world with the same commitment to Saab and who in the world have shown even the slightest of real interest in Saab and openly stated what they want to do with it?
Well one thing is clear, the chinese have not done that and my fear is that Youngman would just want to move Saab to china and if that happens I know that I’m no longer interested in running this place nor buying a Saab again. To me Saab is Swedish and it belongs in Trollhättan. My whole family and all my friends work there and they are SAAB!
Victor has time and time again stated he will do everything in his power to clear up this mess and I’m very sure that he is sincere about it. Who can forget the words he stated to SU a few months ago: “I will never ever give up!”
So before I read one more comment about him stepping down, please come up with a suitable alternative and also why that person would do a better job than Victor has done so far? And just bankrupting the whole thing is clearly not an option, we’ve seen that in todays comments from FKG.
michaelb said on October 22, 2011
A captain never goes shortly before the ship sinks. Thus, for the time being, VM needs to stay and get a succesful deal done. If he will not succeed, he will be hit hard personally, being indebted and probably sued for many years to come. Thus, no way out right now. What my impression from totally outside is, VM lacks a coach or an interlocutor, that challenges his steps, intentions, motivations, strategic moves, organization of key processes. From outside, it is mistake after mistake, sometimes with long announcement. No capacity to anticipate things, no more lateral thinking, no more business visionary, miserable, sometimes even ridiculous communication, just an unlucky looser. He is overextended by every mesure. Do I need to deliver examples?
The question is afterwards, if he stays in a new ownership constellation and what function and powers he will exert. Key is a point brought up by someone else: Is the move by PangDa/Youngman just a nasty, regrettable, but excusable trial to renegotiate the terms, i.e. lower price to be paid, or do they want to get rid of Swan/VM as a person. This is also linked to their ultimate intentions. From outside, very difficult to judge. If it is just negotiation tactics, remain fair but hard. Victor is no saint neither. If they want to get rid of VM, what I could imagine, VM should in his own interest play hard, tricky and even dirty, there is need for further collaboration afterwards.
From outside, VM is not an asset any more to Saab, but inside things might me different. The business model planned seems to be okay; Spyker / Swan was just from the very beginning overleveraged and undercapitalized. I have no clue regarding the new 9-3 and the value of the Phenix platform and his contribution. But at that point: Every enterpreneur even with the highest integrity and loyality to the mission has to look for himself as well. The risks seem to have become enormous, and only a gambler or completely blind would stick 100% for a personal future with Saab. Once bankruptcy is there, It would be a personal catastrophy to him. At this point in time, I would rather play the safe side.
Rune said on October 22, 2011
First of all: Fair comments.
Short answer: No, you do not need to.
…but I find the topic interesting. I have followed my own advice given in an earlier comment in this thread, and I’ve relistened to the press conference as well as the radio interview with JÅJ.
JÅJ says that he was still in charge as late as two weeks before the crisis hit. All the available information, to the best of my knowledge, points to JÅJ being in charge of the daily operations. He says he had set in motion various efforts to bring in capital (and some worked), so I’d say this points to VM not being alone at that crucial point.
What we’ve seen in the past 6 months mostly concerns damage control and getting the train back on the rails. Victor made a bucketload of mistakes during this time, but first of all is this the period of time that is of interest if you want to find the root cause? Secondly, what would someone else had done differently?
Victor pointed to one moment where a supplier demanded different terms. According to him, that was when this disaster was still avoidable.
Do you know of other examples? Examples of moments where you can honestly say “I would have done the opposite”?
As for Saab, these questions are all moot. They need a way forward, and though as enticing new ownership would be, there still remains those pesky details of GM IP and various clauses in the contracts Spyker signed almost two years ago. There may not be a whole lot of wriggle room in this situation. It is easy to criticize Victor — the past week’s comments clearly demonstrates that — but good suggestions to resolve the situation are few and far between. I like CJ’s idea, but a swegov that keeps saying “we are out to lunch, go away” would likely not be part of any road going forward.
davidgmills said on October 22, 2011
VM saved Saab on a wing and a prayer. It is easy to say a person made mistakes when he did not have the capital to do the project properly. If Saab/Spyker/Swan had been rolling in cash, his mistakes would have amounted to nothing. But with so little cash, every mistake is huge. The continued extreme downturn in the world economy meant that even well financed ventures have been forced to the brink of extinction. Some have gone under. Things would have been much easier if Saab had had access to Russian financing, but for whatever reason, political or competition, he was denied this opportunity. If Mueller made a mistake, it was that he was forced into seriously needing this Russian money, which was probably his safety net, and he never got it.
michaelb said on October 23, 2011
The operation was risky in the sense of highly leveraged from the very beginning. A prudent investor would have tried to broaden the shareholding / financing shortly afterwards. The big warning flashes were the brutally missed sales targets in each singly month of H2 2010. At that point in time, several bloggers here including myself raised the question on multiple occasion, if the business plan was not obsolete, and the capital base had to be strengthened a lot. Alll the efforts, that started in April, should have initiated long ago. It is much easier to negotiate in a situation of a running operation than with standstill and liquidity crisis. In June, when after 3 months of liquidity crisis no solution was found, I repeatedly adviced here on SU VM to sell the whole operation. He sticked to his agenda of partial ownership / stewardship and mortgaged out all available assets for a dime, so that is ladden with debt now. At least for me, I do not come in hindsight, I said it in advance. The same is true for others.
Important is just the future. And here options have narrowed a lot. If I correctly understood the translation of Mr. Lofalks interview in Swedish, the two Chinese companies seem to prefer now to buy Saab out of a bankruptcy for next to nothing. Someone with detailed knowledge of contractual obligations and restrictions should make them very clear, that they probably will not produce or sell any car with GM IP then. Thus not the current 9-3, the new 9-5 and 9-4x. And the idea to just produce in China would be ridiculous, as GM will have not any interest at all to get a competitor in their best booming market. GM is interested to deliver expensive engines and various components for THN in Europe to support their ailing Opel business and the whole 9-4x in the US. In fact, the Chinese investors as well have little time left to get access to a valuable Saab without bankruptcy. They would be badly adviced to risk a bankruptcy.
The time frame is very narrow, and I fear that VM under the stress of the desparate situation again will make major mistakes, as he did repeatedly before. It is, if both parties are well informed, a poker, and the time is running rapidly out – for both sides.
Tripod said on October 23, 2011
“At that point in time, several bloggers here including myself raised the question on multiple occasion, if the business plan was not obsolete, and the capital base had to be strengthened a lot. Alll the efforts, that started in April, should have initiated long ago. It is much easier to negotiate in a situation of a running operation than with standstill and liquidity crisis. In June, when after 3 months of liquidity crisis no solution was found, I repeatedly adviced here on SU VM to sell the whole operation. He sticked to his agenda of partial ownership / stewardship and mortgaged out all available assets for a dime, so that is ladden with debt now. At least for me, I do not come in hindsight, I said it in advance. The same is true for others.”
I think it has been mentioned that there were discussions during the autumn 2010; for example October has been mentioned earlier. But it is very difficult to comment when one doesn’t have all information.
(BTW, “bloggers”, is someone commenting on a blog considered to be a “blogger”? I’ve got the impression that some old guys in the US use that word; but what do I know, as a Swede English is not my native language. But I stick to my general idea that a blogger is: blogger, noun, a person who keeps and updates a blog, as opposed to “commenter”, one who makes or writes comments.
)
Iiari said on October 23, 2011
Fascinating analysis, and likely largely correct with some exceptions:
- I’m pretty sure it had been mentioned elsewhere that they were in talks with groups on funding at the end of 2010, if not earlier…
- The GM IP issue is an interesting one. given the NG 9-3 is 14 mo out, I am starting to wonder how badly a fully Chinese ownership would need a 9-5, 9-4x, and current 9-3. I bet the 9-5 is losing money at current volumes and the 9-4x is a very low volume US mostly product. Its been stated elsewhere the current 9-3 only breaks even, so then it might be easier to survive by laying everyone off for a year and mothballing the factory and screwing the backstabbing Swedish suppliers. Maybe a fully Chinese owned SAAB gets the 9-3 launched early in 2013 and then reopens the factory, tries to have a new 9-4x off Phoenix by 2014, and then a new 9-5 2015. Then, no messy GM issues to deal with. The only problem in this scenario is what dealers do for about 10 mo (and I say 10 because what’s the walkway the factory will restart in any scenario before 9-3 launch, March or April next year?)?
My issue right after the GM sale (and I was very happy VM prevailed) was they needed to be ready to absorb 3-5 years of losses financially before the ship would turn, and I (as a “commentator”) posted that several times. They weren’t, they were undercapitalized, and THAT was their cardinal sin and core mistake. To have expected to break-even in the first year out was absolutely crazy…
Rune said on October 23, 2011
As others have mentioned, Victor mentioned in an interview this summer that they started talking with Chinese companies in October 2010. And for all we know, other tracks may have been surveyed prior to that.
Keep in mind that the Hawtai deal was announced in April, but they got pushed out of the way because Saab and Youngman had been talking first. Youngman had dibs on the Saab deal. Which means they must have been discussing the deal at some earlier point in time.
I think Youngman’s move sideswiped the process a little and I’ve never heard of a system like that before (my experience is admittedly nill though).
Victor must have realized this deal could take a while, which is why he renewed his efforts to get Antonov in again. VA’s name had been cleared at that point, right?
Basically your answer boils down to “if I were in Victor’s shoes, I would have brought in more money earlier”? Well… How? Sell to whom? What about the ownership clauses in the contracts he signed with GM? GM IP rights? The rights to the Saab name (and logo)?
If you look at the sales process two years ago, GM clearly had an idea of what type of owner they had in mind for Saab. Their idea was not to sell the operation to a strong competitor. And it would be surprising if they’d let the new owner turn around and find someone bigger to take over the whole thing. So I tend to believe Victor when he says there are several ownership clauses in the original contract. It was mentioned at the time as well IIRC.
Finally, the financial crisis seems to have cut down the number of potential investors. This combined with the ownership clauses may have kept the number of options down to a handful of players.
MarqeDeSaab said on October 23, 2011
Rune: Thank You !
Rune October 23, 2011 at 22:22
Yes, it is necessary to quote you the rules, and this is not the first time I do that. Didn’t I send you an e-mail about a week ago?
You can assume that I will delete future postings from you if you continue your anti-Victor campaign. Not because I’m pro-Victor (I’m not), but because it is annoying to see you not back up your statement with any sort of reasoning or proof. Post that stuff somewhere else.
Pedro said on October 24, 2011
@ ANA – Your comments are spot on, IMHO. It’s not about structuring deals (which are fairly easy to do in paper and on an Excel spreadsheet); it’s about delivering the actual results after the deals are announced and put in place. And in that particular issue of delivering results JÅJ, VM, and the whole of SAAB’s Management have failed. Pure and simple.
ivo 71 said on October 24, 2011
And now Youngman and Pang Da have joined them by reneging on binding agreements. Anyone still out there who is worth your trust?
Ivo