October 21, 2014 in Editorial
After having talked with a couple sources in the past weeks I’ve learned what might become of the Trollhättan factory area if the reconstruction of NEVS was to fail.
First of all regarding the new business plan of NEVS, focusing on the point of letting other manufacturers build their cars at the Saab factory. This is a scenario that nobody I’ve talked to believes in and there are some well founded arguments regarding this so lets put this in context. There is a huge over-capacity in car factories in Europe today. SEAT is not selling well and in order to keep the factories running the VW group are moving production of Audi cars into these factories to keep meaningful production. Most french factories are running on government aid at the moment and almost every manufacturer in Europe are looking for more stuff to do.
So lets say that you are an asian manufacturer looking to enter the European market. Due to high tolls and the soon coming high environmental taxes on shipping its logical for many to place production in Europe, but where?
Option 1. You go to a company called NEVS: They are a company in reconstruction, close to bankruptcy, they do not have any production staff employed at all, they don’t produce any cars themselves, they have zero experience in high volume production and their production capacity is limited to 120k cars per year. NEVS will also not write a long term deal since if their own plans actually become reality they will need the majority of the capacity at the factory for their own cars. Normally production deals like these are written for a full series production spanning 4-6 years. NEVS plans to have a big output of their own cars in less than 3 years.
Option 2. You go for one of the other established manufacturers who have trained production staff, peak capacity of about 3-500k cars per year, a high level of competence and are actually production cars so you can get good contracts on part-sharing. With these manufacturers you can get a long-term deal at a competitive price that NEVS can not match. Right now there are about 5+ factories more or less actively looking for partners to produce for all with a capacity of more than 120k cars per year.
Which option would you go for? Exactly, I don’t think any business man with a sense of reality would go for option 1…
I don’t think there is a chance that NEVS will land a production contract for any other manufacturer unless its actually Mahindra or Dong Feng themselves who would go in as owners in the company thus guaranteeing the financial survival of the company. Question is, is there a demand in Europe for the products that Mahindra or Dong Feng offers?…
So whats up with the headline? SAAB FACTORY COULD BECOME A WAREHOUSE?
Yep, there are actually real plans of this happening and these plans were made back in 2011 when Hemfosa was offered to buy the production facilities from SWAN. This was the backup plan for Hemfosa in case Saab Automobile AB was to go bankrupt, this was also the plan that was to be put into action if the bankruptcy administrators were unable to sell the estate and I’ve learned that this plan is still very much a reality at the moment if NEVS were to fail.
So warehouse? Yes, exactly… There are two big ports close to Trollhättan, Gothenburg 75 km south and Uddevalla 45 km west, both ports are situated fairly close to the center of the city in areas that have high land value. In Gothenburg housing companies are paying big money to get hold of land to build luxury apartments on and a large area of the former ship-building harbor or Eriksberg has already been converted into high-priced luxury condos. Eriksberg is currently one of the most popular areas in Gothenburg. In most cities in Scandinavia the big port-warehouses have been moved outside the city and are serviced by either rail or lorries but not Gothenburg nor Uddevalla. Trollhättan is situated perfectly close to both Gothenburg and Uddevalla to support both ports on short-notise.
The total area of the factory floor and the well built delivery and arrival hall for lorries make the area a perfect warehouse. The ironic thing that a source disclosed to SU is that the plans for conversion called for a big number of employees to be hired, working in 4 shifts around the clock. The newly built high-way system going to both Gothenburg and Uddevalla from Trollhättan are in perfect condition and provides a quick way to transport products with a just-in-time concept as ships arrive at the ports. The warehouse would also boost a lot of jobs in the transport sector which has had very little to do since Saab Automobile AB closed down, a large number of truck drivers and loaders would have been employed, them too working around the clock. A source told SU that as many as 800-1000 people in total could be employed working with spedition, storage, security and transport.
In retrospect I think that the administrators did the right thing by giving the Saab brand a 2′nd chance and that 2′nd chance is far from over, its still very much alive and kicking and I know that everyone regardless if one believe in NEVS or not are still hoping that they will pull through somehow and that we’ll see new cars coming off the production line in the factory! But in all honesty I found myself asking, would the past 2 years really have been so bad if the warehouse plans would have happened instead?… Perhaps NEVS could introduce this idea into their businessplan and provide a part of the factory as a warehouse until the facilities are needed for car production?