The other day, A University of Stockholm professor, wrote an editorial stating his belief that Saab must first die before the can succeed again. He argues that Victor Muller and the current executive team aren’t able to develop or stick to a credible long term plan for the company. At the same time, he ignores the fundamental point that Saab has consistently been aiming to lower their breakeven point, has leveraged their best assets in trying to compete as a small niche player in a larger market, and indeed said many times that 2010-2012 were transition years.
Professor Fang (he sounds like an evil cartoon character) thinks that the Volvo/Geely deal serves as a shining example of how Chinese companies can come to the rescue of beloved Swedish companies. I think time will show that Geely’s interests were primarily in boosting their own image, technology, and domestic positioning in the Chinese market than any interest in Scandinavian heritage or industry. By contrast, Saab is working hard to cement Trollhättan as the global and spiritual center for Saab’s brand, renaming the parent company to Swedish Automobile, focusing on Saab not Spyker, setting up new partnerships with ZF and AAM in Trollhättan, and moving production to a common Phoenix architecture that allows for long term stability in their Swedish operations.
By contrast, Geely is working on expanding Volvo through its Chinese factories much more than through Swedish facilities, which one could argue is only the first step in the dilution of the brand. Saab’s plan to sell its own cars through their new Chinese distributor and plans for a local Chinese joint venture isn’t at the core of their business plan as it is for Geely/Volvo, it’s a newly added bonus. Where Geely was more interested in buying technology, Pang Da is more interested in selling and promoting Saab. Fortunately, I don’t have to argue too much against Professor Fang, as Anna Petre, director of community relations for Saab Automobile has written her own editorial that was published today in DI rebutting everything he said.
Find out what she has to say in a translation after the break. A highly recommended read.
Saab Does Not Need More Absent-Minded Proposals
Our cars are not faring much better in all respects compared to our competitors.However, Saab has a heritage and a history that many competitors can only envy. It will disappear if we go bankrupt.
In a recent article (Di Debate 17 / 5), Tony Fang, a professor of business administration at Stockholm University, argues that Saab should go bankrupt and then like a phoenix be resurrected with a brand new owner. Professor Fang has to our knowledge never been in contact with Saab. That in a situation where we are struggling with all we have to restore the confidence of customers, investors, and especially sub-contractors, to propose something as absent-minded, must be because the professor has gone astray in a desk that effect.
Let’s be clear: If Saab were to go through a full-scale bankruptcy and liquidation, it wouldn’t matter who bought the rights to the brand name of the administrator. The name and the company would be dead as a doornail. Like a number of Swedish subcontractors.Perhaps some remnant might survive somewhere – like in the case of the venerable Rover’s existence in China – but Saab as we know it would cease to exist.
In addition to emotional brand values, there are also production and business aspects to consider. Premium cars can be built in different parts of the world, but the basis for a credible and successful brand must have a connection with something, and in our case this is and remains Trollhättan.
A larger company might rally back, but a small car manufacturer like Saab’s roots and genes are the same as our raison d’etre. Our cars may not be doing much better in every respect compared to our competitors. However, we have a heritage and a history that many competitors can only envy, no matter how technically excellent their cars may be.
But no matter how much soul we build into each one our products, one can’t undervalue the importance of good relationships with some 800 subcontractors, our approximately 3,500 employees and the thousands of people who have all or part of their livelihood by selling or servicing Saab cars. And we still are a large-scale car production, the difference is that we only have one factory, while others may have several. For those who want to compete in today’s hard-competitive automotive industry, what Professor Fang suggests is objectionable.
Rather than follow his advice, we want to do the right thing for us and for all our partners, and with their help we will soon be back on track.
In one area, however, Tony Fang is more right than wrong, that when he writes of how Saab’s owners should operate. I agree wholeheartedly that Saab has suffered a lack of entrepreneurship. However, Fang makes the mistake of dismissing the current owners and managers as the wrong people to lead Saab to success. Tony Fang paints a picture of a person in the style of a Gates or Branson to use their personal wealth to bring the Saab to the top.
Sorry, but it is seldom possible to. It takes inspired people with a certain passion to build successful companies and I believe that our prospective owner ensures just that.
Saab is now for the first time free to act independently and quickly. Interest in Saab is great and we can now capitalize on the cravings for a premium brand that represents a genuine alternative to what the German manufacturers offer. Our plan allows us smaller volumes for the foreseeable future – to stand out from the crowd, especially in China. The business plan succeeds with even only a return to half the normal volume in our core markets. But when combined with breakthroughs in countries such as China, Russia and India, we would completely reverse the concept of how a small manufacturer does business.
In today’s homogenized world, more people than ever are looking for an expression of the very individualism that has always been a Saab trademark.
We have in the past year consulted numerous experts to share their opinions and analyze Saab affairs. In many cases, such as Tony Fang, councils would lead to a complete collapse and effectively wipe out any possibility of the comeback that is now possible. Another point to note is that none of these self-proclaimed experts have even set foot here in Trollhättan, or have made contact to inquire about the facts of the case.
Saab is not without challenges, but the bright spot is that we first see the outline of a model program that has the necessary breadth, timeliness and identity: a sedan with iconic status, a crossover, a modern 9-5 in both sedan and wagon design and a bold new 9-3 to start rolling off the line in just over a year. In addition, we have taken great strides regarding their environmental performance.
This and much more can we explain to those who take the time to talk to us.
Anna Petre, director of community relations Saab Automobile