GM’s ‘recovery’ plan and how they’re going to sell Saab up the river

So now we know. The Plan is out there. You can download your own copy of it here.
The most important paragraph in the whole thing is the one I quoted in my coverage of the press conference:

Sweden/Saab–The Company has conducted a strategic review of its global Saab business and has offered it for sale. Given the urgency of stemming sizeable outflows associated with Saab operations, GM is requesting Swedish Government support prior to any sale. The Company has developed a specific proposal that would have the effect of capping GM’s financial support, with Saab’s operations effectively becoming an independent business entity effective January 1, 2010. While GM is hopeful that an agreement can be reached with the Swedish Government to support this direction, the Saab Automobile AB subsidiary could file for Reorganization as early as this month.

This probably fills in the gaps we’ve been seeing between GM’s opinion as to what’s been going on and the Swedish government’s opinion.
The government has been saying that GM is responsible for Saab and they want to see a plan that truly gives Saab a realistic chance of transition. As you can see from the paragraph above, GM’s plan is cut Saab loose by December 31st 2009 at the very latest.
……And If that’s not good enough for ya , Maud, they can file for reorganisation (bankruptcy) this month and become your problem right now.
Make no mistake – GM have strip mined Saab of their own technology (which Saab can licence back if they need to – thanks) and sold them down the river. Saab’s best hope now lies with convincing the Swedish government to throw them a paddle.
——
Saab have now applied to the European Investment Bank for a loan, which the Swedish government say they’ll guarantee as part of the package of loans they legislated earlier.
——
Maud Olofsson is holding a press conference tomorrow morning (Swedish time) where she’ll no doubt address the concerns for Saab as raised by GM’s plan.
This response will be pretty crucial.
The Swedish government have long held that they will not take an ownership stake in Saab but a reasonable chunk of their automotive industry is stake here, not to mention their export capability.
GM have cut and run. Good riddance to them, I say.
But the Swedes need to back their motoring industry and the company that has the design potential to be a proud Swedish player amongst it. This company is too good to euthanise.
——
Also rmember what Eric Geers had to say in my conversation with him earlier:
SU: So regardless of what GM say today, have you still got some room to move in terms of timing, etc?
EG: Yeah. The negotiations will continue. Exactly when they’ll end in terms of deadlines, etc, I can’t say. We just know that we need to plan an operation that can stand alone and then we will try to move on with things. We have to work on how to finance the operation, and that’s the road ahead for Saab.
It’s also important to remember that people need to back Saab up here. It’s OK for some to write a whole doomsday scenario, saying that it’s over-and-out for Saab, but if it’s over-and-out for Saab then it’s the same for a lot of people, and for an important part of Sweden’s industry and identity. It’s not just Saab, there will be a lot of people effected.
——
It needs to be sooner rather than later. Much sooner. But there’s still time.

D-day for GM – where it’s at for Saab

It’s the 17th in the northern hemisphere and that means it’s time for GM to hand in their homework assignment as set by their old schoolteacher, George W Bush. Of course, he’s retired since the assignment was handed out and there’s a new teech in town, but that doesn’t mean GM’s off the hook.
Here’s a quick look as to where all the various players are at right now:
General Motors
They’ll receive the next instalment of their funding today, another $4billion, regardless of how complete their assignment is. I’m surprised some in the autoblogosphere are getting all antsy about this as it was part of the original plan. GM won’t actually be graded on their assignment until March 31. If they pass, they get a lifeline and if they fail they get their loan called in.
There’s some talk that one of GM’s proposals will effectively be a structured bankruptcy with the US government providing financial backing whilst everything’s reorganised. This will effectively kill off the dealerships and union worries troubling them right now, but it’s a path their reluctant to walk down due to the bad blood it would cause in the community.
As is traditional with anything big like this, GM will most likely wait until the stock exchange closes before submitting their report. That’s 4pm in New York.
General Motors Europe
There have been renewed calls for Opel to be spun off from the mothership as a separate entity. Given that Opel make up the core of GM Europe, you can pretty much say that the whole entity wants a separation. Taking Opel out of the group would leave the cheaper Chevrolet brand, which is growing, but isn’t enough to house all the design staff etc that having Opel allows.
Those calls for separation throw worries about protectionism out the window, by the way, with the German unions being very up front about their desire to see the state take control of the company.
Other plans state that GM are looking to close at least three plants in Europe in order to cut costs. Make that four plants if they dump a certain little Swedish manufacturer.
Saab
Saab are busily but quietly going about their business, which takes three main forms right now:
1) Continuing talks with the Swedish government about support for loans that GM are yet to apply for from the European Investment Bank.
2) Work to finalise the upcoming vehicles that will form the basis for Saab’s future, and
3) Somewhere amongst all this they’re still building and selling cars.
TTELA report that Jan-Ake Jonsson has been busier than a one legged man in an ass-kicking contest (my description, not theirs), formulating the desired plans for Saabs future. They report that those plans have been presented and that the ball is in the government’s court……..but…….
The Swedish Government
……the Swedish government are reported as saying that they haven’t received a satisfactory plan from GM (i.e. Saab) and that the ball is in their court.
The Swedish government are playing the role of guarantor here. They don’t actually have to hand out the money that Saab needs. That will come from the European Investment Bank. They will, however, under the provisions they passed some time ago, be providing guarantees for the money that’s lent to Saab. They have standards they want met before they go ahead and provide those guarantees.
——
GM say they’ve done the plan and the decision rests with the government. The government say they haven’t seen a satisfactory plan and the work rests with GM.
The state of play, then, is seemingly a stalemate.
One thing that’s important to remember here, is that despite GM having to hand in a plan to the US government today, that doesn’t necessarily mean that it’s D-Day for Saab. That plan will state intentions but the execution (pardon the pun) of those plans is still some time away. It’ll take the US advisory panel until March 31st just to grade them and make a decision about them.
Regardless of what’s said about Saab in that paper, Saab still have time to negotiate with the Swedish government and find a way to satisfy their requirements in order to obtain those loan guarantees. The sooner, the better, but the important bit is that today isn’t The End.
It’ll still be a big day once the news is know, but the full effects will not be immediate.
Saab have a bit of time, and they have what we believe to be great models in the pipeline. They just need to make the Swedish government see that, which they’re working on at a fever pitch.

GM cuts continue, will the UAW still be “tone deaf”?

As reported by CNN/Fortune and the AP, General Motors has announced that over 10,000 salaried employees will be cut and the remaining salaried employees will take a 3% to 7% reduction in pay. The salaries of those in the executive ranks will be cut at least 10%. The expected effective date is May 1, 2009.
This will affect GM on a global level; previous cuts were felt only in the US. This announcement indicates that an additional 3,400 US employees are to be released, leaving the majority of the cuts to the global sales and manufacturing operations in Asia and Europe.
This round of reductions in staff and salaries, like others previously, are intended to qualify for government funding. Under the terms of the agreement, GM (and Chrysler) must show “positive net present value” or, in layman’s terms, positive cash flow that justifies the initial investment.
The UAW, ever the foil, has stated in the past that it will fight any attempt to reduce worker’s pay to the levels specified in the US government plan. At this moment, it is unclear what Rick Wagonner means when he says that “there’s good dialogue” with the union. However, what is clear is that the UAW is still clinging to the hope that they will get what they want without regard to the health of GM.
Mr. Gettlefinger, your conditional bluff has been called. You’ve said: “The union will do its part to help find savings as long as other stakeholders accept concessions.” I’d say that those “other stakeholders” are being forced to accept concessions. Big ones. If you are half as savvy as you think that you are, you will get out in front of this media wave and you’ll greet the world arm in arm with the GM management with a determination to get this program to recovery working.
I don’t think that’s going to happen. My guess is that the UAW leadership will reluctantly come to the podium, carp about the fact that they’ve been so put upon and then defeatedly say that they’ve given all they can give. Meanwhile, they will force Rick Wagonner to go back to Capitol Hill, hat in hand, to squirminlgy deliver the message that GM has not fully met the terms of the bailout loans.
I’ll say one thing that I like about President Obama: he is a gifted communicator. His choice of the term “tone deaf” to describe the automotive CEO luxury travel early in this process was brilliant. I will absolutely apply the same term to the short-arming, recalcitrant Ron Gettlefinger: he’s “tone deaf” about the state of his industry if he believes that these conditions are going to allow him to keep his “business as usual” paranoia about management and government and negotiate as if it’s 1999.

2010 Saab 9-5 is ‘on schedule’

A regular commenter at Trollhattan Saab posted what I think is a pretty important comment for Saab and for Saab enthusiasts:

GM announced to the US Saab dealers that the “new” 9-5 is back on schedule…..

Now, that could be anyone, of course, but through the magic of CMS software I can track this person’s comments over the life of this site and let’s just say that his contributions here give his comments some weight. Like this one, for example:

I have been an exclusive Saab dealer for 20 years next week….

The Detroit Auto Show starts this weekend and it’s not uncommon for a dealers briefing to take place prior to a major show like this one. I’d imagine that it’s this sort of occasion that’s just seen this confirmation of the Saab 9-5 take place.
We heard Steve Shannon say via Motor Trend, yesterday, that the Saab 9-5 would be around 1 year away on American shores. That, and this announcement to dealers today, would tend to confirm the whispers going around that the Saab 9-5 will be shown later this year and commence production shortly thereafter.

9-5sketch1

2010 Saab 9-5 is ‘on schedule’

A regular commenter here has just posted what I think is a pretty important comment for Saab and for Saab enthusiasts:

GM announced to the US Saab dealers that the “new” 9-5 is back on schedule…..

Now, that could be anyone, of course, but through the magic of CMS software I can track this person’s comments over the life of this site and let’s just say that his contributions here give his comments some weight. Like this one, for example:

I have been an exclusive Saab dealer for 20 years next week….

The Detroit Auto Show starts this weekend and it’s not uncommon for a dealers briefing to take place prior to a major show like this one. I’d imagine that it’s this sort of occasion that’s just seen this confirmation of the Saab 9-5 take place.
We heard Steve Shannon say via Motor Trend, yesterday, that the Saab 9-5 would be around 1 year away on American shores. That, and this announcement to dealers today, would tend to confirm the whispers going around that the Saab 9-5 will be shown later this year and commence production shortly thereafter.

9-5sketch1

Jonsson and Geers on Saab’s review

UPDATE: CNN Money Report at the bottom
UPDATE II: Automotive News comment
UPDATE III: Swedish minister meeting with German counterparts
——
Swedish newspapers Dagens Nhyeter and Dagens Industri have run a few articles featuring comments by Saab Sweden’s Jan-Ake Jonsson and Eric Geers.
Thankfully, ctm’s provided a translation of the salient points. I’ll get to work on a full translation shortly.
——
Jan-Åke Jonsson at Dagens Nhyeter:
He does not interpret the strategic review as Saab is up for sale – despite that Fritz henderson said that GM is looking for a buyer.
He says that Saab is now working on a plan to secure the short and long term funding.
He characterizes the current dialogue with the Swedish government as “good and constructive,” and he sees major possibilities for the government to ha ve a positive impact in this “critical situation.”
– “The government now has the possibility to have some influence and create some cooperation between the four auto industries in the country.”
He thinks that Saab is well prepared when that market gets going again, and claims that the brand is an important part in the GM brand portfolio.
– “Saab is GMs only European premium brand in a growing and important segment.”
——
Eric Geers at Dagens Industri:
– “A global strategic review of Saab does not mean a sale of Saab, but rather how we can secure the future of Saab and how to raise the money.”
– “It could mean that we work together with an external partner.”
– “There are a number of interesting possibilities. But, of course, you can never exclude the possibility that we sometime will be sold.”
He points out that the most important now is to secure the future products and the funding of those.”
Do you think that Saab will benefit from the money that GM eventually can get from the Congress?
– “It depends solely on the Congress and their attitude. One could imagine that there will a bit too much America.”
– “But it is probably the same with other governments.”
As many others do, Saab also seeks support from the government. But so far, it has been without much result.
– “The current economic situation is as it is. But it extremely important to find a solution to secure future investments.”
——
From CNN Money, a further comment on the Jan-Ake Jonsson interviews:

STOCKHOLM (AFP)–Several companies have voiced interest in purchasing beleaguered Swedish car maker Saab if its owner, struggling U.S. giant General Motors Corp. (GM), decided to sell, Saab’s chief executive told Swedish public radio on Wednesday.
“There are many interested parties. I don’t want to mention any specific names but there are many (interested) companies that work with development and support car production, both in Europe and outside of Europe,” Jan Aake Jonsson said.
“There are many different alternatives and I don’t want to go into specifics but it’s obvious the discussions we have had so far have been with companies within the automobile industry,” he said.
Jonsson’s comments came a day after GM said it would “review” the future of its Saab and Saturn brands as it struggles to survive and restructures its business to focus on core brands.
GM said it will “immediately undertake a global strategic review of the Saab brand,” in a statement outlining a restructuring plan it presented to Congress in hopes of securing some $18 billion in government-backed loans.
BMW AG (BMW.XE), Renault SA (13190.FR) and Tata Motors (TTM) are all reportedly potential buyers.

BMW?
Not according to the last report. But that was then, I guess.
——
And from Automotive News:

With Ford Motor ready to sell Volvo and General Motors considering a possible sale of Saab, Sweden is being hit badly by the storm that is currently threatening the whole car industry.
The question is not just who would want the Swedish brands, but why would anyone want them?
…..In terms of being green, Saab is ahead of Volvo with its biofuel and turbocharging technology.
GM has neglected Saab’s brand character for too long. The Swedish brand has only received the attention it deserves in the last couple of years under Carl-Peter Forster, who is GM Europe’s president and Saab’s chairman.
Forster’s new Saab model range has still not been revealed but the 9-X BioHybrid and 9-X Air concepts have received very positive responses.
If GM sells Saab, Forster will neither enjoy the fruits of his efforts for the brand nor will Ford ever benefit from its commitment to develop Volvo into a world class brand with strong premium values.

——
I’m absolutely knackered from the last few nights, so please forgive me if I limit my own comment on this stuff and just pass on the news in bulk.
——
From Reuters:

Sweden’s industry minister said on Wednesday Sweden was talking to German authorities regarding its auto sector and she hoped to have more information soon on car units Volvo and Saab now the intent of their U.S. parents was clear.
Industry Minister Maud Olofsson told a news conference she does not think the state should be in the business of owning car companies.
“I have talked to my counterpart in Germany who is working on these issues. These (talks) revolve around the fact that Saab and Opel are very closely linked and we of course want to know how Germany is thinking about this,” Olofsson said.
“We want to know how they see their relationship with Opel and we will intend to try present how we see Saab’s situation. But in the current situation, these (talks) have had more of an exploratory nature.”

Saab officially placed “under review” by General Motors

The full text of GM’s submission to the US Congress leaked early (surprise surprise).
To save you all the trouble of looking, here’s the only sentence in the 27-page document that mentions Saab:

GM will also immediately undertake and expedite a strategic review of the Saab brand globally.

That’s it. One sentence. 15 words.
To make that little bit of corporate-speak clear – Saab is now up for sale.
You guys keep posting in comments. I’m going to try and make sense of it all and post a summary up here on site so keep checking in.
I’d also like to take this opportunity to scream a nice, loud SCREW YOU to all the mofos at GM have who have sucked the life out of our favourite little brand and now intend to hang it out to dry. May the hairs on your bum turn into fish hooks and rip the sh!t out of you.
——
Comment of the moment, from Troll96:

Notice how GM plans to increase its emphasis on flex-fuel cars, hybrid technology, turbocharging and 4 cylinder engines. So, of course, Saab has to get the ax. Am I missing something here?

Rignt now, in the heat of this particular moment, I hope Wagoner’s Malibu hybrid breaks down on the way to Washington.
——
Here are the bones of the GM plan for those who can’t be bothered reading through the whole thing:
GM’s plan involves the following moves:

• Slashing hourly costs in North America by $3.6 billion in an attempt to make GM competitive with foreign automakers no later than 2012. GM currently has 96,000 workers and the goal is to have 65,000 to 75,000 workers by 2012.
• Reducing or eliminating four of its eight brands and cutting the number of dealers. The plan involves exploring the sale of Saab, talking to dealers about the future of Saturn and shrinking the Pontiac brand to more of a niche offering.
• Cutting executive compensation and eliminating its corporate aircraft fleet. CEO Rick Wagoner will take a $1 salary next year, and GM is cutting the top four senior executives will see their cash compensation slashed 50 percent in 2009. Neither Wagoner nor top executives will receive bonuses this year or in 2009.
• Complying with the Energy Independence and Security Act of 2007, which was designed to improve fuel efficiency and cut dependence on foreign oil. GM outlined its current lineup of cars and crossover vehicles and plans to shift its portfolio towards producing even more of the fuel-efficient vehicles. For 2009, GM has 18 models in the U.S. that gets 30 mpg on the highway and that push towards more fuel-efficient vehicles will continue, Henderson said.

The bill for all this?

GM is asking for $18 billion in financing, which includes a $12 billion loan and a $6 billion revolving line of credit that would be tapped if the market worsens.
The automaker would make several withdrawals of the cash in coming months. GM needs $4 billion this month to pay its bills and would draw $4 billion more in January.
GM would make a $2 billion withdrawal in February or March for a total of $10 billion. The remaining $2 billion would help ensure GM has enough cash to pay its bills through the end of next year, assuming an annualized sales rate of 12 million units.
The $6 billion line of credit could be tapped if the U.S. auto industry worsens to an annualized rate of 10.5 million units.

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close