Dagens Industri have published a report today with respect to Saab’s profitability and GM’s accounting practices when it comes to reporting the results from its subsidiaries.
The report tends to support the idea that GM are handy at shuffling results around to suit their reporting needs. Given the global nature of their business, there are arguments that can be made both for and against this practice.
It hasn’t helped Saab at all, though, as they’ve constantly been the company said to making losses. As a small division in a car-making company (with all the investment that car-making requires) this is entirely possible. However, Saab have had good years as well, and the claim that they’ve been proitable only once in the last 20 years has always rung a little hollow to me.
This article was written by two union chiefs who are tied to Saab. Some may think that’s an argument in itself for this report to be biased. But please also remember that Paul Akerlund, the IF Metall chief, is also a member of Saab’s board of management. He’s been a steady source of frank and honest commentary in the last few years and his place within Saab confers a certain responsibility for the truth when talking about situations like this.
The following is my tidied up version (where possible) of a Google translation of the original report at Dagens Industri.
DEBATE: GM took Saab’s U.S. profit
Updated 2009-03-23 11:44
Saab shows that reported losses are misleading and an effect of that revenue to the sales of cars in the U.S. went to GM’s U.S. company, while Saab in Sweden had to take the cost, writes Anette Hellgren and Paul Åkerlund, union representatives at Saab Automobile.
The down and claimed a great deal in these days of “game” around Saab Automobile’s future. We refer to the allegations such as “use tax money to play Monopoly” or “Saab has always been a loss so there is no point in saving it”
To comment on the last claim first, they should understand that not even General Motors have kept Saab under arms for almost 20 years out of kindness.
No, it is clear that the company has seen the development gains, production gains and economic benefits of this. In a large group like GM. with group records, there is an opportunity to choose where gains and losses are presented.
Unfortunately, for various reasons, GM have chosen to present the losses of Saab Automobile.
But it is the result on the last line in the consolidated accounts, it is interesting. As an example of how it can go to, we want to take the year 2007 when Saab sold just over 120000 vehicles, of which about 85,000 were sold in Europe.
The cars sold in Europe became profitable for the company while the rest, mainly the U.S. sales, did not generate profit. However, it is not surprising because the proceeds from the sale of those cars went into the GM’s U.S. companies – which meant that Saab had to take the costs but not the revenues.
The above shows how the economy is handled in a global company. It can be very misleading for anyone who cannot see the background. The arguments that Saab have never been in profit are not correct.
With regard to how taxpayers’ money should be used and managed the issue tends to be more political rhetoric than substantive industrial policy. Sorry.
What Saab Automobile has requested is that the government stand as a creditor for a loan from the European Investment Bank, EIB, – not that the state should become the owner or give a refund of tax money. This guarantee, along with GM’s resources, is a prerequisite for Saab’s business plan is to be completed. The hemtagande means of production and development of future products. But the state bond is also a prerequisite for Saab to be attractive to a new owner.
The risk to provide a guarantee for a loan seem quite reasonable compared with the effects if Saab fail in their efforts with regard to business reorganization, and at least 15000-20000 people in and around Saab losing their jobs, people who are also taxpayers.
The loss of these tax revenues and the money that the State may contribute in a bankruptcy for the Saab and a large number of suppliers would far exceed the 5 billion to bail is about. In the event of bankruptcy, it is also where the money that taxpayers certainly have to bear.
President, Union Saab Automobile
President IF Metall engineering club, Saab Automobile