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Wed, Dec 03, 2008 - Page 10 News List

Sweden to come to rescue of ailing vehicle producers


Sweden will come to the rescue of its US-owned carmakers crippled by the financial crisis, Saab and Volvo, to secure the future of an automobile industry that accounts for 15 percent of exports, officials say.

“Of course the Swedish government is committed to supporting the carmakers. We can guarantee that we will have car manufacturing in Sweden because it is an important part of our economy,” said Frank Nilsson, a spokesman for the Enterprise and Energy Ministry.

Volvo Cars’ owner, US giant Ford, said on Monday it was considering selling the marque given the challenges facing the US auto sector, clouding the future for the Swedish brand.

But no matter who ends up as the owner, the government is committed to supporting the industry, well aware that Volvo and Saab and their hundreds of suppliers are “big employers” in Sweden with “lots of know-how,” Nilsson said.

“We want to keep that here and to protect it,” he said, adding that Enterprise and Energy Minister Maud Olofsson had developed “close connections and a close dialogue” with the Swedish manufacturers and their US owners, General Motors (GM) for Saab, and Ford for Volvo.

The Swedish car industry employs 140,000 people in a country of just 9 million.

It counts some 700 companies, including internationally renowned truckmakers Volvo Trucks and Scania, as well as airbag and safety belt manufacturer Autoliv, special steels maker SSAB and the world’s leading manufacturer of ballbearings, SKF.

In recent months, as the financial crisis has widened in Europe and the US, the sector has seen numerous savings and restructuring programs involving thousands of job cuts.

At the end of July, Autoliv announced 3,000 jobs would go.

Volvo Cars, which was sold to Ford in 1999, has announced it will slash 6,000 jobs, including 3,900 in Sweden, out of 24,400 employees worldwide.

Ford and GM, as well as the third-largest US carmaker Chrysler, have been hit head-on by a collapse in demand for their gas-guzzling models and this week will ask US lawmakers for a bailout of US$25 billion in government-backed low-cost loans.

Ford said the possible sale of loss-making Volvo Cars was part of its restructuring efforts.

“Given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo as we implement our ONE Ford plan,” Ford president and chief executive Alan Mulally said in a statement.

A poll published at the weekend showed that seven of 10 Swedes want the state to take over Volvo Cars temporarily.

Meanwhile, Saab, fully owned by GM since 2000, has tried to avoid lay-offs at its Trollhaettan plant in southwestern Sweden, which employs some 1,200 people, by reducing its two shifts to one.

“We have held intense negotiations with the Swedish government,” Saab spokesman Eric Geers said, adding that the center-right government planned to increase its subsidies for research and development.

Nilsson said these subsidies will amount to 450 million kronor (US$55 million) annually for next year through 2012, compared with 430 million kronor this year.

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