GM considers Chapter 11

[Dartzap]

Beeb

Saab aims to survive without GM

Carmaker Saab, which is owned by General Motors, has had its application to enter a reorganisation process approved by a Swedish court.

An administrator has been appointed to handle the process. Saab is seeking to create a fully independent business.

GM has said that it wants to sell Saab. There had been concerns about the loss-making carmaker after the Swedish government rejected GM's call for aid.

GM took a 50% stake in Saab in 1989 and gained full ownership ten years later.

Any restructuring would need the approval of Saab's creditors, who meet on 6 April.

Expressions of interest

"Today is the beginning of a new chapter in Saab's history," said Jan Ake Jonsson, Saab's managing director.

He also said that several companies had expressed interest in Saab, though he declined to name any.

"Even though we have not been actively searching for new partners, we have had many knocking on our door showing interest in Saab," he said.

He also revealed that creating a separate unit of Saab and German carmaker Opel, also owned by GM, had not been discussed.

“ [GM] oversaw the destruction of the Swedish car company's soul ”
Stephen Pope, Cantor Fitzgerald

Separately, the German government said that it had not received an official application for a state guarantee from carmaker Opel.

The government was waiting for a plan from Opel on its future before making any decisions, a government spokesman said.

Government aid

Despite turning down GM's request for support, a senior Swedish government official has said the government has not ruled out providing loan guarantees to Saab following its restructuring.

"It is not the case that we have closed the door to that. That will depend on what the plans look like," Joran Hagglund, state secretary at the Swedish Industry Ministry, told the Reuters news agency.

Sweden said last year that it would provide up to 25bn Swedish crowns in aid to its auto industry to help it through the economic crisis.

Mr Jonsson said Saab expected to be given access to the state funds.

Saab said in a statement that the reorganisation was "the best way to create a truly independent entity that is ready for investment".

In a restructuring plan submitted to the US Treasury this week, GM had said it planned to make Saab an independent business by the start of 2010.

Loss-making

Sales at Saab in 2008 were down 25% on the previous year.

The Swedish carmaker has not made a profit since 2001. In 2007 it made an operating loss of 2.19bn Swedish crowns ($248m; £175m), according to regulatory filings.

It estimates its losses in 2008 at around 3bn Swedish crowns and expects a similar loss this year, filings also revealed.

Stephen Pope, chief global strategist at Cantor Fitzgerald, believes GM "oversaw the destruction of the Swedish car company's soul".

"Just look at the current '93' [model] as an example," he said. "The '93' is just a Saab body skin placed on top of the Vectra from Opel/Vauxhall."

Protection from creditors

The reorganisation process is the Swedish equivalent of going into Chapter 11 bankruptcy protection in the US, providing protection from creditors.

Saab has plans to launch three new models over the next year and a half.

"Reorganisation will give us the time and means that help get these products to market while minimising the liquidity impact of Saab on GM," Mr Jonsson said.

Saab said funding for the restructured company would need to be secured during the three-month reorganisation process and would be sought from both public and private sources.

During that period, the company is not allowed to pay off any debts accumulated before the reorganisation was declared.

Supplier concerns

Saab employs about 4,100 people in Sweden. Thousands more work for suppliers to the company.

Responding to concerns from Saab's supplier base, GM Europe said it would establish "a viable mechanism for the timely payment of suppliers' claims towards Saab".

GM added that it hoped the gesture would encourage suppliers to support Saab's efforts to reorganise into an independent business.

Just saw this and thought it might be relevant to the thread,

[Dartzap]

Also this might be interesting as well:Beeb

UK car plant 'at risk of closure'

A UK car plant that directly and indirectly employs more than 6,000 people may be forced to close within days, a trade union leader has warned.

Unite joint leader, Tony Woodley, declined to name the facility in question, but said it needed urgent state aid to stay open.

Business secretary Lord Mandelson declined to comment, but urged people to "stop feeding the rumours".

The comments came after data showed UK car production slumped in January.

"We've got a car plant that, within just a couple of days, would have run of cash and needs serious financial help to stop over 6,000 people losing their jobs," said Mr Woodley.

He said the government had to act to prevent "a catastrophe".

Lord Mandelson said: "Rumours can very easily turn into a shockwave that destabilises a company or an industry and brings about the very outcome that we are seeking to avoid."

He added that the government would help if it could.

Falling demand

New car production in the UK fell dramatically in January from a year earlier, according to the Society of Motor Manufacturers and Traders (SMMT).



A total of 61,404 news cars were produced last month, 58.7% lower than January 2008, as plants closed for extended winter shutdowns.

Car firms have been hit by falling demand amid a wider economic slowdown.

The SMMT said that the decline in vehicle output highlighted the need for more measures to help the industry.

SMMT chief executive Paul Everitt said that production for overseas markets, particularly Europe, had weathered the downturn better than production for the domestic market.

"European markets have been lifted by scrappage incentive schemes," he said.

"SMMT continues its call for a UK plan to boost the new vehicle market and support employment throughout the sector," he added.

A total of 51,272 new cars were made for export in January, down 54.2% a year earlier. Domestic car production fell 72.3% to 10,132 vehicles.

Cutting workforces

Several car firms have had to cut jobs and reduce workers' hours in response to slowing demand.

Ford has said up to 850 UK workers at the firm would be offered voluntary redundancy packages.

BMW has said it will cut its Mini workforce at Cowley, Oxford, by 850, while 1,200 jobs are going at Nissan's plant in Sunderland.

Aston Martin is axing 600 jobs at Gaydon in Warwickshire.

Jaguar Land Rover, Bentley and Toyota, which has just announced a pay freeze for staff, have all announced either job cuts or production reductions.

Workers at Vauxhall's UK plants also fear redundancies could be made following an announcement by the company's US parent General Motors that it is to axe up to 47,000 workers worldwide.

Most bets are on it being the Vaxuall plant, from what I understand.

[Jade Falcon]

A link on SB from the BBC shows that it's most likely the Vauxhall plant in Ellesmere Port.

Saab, I don't know if they can survive. They did well for many years prior to being bought over by GM but recently they have had the reputation of being far more unreliable than they used to be, I don't think that's wholly due to GM though, I think its partly due to the number of gadgets and gizmos that have become more common in cars nowadays. Saabs designs I quite like though I can see how they are regarded as a bit conservative and old fashioned.

[Thanas]

I for one hope that Germany doesn't go for the nationalizing plan as that is easy to use as an excuse for international protectionism here in the US. I can already imagine the screeching that would cause on the radio.

At that point the claims of "They stull ur jerbs!" would be coming from a bunch of people if the UAW got with GM to attack that move by Germany.

To be brutally honest, those guys can go bugger off. It is not the fault of Opel that GM sucks and the Opel employees and the German unions have been willing to make concessions and did in fact make them for years now.

[montypython]

I for one hope that Germany doesn't go for the nationalizing plan as that is easy to use as an excuse for international protectionism here in the US. I can already imagine the screeching that would cause on the radio.

At that point the claims of "They stull ur jerbs!" would be coming from a bunch of people if the UAW got with GM to attack that move by Germany.

To be brutally honest, those guys can go bugger off. It is not the fault of Opel that GM sucks and the Opel employees and the German unions have been willing to make concessions and did in fact make them for years now.

However, it was GMNA's persistent efforts back in the 1990's that enable Opel to climb back up to profitability, so it certainly isn't a one way street here.

[Thanas]

To be brutally honest, those guys can go bugger off. It is not the fault of Opel that GM sucks and the Opel employees and the German unions have been willing to make concessions and did in fact make them for years now.

However, it was GMNA's persistent efforts back in the 1990's that enable Opel to climb back up to profitability, so it certainly isn't a one way street here.

...and German subsidies, of course. And it is not like GM will just be ripped off - German law quite explicitly demands compensation in such cases.

[Glocksman]

Compensation or not, a forced nationalization of Opel would result in a trans-Atlantic shitstorm of epic proportions.
Best to make it at least appear to be voluntary.

As for protectionism, personally I think we'd be better served by it today simply because the USA is no longer the world's largest exporter of goods, as we were when Smoot-Hawley was passed back in the day and bit us in the ass.

We're now the world's largest importer and our trade deficits are unsustainable in the long run.

[Bounty]

Opel leaves the sinking ship

Feb. 27 (Bloomberg) -- General Motors Corp.’s Adam Opel GmbH division plans to reorganize as a joint-stock company in an effort to attract outside investors and state backing as part of a rescue plan.

Opel needs 3.3 billion euros ($4.2 billion) in aid from governments across Europe, Carl-Peter Forster, head of the GM Europe division, said at a press conference at Opel’s headquarters in the Frankfurt suburb of Ruesselsheim. GM would be willing to give up a stake of 25-50 percent, Forster said.

GM, surviving on $13.4 billion in U.S. aid and seeking another $16.6 billion, is in talks with governments in Spain, the U.K. and Germany to secure funds for Opel and the Luton, England- based Vauxhall brand. Detroit-based GM, the biggest U.S. carmaker, reported a worldwide loss yesterday of $30.9 billion for 2008, including $2.8 billion from its European divisions.

The carmaker hasn’t decided on whether to close any plants cut jobs in Europe, Forster said. Wages will have to be reduced as part of any rescue, he said.

Opel will submit a business plan approved by the supervisory board today to officials in four German states where the company has plants within the coming week. Federal German officials should receive the plan on March 2, Forster said.

[salm]

Compensation or not, a forced nationalization of Opel would result in a trans-Atlantic shitstorm of epic proportions.
Best to make it at least appear to be voluntary.

As for protectionism, personally I think we'd be better served by it today simply because the USA is no longer the world's largest exporter of goods, as we were when Smoot-Hawley was passed back in the day and bit us in the ass.

We're now the world's largest importer and our trade deficits are unsustainable in the long run.

A forced nationalisation would also lead to Opel losing a lot of technology since the patents belong to GM. A total detachment seems pretty much impossible.

[Darth Wong]

I don't know if anyone can really predict what's going to happen now. Unfortunately, the big labour unions are the Democrat Party's version of the Republican Party's Christian fundamentalist wing. They're a poison pill which the leadership will always try to appease.