Is Saab finally out of gas?
The struggling Swedish automaker doesn't have enough cash to pay its 3,800 factory workers this month.
Swedish car manufacturer Saab cannot pay this month’s wages to its some 3,800 factory employees because of a lack of "necessary short-term funding," its parent company announced Thursday, signaling another financial setback for the cash-strapped automaker.
Saab said it was in ongoing discussions with “various parties to obtain short-term funding” to pay workers at its factory in western Sweden. “There can however be no assurance that these discussions will be successful or that the necessary funding will be obtained,” the Netherlands-based Swedish Automobile, Saab’s owner, said in a statement.
The troubled company has suffered several economic hurdles lately, including halted production at its plant, dwindling coffers, and poor sales.
After spending more than 20 years under General Motors management, a struggling Saab stalled after Swedish Automobile (previously called Spyker Cars) bought the car maker in 2010. Saab sold only about 31,000 cars in 2010 compared with 95,000 in 2008.
Swedes are mourning the decline of the iconic Saab brand, which was founded in 1937 and became one of two big Swedish automakers along with Volvo. Now, Saab appears to be on its last leg as there has been no recent talk of a government bailout or rescue plan.
Saab’s factory in Trollhattan, Sweden, has been at a standstill since June 8, and on Monday management told staff not to return to work before July 4. Ahead of that, the assembly lines remained quiet for seven weeks during April and May when Saab was unable to pay its suppliers.
The timing of the withheld wages couldn’t be worse for workers. Friday marks the beginning of the Swedish holiday Midsommar, a three-day festival where Swedes sit down to large meals and celebrations. Many start their summer vacations following the holiday, as well.
Employees said they were told of the news Thursday morning. “It is dreadful. Completely unbelievable. I get chest pains,” Saab employee Fredrik Almqvist told the Swedish news agency TT. “How on earth are we supposed to pay our bills?”
Unions representing factory workers are demanding Saab pays its employees and soon. The trade union IF Metall said it would file formal payment requests for its roughly 1,400 members at Saab.
“I have worked at the factory and know many who worked there. You should never give up hope, but right now it looks extremely bleak,” Veli-Pekka Saikkala, a representative of IF Metall, said in statement on the group’s website.