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Saab Gets No Sympathy From Sweden

While other European governments and the U.S. are coming up with costly plans to bail out their automakers, Sweden is reluctant to rescue GM’s Saab unit from potential bankruptcy.

STOCKHOLM (AP) -- Sweden's reluctance to rescue Saab from the junkyard may seem out of character for a welfare state with a long history of meddling in the private sector.

Especially when other European governments -- not to mention the U.S. -- are coming up with costly plans to bail out their auto makers.

But Stockholm's attitude is in line with the hands-off-business approach that Sweden adopted when Prime Minister Fredrik Reinfeldt's center-right coalition ousted the left-leaning Social Democrats in 2006.

Barely in office, the four-party government launched a major privatization effort, and has already sold government stakes in Nordic bourse operator OMX, telecoms firm TeliaSonera and the maker of Absolut vodka.

Still, General Motors was hoping for special treatment for its loss-making Saab unit.

Even though it's smaller and less well known than Volvo, the other Swedish-based car maker owned by Ford, Saab and its suppliers employ about 15,000 workers in Sweden.

It also represents decades of Swedish car-making history, and the Saab brand remains closely associated with the Scandinavian country, even after GM took full control in 2000.

Would Reinfeldt's government allow all that to perish?

The answer, so far, has been "ja." The government insists that Saab's future is GM's responsibility and has rejected the U.S. automaker's request for $600 million in loan guarantees.

Stockholm says the problem is that GM, facing its own problems at home, wants to get out of Saab by the end of the year.

"The basic problem is that they've set an exit date for their ownership without identifying who will take over," Reinfeldt told Swedish news agency TT on Monday.

The government says GM must find a buyer, because it doesn't want to get stuck with the break-up costs if Saab goes bankrupt.

Saab last week went into bankruptcy protection in a court-managed reconstruction process that aims to disentangle the brand from GM and make it more marketable. But even if the spinoff is successful, Saab is not likely to get very far as a tiny player in a shrinking global auto market.

"It doesn't have the economies of scale or the deep pockets," said Stephen Pope, Chief Global Market Strategist for Cantor Fitzgerald Europe.

Labor unions and the Social Democrats -- now opposition leaders -- say the government is acting irresponsibly.

"Saab needs a fresh start," metalworkers union boss Stefan Lofven said. "If the government and GM choose to take their hands from Saab, it's an enormous treachery against all auto workers in Sweden."

However, the government's approach has widespread backing among Swedes. A Sifo survey last week of 1,000 people showed only one-third supported government intervention to rescue Saab. Half of respondents were against it, while 17 percent were undecided. No margin of error was given.

Part of the reason is that Sweden learned a hard lesson in the 1970s, when the government spent billions of kronor trying to bail out a faltering ship-making industry. Even on government life-support, the industry's collapse was inevitable.

This time, rather than protecting jobs, the government is focusing on what would happen to Swedish auto workers if they stop making cars. Officials said Monday they're preparing an application for EU funds earmarked for workers who are left jobless due to changing global trade patterns.

Industry Minister Maud Olofsson -- once a Saab owner -- has asked GM to present a new business plan for Saab, insisting she will not let taxpayers assume responsibility for the struggling brand.

"It would be very risky to promise to take over a car maker that not even the biggest car maker in the world is ready to put money into," Olofsson said.

Karl Ritter is AP's Stockholm bureau chief.