It’s going to be difficult to cover this article without coming across as being …..well….. not vindictive, but at the very least, negative towards the source, with whom I’ve had issues for some time. I’ve battled with myself over how to cover this, and am really trying hard to address it from an objective point of view. I’m covering this because recent news has the sale or closing of Saab as being a very real possibility, though I’m not inclined to believe it just yet.
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Ryan Emge, publisher of Saab History, has sent an editorial to The Local, a Swedish newspaper published in English. The basic premise of the article is that the Swedish government should nationalise Saab Automobile if it’s jettisoned by its corporate parent, General Motors.
The article starts with a generalised history of Saab’s beginning as the offshoot of an aircraft company, a company that was formed in response to the government’s vision for national security.
Since 1947, Saab Automobile has been inextricably linked with its Swedish roots as an innovative and progressive automobile company. The heritage of Saab Automobile originally began in 1937 as an aircraft company.
The formation of Saab came in response to the immediate requirements of the Swedish Government during the War, so its foundations began as a byproduct of the government’s needs.
From there, Ryan discusses what he sees to be the after-effects of GM either selling or just plain shutting down the Saab brand:
Across Sweden, industry, academia and government will all be affected if Saab were to be relegated to the backburner of the GM portfolio. It is clear that reversing this trend is the best way for Saab to maintain its unique Swedish design, engineering, innovation and identity. While there have been rumours that GM is thinking about potentially selling Saab to another car manufacturer, I believe that nationalizing the brand is the proper and most suitable method in order to continue Saab Automobile.
So let’s have a look at the reasoning behind the suggestion:
Having lived in Sweden, I have seen first hand the nationalized public transportation system which is as a critical infrastructure for the Swedish economy to thrive. In this respect, I do not see why a car company like Saab could not be nationalized as well.
Recent history has taught us that both pure capitalism and pure socialism are both bound for ultimate failure.
The current credit crisis in the US is largely due to a massive lack of regulation in the financial sector and is proving the point that free markets won’t always create conditions where people will act for the common good. Whilst the market will reward people who do so, it’ll give real short term riches to those who don’t give a crap and wring every last penny from the consumer, whether the consumer can afford it or not. If the Gordon Gekkos responsible for it all manage to get out of the market before the fit hits the shan, then all well and good.
The fall of the Soviet Union should have taught us all that a purely socialist economic system doesn’t work too well, either. Having embraced what sort of looks like a capitalist market in the last 15 years, many of those former Soviet countries have seen some degree of growth and prosperity, though in many cases it’s probably relative.
The point of all this?
For society to work, there has to be a balance between government and the private sector. The government should take control of some of the essentials that effect us all, things that citizens in any decent modern country should have access to: basic healthcare, law and order, energy regulation, education, defence. The government should also have a hand in large scale infrastructure that the private sector won’t meet adequately, which is where transportation comes in.
There’s a place for the private sector in all the aforementioned areas, but it’s at the pointy end, the space that encourages excellence and innovation.
Shortly, we’ll take all this a step further and see why a government shouldn’t run a car company.
Back to Ryan’s reasonings as per The Local:
The infrastructure in which the vehicles travel has already been paid for by the Swedish government and comprises some of the best roads in the world. In addition, the academic institutions, through governmentally funded programmes, have also been subsidized by the Swedish Government when collaborating with Saab Automobile’s future product development.
I’m not sure what that first sentence has to do with anything. The roads are paid for by the people for the people. Ryan’s correctly named it as infrastructure and it ties in perfectly with my argument, above. The government does major infrustructure from which a direct profit is not expected to be realised. The roads provide a common service to the whole country, which makes trade a whole lot easier, which gives people an income and therefore the government a return through taxation of that income.
Government funded academia is one of those areas that illustrate how government and industry can work in partnership to provide a good outcome. It doesn’t always work, but most of the time it produces a good outcome. Again, though, projects like this are generally for research into things that will produce a community outcome, even if it benefits a private sector firm as well. The Swedish government helps out with hybrid research, for example, but I’d be surprised if they’re helping a firm produce a more addictive fast food. The common good.
Finally, the Swedish government will be at a significant advantage by owning Saab as it will have the full autonomy to design, build, and regulate the next generation of private transportation which will meet their goals of ending fossil fuel driven vehicles by 2020.
No. No no no.
It’s the government’s job to set the goals and the regulations to meet those goals. It’s the private sector’s job to comply and produce vehicles (in this case) that will meet whatever targets are set and be attractive to consumers.
The key here is partnership – to some extent – between govermnent and industry. Government can help with fuel cell research as the results may have applications across a number of scenarios. It’s not government’s place, though, to build and market the vehicles, and there’s very good reasons for that.
What was the last government mandated or sponsored vehicle to set the world on fire? Probably the Volkswagen Beetle. There’s been a number of other government-run vehicle manufacturers over the years, mostly in Eastern Europe and Asia and if you can think of a single one that produced something other than a basic rattler for the common man then all credit to you.
See, this is what government does, and it’s the whole point of why a state-owned Saab would be wrong.
Government produces the basics only. It doesn’t strive for excellence. It doesn’t push the envelope or innovate. It takes the innovations of others and regulates them.
Who would decide the strategic direction of a government owned Saab? How many people would be involved in the decision as to steering feel in a future government owned Saab? And of those people, how many would be kissing the butt of the next person up the food chain in the hope of being viewed favourably? (This is not a state-only problem by the way. I believe there’s plenty of that going on at GM right now)
How many would be scared to take a chance?
How many would be motivated to take a chance, given that the reward incentive base of the private sector has been removed?
How many of the best designers and engineers would stay at a State owned Saab and how many would accept more lucrative offers from private carmakers elsewhere in Europe?
The history books and many cities of the world are littered with the mediocrity of state owned enterprises. The Saab that I know and love to drive should never be allowed to sink to such a level. A state-owned Saab is most likely going to result in cars designed by committee, lacking the edge that’s going to draw people in and convince them to spend their money (much like what we’ve got right now, actually, only worse).
The truth is that Saab may well be sold or shuttered in the coming months, or they may continue as a division within GM. We just don’t know. But if they’re sold or shuttered it will be for a number of reasons. The first and obvious one is that they never grew big enough in the last 60 years to stand on their own two feet. More recently, they haven’t received enough investment from General Motors to really make a go of things. And some of the investment they did receive was squandered.
If Saab stay within the GM fold then GM have to invest in Saab. They’ve got the right formula for the future of motoring and great heritage to sell to people. In an article titled Saab may be GM’s best hope for the future, one writer states….
That leaves Saab. The accountants might conclude that it is a dying brand by its eroding sales and only 105 dealers. But Saab spells the automotive future, high quality small and midsized cars. Saab cars are nicely sculpted, or at least uniquely shaped. They have smaller engines with good handling and performance. Even though they share GM platforms, they retained differentiation. Saab is the perfect complement to Cadillac and should be built up rather than destroyed.
…which are my thoughts exactly.
If Saab is sold or shuttered, then I’ll join the rest of you in condemning GM for their lack of decent stewardship and I’ll hope like heck that any new owners can truly “get it”.
But a state-owned Saab?
Unless it’s a very, VERY short term arrangement to transfer ownership to a proper owner in the private sector, I could barely think of anything worse.
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As mentioned in the intro, I’ve had issues in the past with Ryan. However, I’ve made every effort here to address the argument and not the person.
If you’re going to comment on either article, please take the same care.
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