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After an initial contact via email, I was invited to submit a copy of my editiorial To hell in a handbasket: why the Swedish government should not assume ownership of Saab to the english language newspaper in Sweden, The Local.
The original piece was around 1500 words, which was much too long for them. I thought about trying to cut the original piece in half and then figured it was easier to just rewrite it from scratch.
The article was published at The Local today. Here’s a copy for your perusal.
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Protect Saab from public sector ‘mediocrity’
If Saab is to preserve its tradition of excellence it needs to remain in the private sector, argues Steven Wade following a recent flurry of calls to nationalize the Swedish car maker.
This week, the CEOs of General Motors, Ford and Chrysler will present before the US congress their detailed reasonse as to why their respective companies should receive loans in the billions of dollars.
There has been much speculation as to what concessions these companies might have to offer the government in return for a financial lifeline and some of that speculation concerns an automotive brand that is very dear to my heart, and no doubt to the hearts of many Swedes as well: Saab.
There has been a lot of talk recently of the Swedish government taking ownership of Saab, or Volvo, or even both. It is my belief that such a decision would be the first sad, calculated step along the road to deliberate mediocrity.
Saab is a small player on the world stage, but has a history that all Swedes should be proud of. At their height, Saabs were a shining light as to what a car could be. Much of the talk nowadays in the motoring industry is about fuel economy and building smaller cars with the room and power of larger cars. Saab has been doing this since the 1970s.
And I believe it has the plans in place to do it again.
To succeed in the automotive industry today a company has to have cutting edge R&D, progressive design, brilliant build quality and razor sharp marketing. Whilst the latter can be outsourced, the first three require insight, intelligence and planning that a government authority simply doesn’t understand, and nor should they.
The role of government is to provide essential elements that a society needs to function and grow; infrastructure, basic medical care, law and order, education, defence and a regulatory framework to responsibly govern the conduct of the private sector.
The private sector has a role to play in all of these areas as well, but their role is at the pointy end; the space where excellence and innovation are encouraged and rewarded. The space where people are also allowed to fail in their pursuit of excellence, innovation and reward.
Who would decide the strategic direction of a government-owned Saab?
How many people would have to be involved in determining and then approving the right level of steering feedback in a government-owned Saab?
How many of the best designers and engineers would stay at a state-owned Saab?
How many would accept more lucrative offers from private carmakers and other technology companies elsewhere in Europe?
The history books, and many cities of the world, are littered with tributes to the mediocrity of state-ownership. If we want to talk specifically in terms of motor vehicles, I defy you to name one state-sponsored motoring project that has truly pursued excellence.
There have been many that pursue the basic necessity of travel from A to B, most often with teeth-rattling suspension and driving characteristics that are about as engaging as a can of grey paint.
The Saab that I know and love should never be allowed to sink to such a level, but there’s a high likelihood it would under long-term state ownership.
If they survive this current mess, General Motors should invest in Saab with the same enthusiasm with which they’ve got workers in Trollhättan building Cadillacs. Saab’s design ethos is the way of the future – smaller, lighter and smarter. GM should recognize this and develop it.
Should it not survive intact, then I sincerely hope that GM sells Saab to someone who is able to make Saab what it truly can be: a company building innovative, stylish, safe, engaging and practical automobiles.
The Swedish government can’t do that. An automotive company has to have long term plans and those plans have to be determined by people who know the industry. More importantly, those plans and the investments needed to fulfill them cannot be subject to the changing will of a political party that may or may not be around in three or four years.
Unless it’s a very short term arrangement to transfer ownership to a proper owner in the private sector, the Swedish government should not take ownership of Saab, but they should provide support by helping to create conditions where the company can grow.
That’s one of the true roles of government, after all.
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Steven Wade is a rabid Saab enthusiast and has been the publisher of the Saab enthusiast site, www.trollhattansaab.net since February 2005. He lives in Australia with two Saabs, his wife PJ and dog, Charli.
13 responses so far ↓
1 Tim in Denver
// Dec 2, 2008 at 10:51 am
well done, mate.
2 Markac
// Dec 2, 2008 at 11:06 am
Swade: Good piece, but I’d still be in favour of partial state ownership of Saab (and Volvo) if the need arises, but definitely not a controlling Interest. History shows that just doesn’t work.
I think GM and Ford need to show that they have viable brands to sell otherwise they’ll only get rockbottom prices. How they do that without investing money is difficult to fathom. GM needs to get the new 9-5 on the market before Saab even begins to look like a worthwhile investment for a potential buyer. Unfortunately the new owner will then have the problem of sourcing the car from Opel. GM can make money from the new 9-5 even if it no longer owns Saab That’s something I’ve been predicting for a long time, but I didn’t predict the current circumstances.
3 Bernard
// Dec 2, 2008 at 11:30 am
Swade,
Congratulations on being a published journalist. It’s good toi see your writing skills (and passion) recognised outside of the blog.
One ironic thing is that your description of a government-owned Saab isn’t all far removed from a description of a GM-owned Saab.
Could the Swedish government’s version of conservatism, inertia and bureaucracy be any worse than GM’s version?
4 Swade
// Dec 2, 2008 at 11:38 am
Interesting question, Bernard, and one that I asked myself as I wrote the piece.
There are definite similarities between the way GM currently run Saab and the way a public sector entity is run. But both are a long way away from how a car company should be run, which I think is the criteria we have to use to evaluate the government option.
5 DamoG
// Dec 2, 2008 at 12:41 pm
I just noticed this on news.com.au :
http://www.news.com.au/business/story/0,27753,24739474-31037,00.html
6 saabyurk
// Dec 2, 2008 at 12:52 pm
I don’t completely agree, but congrats on getting a well written article published by The Local—impressive.
7 joemama
// Dec 2, 2008 at 1:03 pm
Swade – great editorial.
My question to readers is this – Would you prefer it if Saab/Volvo remained in Sweden under government control or end up in the hands of another company from say India or China?
I know they are GM/US owned right now, but I think an Asian/Middle Eastern owner would be more hurtful to the Saab brand.
8 JonaTHAN GREEN
// Dec 2, 2008 at 1:42 pm
Read this…
“If they survive this current mess, General Motors should invest in Saab with the same enthusiasm with which they’ve got workers in Trollhättan building Cadillacs. Saab’s design ethos is the way of the future – smaller, lighter and smarter. GM should recognize this and develop it.”
Really, the manufacturer for right now is Saab – I really wish instead of harvesting the brands engineering know how and ideas for GM’s domestic brands, they would have just let Saab build Saabs. We may have a wicked 5 door hatch (the most useful vehicle on the road next to a truck or a full blown wagon) with a turbo or even a new Vig!
Funny, I was just noticing Saab ads in Automobile Mag the last month or two and this months newest edition as well as Television advertising – haven’t seen a Saab TV ad since……have I ever actually seen one on air??
9 Tedjs
// Dec 2, 2008 at 2:27 pm
Very good editorial – and nice job on being published!
10 bornfromjets03
// Dec 2, 2008 at 2:54 pm
Great article!!
there’s not much else to comment on, you already hit the nail on the head swade!
11 Jr.
// Dec 2, 2008 at 3:25 pm
I don’t agree, but it’s well written. Why I don’t agree?
First; you assume full ownership. That’s not gonna happen, but partial may happen and that’s not necessarily a bad thing. Renault is 15% owned by the french government, and are doing quite good nowadays.
Second; you assume that government ownership is bad. That’s neither entirely true. In Sweden we have several examples of government owned companies that are flourishing, not least in the steel industry, and several reports the last years indicate that government ownership isn’t as bad for a company that people generally think. On good example is SSAB, which in the 70’s where three or four different steel-mills that were near bankruptcy. The government went in with full ownership in all of them and created SSAB. 10 or so years later, they could sell SSAB with a profit, and SSAB was then a very profitable company. One of the underlying reasons for this was that the government could spend money on new equipment and factories in a more long-term plan then a publicly owned company could. One year with red numbers, and you have to cut down on manpower or sell something, otherwise the stockmarket will punish you. That’s not the case with a government as an owner.
Another example non-public companies doing well (as an example of long-term capitalism instead of quarter-capitalism) is IKEA and Tetrapak; neither of those would have been where they are today without huge losses year after year while building up new markets, a practice which would not been accepted by shareholders. So, to conclude, when it comes to long-term thinking, the government may not be “hell” for companies, as long as it’s done right.
12 swade
// Dec 2, 2008 at 3:37 pm
Jr,
Indeed I did assume full ownership. This piece was written as a response to a number of prior editorials at The Local, editorials that advocated a full ownership position. hence it’s been written from that point of view and no attention given to the partial ownership model. I wouldn’t have been able to address both models with the word limit I had.
Good to hear SSAB has done well, but for every efficient and profitable government operation, I’m willing to bet there are multiple inefficient ones. Maybe that wouldn’t happen in Sweden, though.
13 Snotfjold
// Dec 2, 2008 at 7:29 pm
Good piece Swade, and congrats on being published.
I agree with some of the commenters here that a fully state owned Saab would be bad, and to be honest, not likely anyway.
I still believe a Spin-off of GME with Opel and Saab together is the best solution. GM Should sell the company to the market, to the employees and if necessary to the respective governments. A publicly traded GME would stand a fair chance to succeed in the market and get the necessary money to develop new models. Let’s face it, it is GM in North America that is going down the drain all the other areas are doing quite okay.
I’d also suggest reading Mark Phelan’s (Detroit Free Press) ideas on what the big 3 need to do
http://www.freep.com/article/20081201/COL14/812010360/1014/BUSINESS01