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The SEK28-billion aid package recently announced by the Swedish government has got plenty of coverage around the traps in the last 12 hours.
A couple of notes….
* The package still has to be voted on by the Swedish parliament before it goes through and companies can start applying for funds.
* The package consists of three parts. SEK20 billion of it is loan guarantees for money that can be borrowed at the European Investment Bank and used for new green technology. Essentially, they’re going guarantor like you might for your kids on a car loan. SEK5 billion of it is emergency aid for those who need a chunk right now. SEK3 billion is an investment fund for a new state-owned research house.
* The Financial Times say that the package is open to all auto industry manufacturers in Sweden. Volvo Cars, Volvo trucks, Saab and Scania can all apply for some money if they need to. Koenigsegg, too, I guess.
* CNN Money say that it’s for carmakers only and truck makers are excluded. Hmmmmm.
* Eric Geers from Saab was suitably pleased. This to Automotive News:
“We are extremely positive. We have to work out the details, but this is a good step from the government with whom we have been having good discussions.”
And this to me via email:
This is indeed very good news. We believe it is very positive that the Swedish government recongnizes the importance of the Swedish automotive industry. This is a very comprehensive package of which we need to understand all the details. We look forward to future discussions with the Swedish government, which have been very positive and constructive so far.
Can’t go in the details of this but we have many plans as to what we want to do in the future in the area of innovative green technologies and products.
Eric also emphasised that the Swedish parliament still has to vote on this. I’m not sure if he’s foreshadowing a problem, but I don’t think so.
——
Personally, I just hope that Saab can secure enough of the emergency funding to get through in the short term. The green technology stuff is great as it seems Sweden are very committed to this course and I’d love to see Saab take some leadership in this issue. But that’s a long-term goal and they need to get through the near term first.
5 responses so far ↓
1 Richard
// Dec 12, 2008 at 9:23 am
Great news indeed. The fact that there is a potential lifeline available to Saab should allow for a sigh of relief for many on the inside.
It’s interesting how quickly the Swedish government was able to discuss and decide on this financial measure of support for their industries. And in fact this has all happened (excluding the vote itself by Swedish parliament) in less than half the time that the US Congress has been playing the blame game and grandstanding in front of the cameras. Granted, the US dollar figure is much arger. But the issues are the same – survival of their respective domestic automotive industries.
2 saabyurk
// Dec 12, 2008 at 11:11 am
For the size of Sweden compared to the USA, this is a large amount. The USA is roughly 33 times larger than Sweden population-wise. The $3.4 billion would be comparable to a USA $112 billion bailout. The $15 billion shouldn’t be such a big deal. However, maybe the U.S. government should use the position of weakness of the big 2.5 to force major UAW concessions up front before giving any help. Of course, the UAW would be too stupid and recalcitrant to yield (In spite of this, I support unions in general).
3 Richard
// Dec 12, 2008 at 12:10 pm
@ saabyurk – Very good point. The relative sizes of the two economies are enormously different. And to extend that analogy further – given that Sweden has much higher taxation in general, that government money is much more closely tied to each and every taxpayer in Sweden. Though most likely the money will come from the sale of government bonds.
4 Brendan
// Dec 12, 2008 at 2:32 pm
Well the UAW have stuffed things up for GM. Greedy Bastards.
http://www.usatoday.com/money/topstories/2008-12-11-2268737823_x.htm
5 MagnusE
// Dec 12, 2008 at 10:19 pm
“… that the Swedish parliament still has to vote on this. I’m not sure if he’s foreshadowing a problem, but I don’t think so.”
This should not be a problem, since the opposition has blamed the alliance in power for acting to slow and not doing enough. Almost every one in parliament knows and understands that SAAB and Volvo Cars needs help now.
@Richard: “Though most likely the money will come from the sale of government bonds.”
No need for bonds. Sweden had a big financial crisis in the early 90’s and since then all the parties in parliament has understood the need for responsible financial behaviour and hence Sweden economy is quite good. So Sweden can afford the bailout.