Saab looks to cut jobs during restructuring
As a part of the protection process granted by the Swedish government, Saab’s workers who have gone unpaid since early August should be receiving their last due wages by the weekend. However, the good news of finally getting paid is countered by the news that some of those workers may be losing their job in an effort by the Swedish automaker to cut costs and protect the company’s future. The company hasn’t given any idea as to how many jobs could be cut or what levels of workers are in the most danger of losing their jobs but Saab has indicated that a “headcount reduction” may be necessary to help lower the company’s operating costs as they work to avoid future financial issues.
Even though many companies facing this type of financial crisis would look to negotiate with their creditors to see how little they can get away with paying, Saab insists that they intend to fully pay back all monies owed to the suppliers and other creditors as part of their corporate restructuring. This differs from the reorganization process completed by Saab while under the wing of General Motors, when some of the debt owed by Saab to its creditors was written off; leaving those portions of the debt unpaid forever. Saab management intends to meet with their creditors as part of their restructuring process starting on October 31st.
The good news is that Saab has 70 million Euros to work with from Deutsche Bank AG and guaranteed by Youngman Lotus but the bad news is that the Swedish automaker reportedly owes more than double that to the workers and suppliers. The past due wages owed to the workers will be written off when the Swedish government steps in and begins paying the white and blue collar union workers but the amount of money owed to suppliers and other creditors grossly exceeds the 70 million Euros that Saab ha acquired recently. The saving grace for Saab in the immediate future is the approval of the Pang Da and Youngman Lotus deals by the Chinese government, which should bring in enough cash to pay off the current debts along with making the purchases needed to restart production.
Saab expects to implement their reorganization plan by the end of the 2011 calendar year but it is unclear whether they will be able to restart production before 2012 gets here. In either case, the company is heavily dependent on that Chinese money and if it doesn’t come soon enough, Saab will be forced to find other investors with deep pockets in a hurry.
Other Saab News:
Saab lives, government protection granted
A third Swedish labor union demanding Saab bankruptcy
Saab gets a glimmer of hope from the Swedish government
Saab to face first bankruptcy hearing on September 26th
Swedish debt authority prepares to seize Saab assets
Source: Automotive News