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GM agrees to pay Saab’s debts to suppliers

Saab’s US owner General Motors has said it will start paying money owed to the struggling Swedish automaker’s suppliers in order to keep Saab's production lines running.

“We have put aside 1.3 billion kronor ($142 million) for this and have already received most of the bills, which will be paid immediately,” GM’s purchasing chief Bo Andersson told Swedish financial daily Dagens Industri.

“We have no problems with deliveries to Saab right now,” he said, adding that Saab’s largest suppliers included Lear, IAC, Aisin Warner, Arcelor Mittal and Thyssen Krupp.

GM has asked the US government for tens of billions of dollars in loans and has announced plans to lay off 47,000 employees.

Last month the company basically abandoned Saab Automobile, saying its ownership obligations would run out at the end of this year.

The beleaguered Swedish carmaker began restructuring after GM warned it could be pushed into immediate bankruptcy unless it received help from the Swedish government, which in turn flatly refused to step in and rescue Saab.

In order to keep production running, GM also paid 1.4 billion kronor to lawyer Guy Lofalk, who has taken on Saab’s restructuring, but Andersson admitted the amount would not get the Swedish company through the three-month restructuring period.

“Think of it as a ‘get-started’ fee. We’ll have to see how long the money lasts,” Andersson told Dagens Industri.

Last week, Saab’s production was temporarily halted due to supply problems and was threatened by a dispute with the Swedish customs service over payment difficulties that have since been worked out.

Saab is not the only part of GM that is struggling. The US automaker owes a total of about 90 billion kronor to suppliers, according to Dagens Industri.

“Many suppliers are dragging their feet on deliveries due to the threat that GM could file for bankruptcy,” Andersson acknowledged.

Saab employs about 4,100 people in Sweden, 3,700 of whom work at its hub in the southwestern town of Trollhättan.

Including suppliers, some 15,000 jobs in Sweden are believed to be at risk if the unit disappears.

WORKING IN GERMANY

German steelworkers agree 6.5 percent pay hike after strike

Tens of thousands of steel workers in western Germany will get a 6.5-percent pay hike this year - the biggest jump in three decades - in a settlement that could set the tone for industry as inflation soars.

German steelworkers agree 6.5 percent pay hike after strike

The agreed increase would come into effect “from August 1st”, the IG Metall union in the region of North Rhine-Westphalia said in a statement Wednesday.

The 68,000 steelworkers in the industrial region would also receive a one-off payment of 500 euros for the months of June and July, the union said.

The outcome of the negotiations was “the biggest increase in wages in the steel industry in percentage terms in 30 years,” said IG Metall boss, Joerg Hofmann.

Germany’s largest union, IG Metall launched a strike action at steelworks in the west in May after management failed to meet its demands for an 8.2 percent pay increase.

On Thursday at the peak of the movement, around 16,000 workers across 50 firms downed tools, the union said.

READ ALSO: Should foreign workers join a German union?

“Rising inflation” and the “good economic situation” of the steel industry were the basis for IG Metall’s demands.

Consumer prices rose at a 7.9-percent rate in Germany in May, a record for the country since reunification in 1990 driven by the outbreak of the war in Ukraine.

The smaller number of steelworkers in the east of Germany, who are also seeking an 8.2 percent pay boost, have yet to reach their own agreement.

Negotiations are currently taking place in a number of sectors. In the textile industry, 12,000 workers in the east of Germany sealed a 5.6 percent pay increase at the beginning of May.

Meanwhile, negotiations covering the auto industry, and mechanical and electrical engineering will begin in November.

Despite the agreed rise the onus was still on government to relieve the pressure on workers form rising prices “in the coming months”, IG Metall boss Hofmann said.

Significant wage demands have prompted concerns of a wage-price spiral, where rising pay sustains higher inflation.

The European Central Bank last week said it would raise its interest rates for the first time in over a decade this July as it seeks to stamp out price rises.

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