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SAAB

Saab production grinds to a new halt

Cash-strapped Swedish carmaker Saab stopped production on Wednesday due to a lack of spare parts, only two weeks after restarting production lines.

Saab production grinds to a new halt

“The productions line stopped yesterday afternoon. We were working building cars early this morning, but for the greater part of the day it has been disrupted and will remain stopped today,” Saab Automobile spokesperson Gunilla Gustav told AFP.

She said the carmaker lowered its overall production targets for this week and would have to decide on a day-to-day basis “when and at what pace to run the line tomorrow and on Friday.”

A local branch of Swedish public radio in western Sweden, where Saab’s Trollhättan plant is located, meanwhile reported that workers had been told there would be no production for the remainder of the week.

Saab started up production again on May 27 after a hiatus of over seven weeks because suppliers had halted deliveries over unpaid bills.

On Tuesday, it stopped production “due to disruptions in the flow of material into the plant,” said Gustav.

“We have a just-in-time production process, so we don’t have large supplies of different components. We have just enough for the production line to flow effectively,” she said.

When the system works “it works very, very well. It is very lean and sophisticated (and) extremely cost-effective,” Gustav said.

The downside, she acknowledged, is that “it is very sensitive to disruptions… It could be that 99 percent of the components are all in place, but if there is a problem with one or two parts, the whole line can be disrupted.”

Asked whether a new drawn-out production halt should be expected, Gustav said: “I’m not going to make any predictions on that.”

“We’re working as intensively as we can on getting the production line restarted… It is priority number one for the whole company,” she said.

Some suppliers meanwhile are reportedly still waiting for payments from Saab, while one supplier that focuses almost uniquely on serving the carmaker, Lear, sent all its employees home with pay for the rest of the week.

“Everyone wants Saab to survive, but the doubters are many,” Svenåke Berglie, the head of another supplier, FKG, told the TT news agency.

“What worries people the most is that they can’t add up Saab’s maths, what kind of cash flow availabilty Saab has. Is the money enough? You have to start suspecting that it’s not,” he added.

The tiny, iconic Swedish brand Saab, which employs 3,800 people, was rescued at the last minute in early 2010 when tiny Dutch company Spyker bought it for 400 million dollars from US auto giant General Motors.

Spyker originally made luxury sports cars but said in February it was selling that division to concentrate on Saab, and on Tuesday, it announced the company was changing its name to Swedish Automobile.

After initial optimistic statements and production forecasts, Spyker and Saab have recently been scrambling to pull together enough cash to keep production going.

Saab said last month it had signed a deal to obtain last-ditch rescue funding from large Chinese distributor Pang Da Automobile, just days after a deal with Chinese car manufacturer Hawtai fell through.

Pang Da has under the redistribution deal agreed to buy Saab for up to €45 million ($66 million), which according to Gustav “goes a long way.”

She stressed that the carmaker also had a number of other projects in the

making that would also soon inject in fresh cash.

“We are doing a lot of work to strengthen the capital situation within the company,” she said, pointing out that Saab was waiting among other things for approval of a joint venture with Pang Da and for the green light on a renegotiation of a bailout from the European Investment Bank that will allow it to sell its real estate and lease it back.

“And we are having negotiations and discussions with a number of suppliers when it comes to various questions about payment terms,” she said.

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PRODUCTION

VW reaches supplier deal to resume production

German car giant Volkswagen said on Tuesday it has reached a deal with suppliers to begin deliveries again after a stoppage that forced the group to halt production at several plants.

VW reaches supplier deal to resume production
Photo: DPA

“The affected sites are preparing step-by-step to resume production,” VW said in a statement.

VW and suppliers Cartrim and ES Guss — which make seat covers and gearbox parts — had returned to talks on Monday after negotiations into the small hours of Saturday yielded no results

The VW statement added that both parties had agreed to keep details of the agreement secret.

Without a deal, VW had warned on Monday, around 28,000 workers at the six plants affected would have seen shifts cut.

Some had already lost hours since deliveries of the vital parts had been interrupted.

The car giant obtained court injunctions ordering the two suppliers to resume delivery in early August.

But they refused, saying that VW had cancelled future contracts without providing adequate compensation.

A spokesman for Prevent, the two suppliers' parent company, told business daily Handelsblatt on Friday that VW was imposing “unacceptable conditions” on its suppliers.

Politicians had added pressure on the two sides to reach a deal on Monday.

“This should not be an example for others to learn from,” warned Stephan Weil, premier of Lower Saxony state, as he welcomed the deal on Tuesday.

Lower Saxony is home to tens of thousands of VW workers at the group's Wolfsburg headquarters and is also a major VW shareholder.

Employees of the company “became victims of a conflict that was needlessly fought out on their backs,” Weil said.

Volkswagen, which also owns brands from luxury Audi to lower-end Skoda, is still in the throes of its biggest-ever crisis after it admitted in September 2015 to a massive emissions cheating scandal affecting 11 million diesel engines.

It has agreed to pay out $14.7 billion to settle damage claims in the US, although some analysts have estimated the final cost of the affair at $20-30 billion dollars as further claims roll in.

Shares in VW immediately jumped on news of the deal, gaining around 2.2 percent to 122.7 in morning trading in Frankfurt — outstripping the DAX index's gain of 0.65 percent.