Sweden Won't Put Public Funds Into Volvo, Saab

Ford wants to sell its Swedish subsidiary Volvo, which has been suffering as a result of the global downturn in auto sales. GM is selling Saab. The automakers are major employers and industrial icons in Sweden. Unlike comparable situations in the U.S., the Swedish government says it is not willing to invest public money in trying to save the companies.

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Cadillac is having an especially hard time because of GM's decision last summer to pull back from the financing business. The lack of financing has hurt the brand's overall market share. Despite the downturn, rivals like BMW and Audi have gained ground this year.

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A couple of other car companies that have been hit hard by the recession are Volvo and Saab. Both are Swedish brands bought by U.S. carmakers, though Ford and GM are now trying to sell them. Ironically, while the U.S. government has spent huge sums bailing out its carmakers, the Swedish government, which has a long tradition of state intervention, is now refusing to help its auto industry.

Jerome Socolovsky reports from the Swedish city of Gothenburg.

JEROME SOCOLOVSKY: It is remarkable that a country with just nine million people has two car brands, Saab and Volvo, as well as two truck brands. And the made-in-Sweden label sells here.

I'm standing in the center of town in Gothenburg and let's see what kind of cars are passing by. There's a Volvo, a Volvo, three Volvos in a row. Here comes another Volvo. There's a VW and a Renault.

These vehicles were made a few miles away at the Torslanda assembly plant, the main Volvo factory in Sweden. That's where the carmaker manufactures its larger model sedans, station wagons and SUVs.

Robotic arms bolt tires on to a new line of cars with speed and precision. It's a sight that would make anybody who's changed tire themselves intensely jealous. But things are not going well. Volvo has laid off thousands of workers this year and the plant's output has been drastically cut back.

SOCOLOVSKY: Still, Volvo is in relatively good shape compared to Saab. Its workforce is about a quarter of what it was just a few years ago. Saab's owner, General Motors, is trying to sell the company to a tiny outfit called Koenigsegg, which makes high-priced sports cars. But Sweden has a right-wing government now which has refused to finance the deal.

Mr. HAKAN MATSON (Automotive Editor, Dagens Industri): Normally the tradition, as we know, of course, the government would be putting money here in some support.

SOCOLOVSKY: Hakan Matson is automotive editor at the business newspaper Dagens Industri. He says Sweden learned a lesson when it tried to save the country's shipyards back in the '70s.

Mr. MATSON: It was a fierce competition from Korean and Japanese shipyards. But still, the government said we need them to survive. We need to put in money, and they put in a huge amount of money. And finally, they all fell down anyway, so we don't have any shipyards left in Sweden.

SOCOLOVSKY: Since then, he says the Swedish way has been for the state to intervene with retraining programs aimed at helping workers rather than rescuing companies.

But for unemployed autoworkers like Magnus Hanson(ph), recently laid off from Volvo, the outlook is still bleak.

Mr. MAGNUS HANSON: Of course, I'm worried because I have a son and I need to take care of him and still I look for jobs every day in the Internet and call my friends and talk to other people to find out ways to find different jobs, but it's - the market is really, really dead.

SOCOLOVSKY: He says Sweden is out of step with other car-producing nations.

Mr. HANSON: If you look all over Europe and in USA, the government is helping out the car industry to support. But here in Sweden, they just lay down flat and they don't do anything, and it feels a little bit like they're giving away our industry to other countries because if we don't do anything here, the industry will for sure move to other countries.

SOCOLOVSKY: Enter the Chinese. A few weeks ago, Koenigsegg said it would sell part of Saab to a Chinese firm in a deal that could eliminate the need for state aid. There have also been reports of a possible Chinese bid for Volvo.

Alexander Shusha(ph) of the IF Metall Industrial Workers Union says he's not so concerned about foreign ownership or state control as long as the jobs stay in Sweden.

Mr. ALEXANDER SHUSHA: So we're not that ideologically bound. We think that we should do the right thing, and it doesn't matter who does it.

SOCOLOVSKY: Swedes have had more than a decade to get use to foreign ownership of their carmakers. And aside from the laid-off workers, few people are criticizing the government's reluctance to prop up Saab or Volvo.

For NPR News, I'm Jerome Socolovsky in Gothenburg.

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