The New York Times today reports on the Swedish Government's refusal to bailout iconic automaker Saab. Sweden, often hailed by the left as a model social democracy, is renowned for it's generous welfare state. It's interventionist model of dealing with banking crises - essentially nationalizing banks and pumping cash into them before selling - has been much discussed on this side of the Atlantic lately. So the decision (albeit coming from a more conservative government) to hang Saab out to dry is surprising, and will have a deep impact in parts of southwest Sweden where the carmaker dominates the economy.
Saab is owned by GM, and some are questioning whether their influence has been beneficial. The criticisms echo the ones we've heard on Sunday morning talk shows here: That GM has failed to innovate or keep pace in a competitive market. Is poor management in Detroit now having an impact on Sweden? From the NYT:
Saab was always known for its innovative engineering. But analysts say that in recent years, with General Motors’s emphasis on volume rather than individuality, it has lost its edge. “Under G.M.’s ownership, they denuded the intellectual content behind the brand,” said Peter Wells, who teaches at Cardiff Business School in Wales and specializes in the automotive industry. “Its products are not exciting enough, and Saab doesn’t have a strong brand identity anymore.
Swedish officials...have also been scathing about General Motors, Saab’s owner, and the last thing they want is to seem to be bailing out a despised foreign company. Struggling for its own survival, GM has said it will completely pull out of Saab by the end of 2009, a course that Ms. Olofsson, the enterprise minister, described as tantamount to declaring “that they wash their hands of Saab and drop it into the laps of the Swedish taxpayers.”
Ouch. GM execs might want to postpone their Swedish vacations for the time being.