When suppliers don’t get paid a vicious circle begins of : lack of cash >> unpaid dues>> lack of some critical supplies>> reduction of production>> stoppage of other supplies>> diminishing of trust>> withdrawal of credit >>leading to a further lack of cash. After years of living from hand-to-mouth but still producing what I consider one of the best cars on the road, SAAB automobile may now be approaching a fateful point in an illustrious history.
There are worrying signs that came out from Saab Automobile on Tuesday night. Saab may have suffered an acute liquidity crisis. Saab production, according to several sources came to a standstill on Tuesday because suppliers were not paid. Even union IF Metall’s Chairman Hakan Skött confirmed that production had stopped. And then came the news at 8pm on Tuesday night, that Saab’s advertising agency Lowe Brindfors had suspended their ongoing engagement due to nonpayment.
In recent weeks, warning bells have been ringing louder and louder. Saab’s new CFO quit before he even had time to start. And one of Saab’s heaviest funders, Pieter Heerema, who had lent 25 million U.S. dollars, recently abandoned Spyker’s board with immediate effect.
And then the CEO Jan Ake Jonsson left, oddly enough just last Friday after Spyker came up with its report – even if is due to stay until May on paper. But the issue of of Saab’s liquidity has become serious just recently. When I asked the chairman Victor Muller last Friday in connection with the report whether Saab has enough capital to pay bills this year, he replied that “probably not”. The report also described that liquidity is lower than expected. But Muller was talking in his characteristically intense way that they will find solutions – including selling their new platform Phoenix to other automakers.
But the signals that came in Tuesday night are very worrying.
Saab could choose to put a lid on it.
It would be of great regret if SAAB Automobiles went bankrupt. But perhaps SAAB have had their day and it is time to move on.
The k2p blog 