Sweden says no to GM; why don’t we?
Automakers, it turns out, really can go bankrupt. It’s just happened in Sweden to Saab, a subsidiary of General Motors. A company statement says the move will allow Saab to “continue business as usual” and create a “truly independent entity that is ready for investment.”
The refreshing thing here is that the Swedish government didn’t rush in to prevent the bankruptcy. Here’s what a government spokesman, Frank Nilsson, told Forbes:
We have ruled out to go in as owners or taking any shares of Saab. We don’t believe in their business plan. We are careful with taxpayer’s money, and taxpayers in Sweden don’t want to own car factories.
I suspect that most U.S. taxpayers don’t want to own car factories either, let alone subsidize the generous pension benefits that the Wall Street Journal’s Paul Ingrassia wrote about yesterday. As I and others have written, a Chapter 11 bankruptcy filing would be the best way to solve GM’s deep-seated problems. My betting is that when Saab is reorganized and back on its feet, its old parent will still be struggling and dependent on government aid.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
Couldn’t have said it better myself David, so I won’t try.
A case worth studying is MG Rover, in the UK. Many of the same arguments, much of the same brinksmanship. But in the end the government said no bailout, and Chinese companies wound up with most of it.
I am once again amazed at the Anti-American business slant Mr. Nicklaus continues to voice in this column. First, it was A-B, and how bad it’s business was, and what a cheap dividend it had. Then he acted suprised when he realized how much of a profit A-B made in China! Then found out about other great investments A-B had, wow! A solid American Company. Gee, I would love to have that dividend now. So, a few folks made a lot of money selling out A-B, and stole long time stockholder and employee equity, and that seems to be ok with Mr. Nicklaus. A-B ran itslef the old fashioned way, little debt…mmmmmm
Now what do we have, a lot of people in the U.S.A. that are out of a middle class job, and now, instead of adding to our tax base, are taking from it. Many more to come as INBEV sharpens its knife.
Now comes General Motors. Have we forgot about Chrysler? The government, and the American tax payer, made out nicely with that bailout. I am not thrilled with bailouts of any kind, however, sometimes not doing so would be worse. The end result, if we did nothing, would be a huge hit on ……the middle class. THey are the ones that would not only sustain the loss of a job, but benefits and a quality retirement. If I recall, you were all for the bank bailout, and the TARP money helped no one but the banks. That bailout had no strings, mmmmm. If you are not happy with a government subsidy for the auto industry, maybe we should have the government pull all subsidies starting with all of the farming subsidies in the Show Me State!
I am not standing up saying that GM has been run well, mistakes have been made on management as well as the union’s side. However, a lot of the blame can be put on a do nothing Congress and the lobbies that have not forced American car companies to change. That, to me, is why the government MUST give these folks a hand.
Sean , Couldn’t have said it better- so I won’t
Blaming a do-nothing congress for an auto company’s mistakes? That’s a little silly. It is not up to congress or our government to force any company to change. That is not why we have a government, and it’s not their responsibility. In this country, businesses succeed or fail on their own merits (at least they used to). In the long-run, it wouldn’t be a bad thing to let GM fail if it continues down the wrong path.