Saab automobile of little importance to Sweden so it can collapse and that have no effect on its economy
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Wednesday, 22 June 2011
Saab Automobile's impact on the Swedish economy is limited and its value is only 0.11 percent of Swedish GDP. Therefore as Saab is dragging its feet in despair, it’s collapse will means nothing to the Swedish economy.
Well, this is the view the Swedish economic think thank, the Nation institute of Economic research (NIER) in an assessment or what makes sense in the Swedish economy.
This just confirms the attitude of the Swedes in which they discourage risk taking which is the force beside innovation and redevelopment and, or, they encourage only big successful companies that have grown in other parts of the world and then they can come to Sweden and use Sweden as another place where successful international conglomerates harbour.
The Economic Research institute has been calculating Saab Automobile's direct and indirect effects on the Swedish economy and concluded that its significance is limited.
"The projected importance of Saab's production for the Swedish economy is dependent on the import share that is adopted. The result shows that even in the calculation with low import content will the impact on the Swedish economy so small, "writes the body.
The total value added generated by Saab Automobile in 2010 was estimated at Skr3.1 billion, 0.11 percent of Swedish GDP. Number of jobs generated were calculated for 6800, 0.15 percent of total employment in Sweden.
An alternative calculation, with higher import share, estimated that Saab Automobile in 2010 generated 0.06 percent of GDP and employed 0.10 percent of the workforce.
But while the car manufacturer's importance to the Sweden as a country is limited, its importance to the regional and local levels is great.
In 2010 Saab's employees were about 12 percent of total employment in Trollh�ttan and barely 0.5 percent of employment in the West Sweden County.
The institution also calculated Saab Automobile's impact on the Swedish economy in 2012 with the assumption that the company achieves its sales target set at 80,000 cars. In the scenario, where was still low import share, Saab Automobile, would generate 0.22 percent of GDP and 0.19 percent of the workforce in Sweden. In the scenario with high import share, the company will generate 0.15 percent of GDP and 0.12 percent of the Swedish workforce.
In an analysis from the April Nordea pointed that that a bankruptcy of Saab Automobile would provide a short-term effect on GDP growth of no more than 0.1-0.2 percentage points.
Saab Automobile and the owner of Spyker have acute financial problems and the factory in Trollh�ttan has stood still for about ten weeks.
Well the question some people are asking after this study is whether there is a conspiracy to eliminate Saab from the Swedish industrial site. This not the first time Saab has had problems although this time its factory have been closed for long. No study was carried out about the viability of the company when it was run under General Motors (GM). Why? Because GM absorbed all the costs and kept on pumping additional money into the unprofitable project. This action by GM is what made the GM almost collapsed in tow years ago and only the Obama administration’s bailout funds brought the company back to life.
Saab’s people had accused the Swedish government and similar institution of wanting to eliminate Saab based on the way the government and those types of institutions have been acting towards the company’s problems.
Saab’s management might have acted weakly and poorly in forecasting their operation’s financial needs. Had Saab’s management behaved reasonable – with proper management foresight, they would have notice long ago that the company would need extra capital and could have started looking for money there limiting its negative PR which is now raging in the Swedish press.
Therefore instead of analysts and all the intelligent institutions in Sweden coming up to look at how Saab can survive and continue growing, so that it could add maybe 2, 3 or 5 percent into the Swedish GDP what happens how is all negative examination and already the writing of the company’s epitaph.
Our own question is “how do companies grow?”
By Scancomark.se Team
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