Saab continues to downsize

Brand boss Augustsson hopes to return to profit by year-end

Trollhaettan, Sweden. Saab will continue to reduce its workforce as it tries to boost productivity and return to profitability.

"We need to let go several hundred workers until the end of the year," Saab boss Peter Augustsson said in an interview with Automobilwoche.

Approximately 6,300 people currently work for Saab, a division of General Motors Europe, in Sweden. That compares with more than 9,000 at the end of 1999.

Like last year there will be no early retirement programs or settlement payments. Staff is reduced solely through natural turnover and by not filling open positions.

Saab hopes to further increase unit sales in 2005. "Otherwise we will need to continue reducing the number of staff, as we have to improve our productivity," Augustsson said.

Saab plans to sell between 130,000 and 135,000 autos worldwide in 2004 (2002: approximately 130,000). The internal plan is to hit the 200,000 mark in 2006.

Augustsson's big hope is the American market, where Saab managed record unit sales of 48,000 autos in 2003.

Two new models that will only be available in North America should increase the unit sales figures: the 9-2X basic model and -- from spring 2005 -- the SUV 9-7X. The new 9-3 wagon will follow in mid 2005, a crossover called 9-6X and a restyled version of the 9-5 top model are to be launched in 2006.

"Our problem is that we do not have enough products and that our fixed costs are too high," Augustsson explained. He said that in 2003 Saab managed to reduce its structural costs by 20 percent or 163 million euros. The Saab boss expects similar cost savings for 2004.

Augustsson: "We stick to our target of returning to profit in 2004."

He did not disclose how high the losses were under U.S. GAAP accounting rules. According to a Swedish regulatory filing, Saab lost 4.8 million euros in 2003.

Augustsson said that Saab manages to increase productivity by 10 percent a year at the Trollhaettan plant. Last year 112,000 autos were built there.

"But that is not sufficient. Our aim is to become one of the best GM plants in Europe," the CEO said.

He also said that there is a "theoretical" danger of the plant being closed down. "This can not be ruled out. However, this applies to every single GM plant."

An expansion of production is also possible. "Our maximum capacity is currently 200,000 units. It would be possible to also manufacture models by other GM brands that share the architecture with the 9-3." Possible candidates would be the Opel Vectra successor and a planned Cadillac basic model.