Saab Auto Closing Plant, Cites Per-Car Loss of $18,000

Saab Automobile today said it is closing its 18-month-old model production plant after losing more than $18,000 on each car it made.

Saab Automobile, a joint venture with U.S.-based General Motors Corp., suffered a loss of more than $840 million in 1990.

Some of the 770 factory workers and 100 administrative personnel will be transferred to Saab’s aircraft division. Others will be given the opportunity to move from Malmo, in southern Sweden, to the Trollhattan auto plant in western Sweden.

The Malmo plant, to be closed in the spring, was decorated with waterfalls and scenic-view escalators and hailed as a new model for car production when it opened. Assembly lines were abolished in favor of work groups of 10 to 15 employees building each vehicle.

According to the Swedish business daily Dagens Industri, Saab Automobile lost $18,180 on every car it produced at the Malmo factory.

Saab Automobile, formed in late 1989 as a joint venture between Saab Scania and General Motors, incurred an $843.6-million loss in 1990, the company said.

In its earnings statement for 1990, Saab Automobile said sales fell 5% to $2.67 billion from the previous year.

About a month ago, the venture estimated that the number of cars sold had fallen to 93,200 in 1990 from 109,483 in 1989.

In the United States, sales plunged to 1,023 cars from 1,957 in 1989.

The company had instituted four-day workweeks last year to reduce annual production by 2,500 cars and had started negotiations in January to continue the practice.

The plant closing was another step toward adjusting production to the lower demand, it said.

Saab Automobile said the declining value of the dollar over the last year accounted for $54.5 million of the losses.

The company called 1990 a difficult year and said it doesn’t expect much improvement in 1991. It anticipates that the slowdown will be accelerated by the Gulf War and damage the company’s important Nordic and U.S. markets.