GM's Saab Unit Planning to Restructure as Losses Mount

Detroit November 19, 2002; Dow Jones reported that Saab facing mounting losses, is planning a major restructuring, including job cuts and a ratcheting down of the quirky luxury brand's expansion dreams, Tuesday's Wall Street Journal reported.

Saab's losses are likely to total several hundred million dollars this year, according to people familiar with the situation. Saab's worsening results are the main reason why GM's European unit won't make its original target of halving losses to $350 million this year, these people said.

GM still expects the European unit, which also includes the much-larger Opel, to do better than the $767 million loss reported for 2001. GM doesn't break out detailed financial results within its European unit. Opel, facing slumping sales and bloated costs, is in the midst of a major turnaround of its own.

To speed the restructuring at Saab, GM has sent in new senior managers to the Swedish unit. Saab is preparing to slash its work force and overhaul all aspects of its operations, from development and production to sales and distribution. The company hasn't determined the number of jobs to be eliminated, but outlined the scope of the restructuring in a letter to employees Friday. Saab employs just under 10,000 workers, 8,500 of them in Sweden.

As part of the plan, Saab is cutting back its aggressive targets for expanding sales and opening lavish new dealerships in major cities, although officials said plans for adding new models to the lineup remain on track.

Automotive News reported on Saab's restructuring plans Monday.