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Sweden Says No to Saving Saab

Saab Automobile may be just another crisis-ridden car company in an industry full of them. But just as the fortunes of Flint, Mich., are permanently entangled with General Motors, so it is impossible to find anyone in the city of Trollhattan, in southwest Sweden, who is not somehow connected to Saab.

Which makes it all the more wrenching is that the Swedish government has responded to Saab’s desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, “The Swedish state is not prepared to own car factories.”

Such a view might seem jarring, coming as it does from a country with a reputation for a paternalistic view of workers and companies. The “Swedish model” for dealing with a banking crisis—nationalizing the banks, recapitalizing them and selling them—has been much debated lately in the United States, with free-market defenders warning of a slippery slope of Nordic socialism.

But Sweden has a right-leaning government, elected in 2006 after a long period of Social Democratic rule, that prefers market forces to state intervention and ownership. That fact has made the workers of Trollhattan wish the old socialist model were more in evidence.

“I don’t think the government knows the situation in this town, how many people depend on Saab,” said Therese Doeij, 25, a clerk at a photo shop who has several friends who work at the company. “To them it’s just a factory. They don’t see the people behind it.”

Governments all over the world are confronting the disintegration of the global automobile market in different ways, with loans, bailouts and takeovers.

But Sweden’s approach has been particularly hard-nosed, and particularly unequivocal.

Why is the government apparently dead set against helping Saab, an iconic brand that stands as a global symbol of Sweden, with Ikea, Volvo and Abba?

That is what Paul Akerlund, the local chairman of the automobile workers’ union, wonders.

“I’m a little surprised,” he said. “They say the market should help itself, but the market has collapsed around the whole world. It’s an extraordinary situation.”

He added, with a note of accusation in his voice, “In Germany, France and England, the government is going in to help the car manufacturers.”

Swedish officials have condemned what they see as protectionism by other European countries that have pledged to prop up their own failing car industries. They have also been scathing about General Motors , Saab’s owner, and the last thing they want is to seem to be bailing out a despised foreign company.

Struggling for its own survival, GM has said it will completely pull out of Saab by the end of 2009, a course that Ms. Olofsson, the enterprise minister, described as tantamount to declaring “that they wash their hands of Saab and drop it into the laps of the Swedish taxpayers.”

She said: “We are very disappointed in GM, but we are not prepared to risk taxpayers’ money. This is not a game of Monopoly.”

Saab lost about $343 million last year. It is now going through a Swedish process known as reorganization, a step short of bankruptcy, as it tries to persuade its creditors to prop it up while it looks for a buyer. Joe Oliver, a spokesman, said in an interview that “around six serious investors,” from Sweden and abroad, had expressed interest.

Time is running out.

But the prospect of failure is too awful for Trollhattan’s mayor, Gert-Inge Andersson, to even contemplate. In a city of about 54,000 people, Saab employs 4,000.

“I’m being optimistic, because I can’t envision a time when Saab doesn’t exist,” Mr. Andersson said in an interview in City Hall.

His son worked at Saab for a decade; his daughter’s boyfriend works there now. “Saab is our identity,” he said. “We have lived with it for many years, and it’s very important to all of us.”

Saab was always known for its innovative engineering. But analysts say that in recent years, with General Motors’s emphasis on volume rather than individuality, it has lost its edge.

“Under G.M.’s ownership, they denuded the intellectual content behind the brand,” said Peter Wells, who teaches at Cardiff Business School in Wales and specializes in the automotive industry. “Its products are not exciting enough, and Saab doesn’t have a strong brand identity anymore.”

The numbers speak all too loudly. Saab sold just 93,295 vehicles worldwide last year, 21,383 of them in the United States. As global demand plummets, the expectations for this year are even more dire. The company announced this month that it planned to lay off 750 workers in Trollhattan.

This is not a rich city. Besides Saab, the largest employer is the municipal government. The houses run mostly to modest wooden two-story structures and low-rise brick apartment buildings. But about 40 percent of the people here drive Saabs, Mayor Andersson said. On a cold evening last month, 3,000 people held a torchlight ceremony to show their support for the company.

Leave the tourist office and you come immediately to the Saab Museum. A shining, sparkling valentine to a company and an industry, it features treasures like the groundbreaking turbo engine unveiled at the 1977 Frankfurt automobile show, and the prototype of the very first Saab car, from 1947—Ur-Saab, its license plate says proudly. All the cars here, even the rarest and most precious, are still driven from time to time by enthusiasts.

Some 50,000 tourists visit each year, said Ola Bolander, who works at the museum. Saab sponsors a festival for its fans every other year; 20,000 came to the last one, in 2007. “Saab has always been a bit different, a bit more interesting,” Mr. Bolander said. “It’s gone its own way, and it’s in the heart of the Swedish people.”

Sweden has nine million people. Labor leaders say Saab’s collapse would disproportionately affect southwest Sweden, an industrial belt that is also home to Volvo. But it would reverberate through the rest of the economy, which depends heavily on industrial exports, jeopardizing perhaps tens of thousands of jobs.

Sweden is famous for its generous unemployment provisions, which include retraining for laid-off workers. But unemployment is quickly rising. Tomas Eneroth, a member of Parliament and the spokesman for industry and trade for the opposition Social Democrats, said the government’s tough line was foolish.

“The fact that they are so passive,” he said, “is every day now making it worse and jeopardizing the possibility of having Saab still in Sweden.”

Around the corner from City Hall, Johann Riden, a sales clerk in an electronics store, said about half his customers worked either at Saab or at companies that do business with Saab.

“I have friends there, my colleagues have family there, and my friends have family there,” said Mr. Riden, 32. “If you look around, you see Saab everywhere.”