Valmet and Mercedes have announced that production of the M-B GLC SUV will increase at their Uusikaupunki plant. This is to make room at Benz’s Bremen plant which is already completely busy making GLCs.
Production of the A-class at Valmet will move to Germany. Valmet will make as many GLCs as they did A-classes so it’s a production swap rather than an increase. The change will result in an increase in labour requirements at Valmet.
As well as being an endorsement of Mercedes product plans and design (which we here at DTW are rather critical), it also makes one think about the fate of Saab in Trollhattan. One of the arguments against Saab was the cost of Swedish labour. Finnish labour is not exactly cheap, probably more expensive than Swedish labour and Finland is also hardly well-placed geographically. Yet Valmet is able to competitively manufacture the GLC and allow Mercedes to sell them at a profit.
Saab had a lot of problems such as a tricky place in the market and a small portfolio of models. Labour costs and geography probably didn’t help. However, Valmet´s ability to deal with geography and labour points to Saab’s problems really being about management. In theory Saab had the worldwide resources of GM to draw on which gave is scaling economies equivalent to Mercedes. The GLC is, after all, a variant of the of A-class just as latter-day Saab’s were based on GM vehicle architecture.
What I am arguing for here is that Valmet’s ability to make one model of car indicated that Saab could easily have survived making a few models and not necessarily in the volumes that were supposedly required. It might have been a separate brand but in truth Saab’s few models were no different from other GM cars than Mercedes Benz’s GLC is from other Benz vehicles. If Benz can make a living selling 350,000 GLCs a year, so Saab could have done equally well in Trollhattan making 250,000 9-3s and 250,000 9-5s. That they never got near those numbers has more to do with poor management than the costs of doing business in Sweden.