Sweden unveils $3.4 billion aid plan for auto makers

Sweden's government announced their own auto industry bailout today. The deal, worth an estimated 28 billion kronor ($3.4 billion), consists of emergency loans, funding for research and development, and a credit line.

The news comes on the heels of an announcement by a coalition of engineers from Volvo and Saab calling for a merger of the two companies. A merger could only take place if Volvo and Saab were dumped by their respective parent companies, Ford and GM.

Both American companies have considered selling off their Swedish divisions as of late.

Now, the Swedish Government and employees of the two units are looking for a way out from under the thumbs of their financially toxic parents. The government says the funding is necessary to ensure "the continued success of the Swedish automotive industry," despite the worsening crisis. The plan also calls for faster development of alternative fuel and fuel efficient technologies. Sweden does not wish to nationalize the brands.

Meanwhile, Magnus Sundemo and Håkan Danielsson, representatives of the automakers engineers, wrote an item in the Svenska Dagbladet newspaper claiming Saab and Volvo have "complete development organizations" to produce and develop vehicles on the global market, independent of their American parent corporations. Together, they say, the two companies are large enough "for basically all components which go into determining a competitive manufacturing price." At the same time, they have also derided their parents, saying the scale advantage brought to the table by GM and Ford were an overstatement.

On new ownership, the two wrote, "The search for a future owner must be directed toward a solution by which industrial know-how and capital generated in the Nordic region and where both brands are retained in a new, common company.”

Sweden's bailout proposal from the center-right government still requires the approval of legislators.