The Norwegian government won’t save the the troubled car manufacturer. At least not directly.
"There are many companies that are in a demanding financial situation because of the financial crisis," Deputy Minister of Trade and Industry Rikke Lind told Reuters.
"The government cannot go in on the ownership side or provide loans to specific companies in today’s situation," she said.
But there is some hope for THINK:
The government has approved an increase in loan support for Innovasjon Norge, an organisation fostering small- and medium-sized companies, by 1 billion crowns to 2.5 billion, in effect from Jan. 1, 2009, from which Think could apply for loans.
It ain’t looking good, but there’s a small chance of survival.
The history of the Norwegian car industry is not particularly bright. Unlike most of the rest of the countries in Europe, the Norwegians never really made cars. The most famous attempt was the Troll, but only five ever made it off the assembly line. Interestingly enough, treaties protecting Norwegian fisheries basically killed the auto industry.
In the last decade or so, however, the industry has had a bit of a revival with electric cars. The most successful is the Buddy, a limited range car that is so tiny it can be parked perpendicular to the curb in parallel parking places. The factory has a production capacity of 500 cars a year and is available only in Norway, but sales seem to be on the upswing.
The most highly anticipated, however, is the TH!NK, a crash-tested and highway-certified electric car. It goes significantly faster than the Buddy and has up to 5 times its maximum range. Unfortunately, its plans for a worldwide rollout in 2009 look to be in lots of trouble:
Think Chief Executive Richard Canny told a news conference that the company was halting production and seeking state aid, warning that it would probably not survive without that assistance.
"We would not have taken these actions if it was not serious," he said on Monday, adding that the firm would need up to 200.0 million kronors in the short term through guarantees. The firm will lay off up to 70.0% of its staff and had hoped to restart production of its car, Think City, in the first quarter of next year.
Perhaps my headline is a bit pessimistic, but if I worked at the Buddy plant, I wouldn’t feel to comfortable with my job security. But it will be interesting to see if the government decides to give Think the money its asking for. In the current economic climate, it seems like a fairly high risk loan, yet the Norwegian government has proven that it is not adverse to owning significant stakes in Norwegian companies.