Electrolux CEO Hans Straberg is taking a hard line against bailouts, telling CNBC that failing companies should not receive any more help from governments around the world.
“Let the businesses that are not fully functional, let the weaklings go in this, don’t prop them up,” he said. “I understand it’s difficult to distinguish sometimes between good or bad businesses, but make sure that those who are not surviving the winter don’t survive and instead focus on those who have the strength to grow bigger and stronger internationally.”
Straberg added that “We see in our industry that there are some companies that have been loss-making for years, are now propped up during this with emergency loans.”
But Straberg brings up a few key points about the problem with bailouts.
By providing financial support to failing companies, you put companies that have been mismanaged at an unfair advantage by a cash injection to correct their errors. And, where is the sense in propping up businesses that are, effectively, bankrupt?
However, things are not just that simple as any government will consider the financial implications in people that worked for these companies becoming a drain on resources if plants close, balanced against the cost of keeping them open and people in employment.
Although Straberg didn’t name and specific companies to avoid making enemies, it’s not difficult to see who he’s talking about.
Fisher & Paykel have been linked to talk of government aid in New Zealand, Gorenje have requested government help, Antonio Merloni has received loans from the EU and so on.