As part of an extensive cost reduction programme, Volvo is planning to reduce its workforce by 1,400 white collar (consultants included) and 600 blue collar members of its workforce. The company is today handing in a notice of these actions to the Swedish authorities (the Swedish Public Employment Service).
The notice includes 1,200 employees at Volvo Car Corporation in Gothenburg (1,105 employees), Volvo Car Sweden (45 employees) and Volvo Cars Body Components in Olofström (50 employees). Also, contracts with around 500 consultants will be cancelled. The company is also planning to reduce its workforce by 300 people abroad.
Negative currency effects, mainly due to the weak US dollar, and increasing raw material prices, have for a long time had a significant impact on Volvo Cars' financial situation. Previously, this had been balanced with the help of cost reduction and efficiency programmes. However, with a continued declining US market, continued price increases on raw materials, and weaker market conditions in Europe, the situation has deteriorated. This resulted in a financial loss for the first quarter of 151 million US dollars.
In order to improve the business, Volvo Cars is implementing a cost reduction programme which is estimated to reduce the total cost level by 4 billion SEK (approx. 700 million USD). Staff reductions are a part of this cost saving programme.
"This is an unfortunate but necessary action if we are to achieve a better financial position", says Fredrik Arp, President and CEO of Volvo Car Corporation.
"We must tackle the difficult market conditions, most of all in the US market. The US market contribution to cover Volvo Cars' costs is very small", Arp continues.
The third shift at the Volvo Cars Torslanda plant, with 600 employees, is part of the redundancy notice. The company has recently initiated negotiations with the union representatives. These negotiations are ongoing.
The formal notice to the authorities today marks the start of a process of reviewing the organizational structure which will continue throughout the autumn, and which will be in place by the end of the year. A number of activities will be carried out with various business partners to assist employees in finding alternative employment.
The purpose of these actions is to return to profitability. Volvo Car Corporation continues to invest in its leadership in safer cars with improved environmental performance, and with an attractive modern Scandinavian design language that meets the expectations of customers. The investments will be focused on a concentrated model lineup with, among other innovations, even more fuel efficient engines.
The strategy is to continue the successful growth in markets like Russia, China and Eastern Europe, but also maintain a strong position in the established European markets. For the US market, a selective strategy will be used in order to ensure improved profitability.
For further questions please contact:
Corporate Spokesperson Maria Bohlin +46 31-59 65 25
Senior Vice President Public Affairs Olle Axelson +46 31- 59 26 00
