Göteborg, Sweden – Volvo has announced that it is cutting 2,000 jobs worldwide as part of an extensive cost reduction program. The move will affect 1,400 white-collar and 600 blue-collar jobs in Sweden.
The notice includes 1,200 employees at Volvo Car Corporation, 45 employees at Volvo Car Sweden, and 50 employees at Volvo Cars Body Components. The company will also cancel contracts with approximately 500 consultants, and plans to reduce its workforce by 300 people abroad.
The company attributes the job cuts to negative currency effects, mainly due to the weak U.S. dollar, and increasing raw material prices which it said “have for a long time had a significant impact on Volvo Cars’ financial situation.” The company reported a financial loss of US$151 million in the first quarter of 2008. The company is implementing a cost reduction program which is estimated to reduce the total cost level by approximately US$700 million, with staff reductions as part of the program.
“This is an unfortunate but necessary action if we are to achieve a better financial position,” said Fredrik Arp, president and CEO of Volvo Car Corporation. “We must tackle the difficult marked conditions, most of all in the U.S. market. The market contribution to cover Volvo Cars’ costs is very small.”
The company said its strategy is to continue the successful growth in markets such as Russia, China and Eastern Europe, to maintain a strong position in the established European markets, and in the U.S. market, to implement a selective strategy in order to ensure improved profitability.