The value of the dollar is being given as one of the main reasons behind the package of savings which was presented on Tuesday, but the rising cost of raw materials and oil are also playing a part. Nor is the situation helped by increasingly fierce competition, above all in the US.
“In a few years we’ve dropped around four billion kronor as the rate of the dollar has sunk from 10 kronor to 7.5 kronor,” said Volvo’s head of information, Olle Axelson to TT.
It has been golden times for Volvo since Ford took over in 1999, delivering multi-billion kronor profits to the new owners.
But the success has, according to Axelson, led to certain areas of production becoming bloated.
Within four to six weeks – and after consultation with the unions – he reckons that the company will be able to clarify how and where the redundancies will be implemented.
Volvo Cars has almost 28,000 employees around the world, of which some 20,000 are based in Sweden. The majority are in Gothenburg and that’s where most of the cuts, which will affect all levels of staff including consultants, are likely to occur.
“We still don’t know where they are thinking of cutting back,” said Mikael Sällström, chairman of the Metall union within Volvo.
“They are talking about 400-500 Metall jobs being in danger but where they’ll take them from is unclear. Is it in Ghent in Belgium, in Skövde or in Gothenburg?”
2004 was a record year for Volvo, with sales of around 456,000 cars.
The company invests 10-15 billion kronor every year in systems and product development. It is partly to allow continued investment in these areas that the company says the cost-cutting is necessary.