In addition to the planned downsizing, the company plans to eliminate 300 white collar positions overseas.
A contract with around 500 consultants will also be terminated, according to the company.
The redundancies includes 1,105 people at Volvo Cars in Gothenburg, 50 people at the Olofström body component manufacturing facility, and 45 people from the Volvo Personbilar Sverige marketing company.
The third shift at the Torslanda factory near Gothenburg, which includes 600 people, is included in the notice.
When staff was informed of the move, production at the Torslanda factory stopped for six minutes.
Employees took the news hard.
“People are worried that we are next. This is anything but a normal situation for us at Volvo Cars. Now management is clearly taking a tougher line,” said Mikael Sällström, head of the IF Metall union branch at Volvo Cars, to the TT news agency.
The reduction in personnel ranks by 1,400 white collar workers (including consultants) and 600 workers employed under a collective wage agreement is part of a large cost savings program which is designed to reduce costs by 4 billion kronor ($661 million). The program will include additional staff reductions.
Additional work to overhaul the organization will continue through the autumn and is expected to be completed by the end of the year.
Among other things, Volvo plans utilize various partners in order to encourage staff to quit voluntarily or seek positions with other employers.
“We have to meet these worsening market conditions, primarily in the American market. The market’s contribution to covering Volvo Cars’ total costs is, at the present time, too little,” said Fredrik Arp, CEO for Volvo Cars, in a statement.
He sees Wednesday’s decision as a “difficult but necessary measure to reach a better financial position”.