Volvo to cut more than 1,500 jobs as markets weigh
World number two truck maker Volvo said on Wednesday it would cut a further 1,543 jobs at the group as it sought to adjust to plummeting demand across all its main markets.autos Updated: Apr 22, 2009 15:40 IST
World number two truck maker Volvo said on Wednesday it would cut a further 1,543 jobs at the group as it sought to adjust to plummeting demand across all its main markets.
Volvo said in a statement employees at its Volvo Trucks, Construction Equipment, Penta and Powertrain units would be affected by the lay-offs. "As a result of the sharp decline on world markets for heavy vehicles, the Volvo Group is being forced to implement new personnel reductions within its Swedish operations," the company said in a statement.
Volvo shares were up sharply already ahead of the news amid broad gains in the Stockholm equity market. At 0938 GMT Volvo shares rose 8.8 percent to 53.75 crowns.
The job cuts announced on Wednesday come on top of the thousands of staff the company is already in the process of laying off in order to come to grips with the sharpest decline in heavy-duty truck markets in living memory.
A Volvo spokesman said the job cuts would reduce costs, but declined to give any specific figure for the savings."It is no huge surprise that they make further cuts but it underlines how bad things really are," said an analyst who asked not to be identified. "The previous wave of cuts came in October and this clearly shows that things have not improved since then."
Volvo, which manufactures heavy-duty trucks under the Renault, Mack, Nissan Diesel and Eicher brands, as well as its own name, said it was also discussing the possibility of introducing a shortened work weeks with unions.
Plunging demand and the resulting overcapacity led the Swedish company to report a pretax loss in the final quarter of last year and many analysts see the company staying in the red throughout this year. "The truth is that if the company is to survive, it must push down costs. But if they do this early enough, and powerfully, they can definitely survive on their current balance sheet," a second analyst said.
Volvo reports its first-quarter results on Friday.