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Volvo plans 1,620 layoffs

Volvo Group has given notice to 1,620 workers in Sweden, the company announced on Tuesday afternoon.

Published: 13 January 2009 13:41 CET

Volvo plans 1,620 layoffs

Volvo Trucks’ Umeå plant is set to be hardest hit, with 670 proposed new job cuts adding to the 500 jobs already slashed at the facility in recent months. The truck maker has also given notice to 350 workers at its Tuve plant.

The firm’s plant in Gent in Belgium is not reported to be affected.

“For us in Umeå this is a major blow. In one year we have gone from 2,250 employees to around 1,000, if this third notice is put into effect,” said metalworkers union Jan-Olov Carlsson.

He considers the distribution of the cuts across the company’s facilities as totally unacceptable and called on the government to act to save current skills and expertise at Volvo Trucks.

Volvo Powertrain has also given notice to 400 workers in Skövde and 200 employees at its Köping plant.

Sweden's Volvo regains strength after pandemic puts brakes on earnings

Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

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