Life & Style | Motoring
Volvo to reduce 8% of global workforce
Volvo Cars is cutting about eight per cent of its global staff in response to soaring raw material costs and weaker sales in the US and European markets.
- By John Reed and Robert Anderson, Financial Times
- Published: 23:41 June 29, 2008
Volvo Cars is cutting about eight per cent of its global staff in response to soaring raw material costs and weaker sales in the US and European markets.
The announcement yesterday came as Carlos Ghosn, Nissan's chief executive, said that his company was "preparing itself for the worst" in the US, and that total car sales there this year could fall well below 15 million.
Ghosn added that Nissan might need to raise the prices of its vehicles in Japan. Volvo's axing of 2,000 jobs is the largest in the history of the premium brand, owned by Ford Motor, and created a stir in Sweden, where other exporters have also been hurt by the weak dollar.
Volvo said that the cuts of 1,400 white-collar and 600 blue-collar staff were part of a cost-reduction programme aimed at improving its business by saving $662 million. The brand employs about 25,000 worldwide.
Volvo reported a net loss of $151 million in the first quarter of this year, compared with a profit of $94 million a year ago.
Volvo has been hit harder than most other carmakers by the weaker dollar because it produces no cars in the US.
The brand sold 458,000 cars worldwide last year and the US is its largest market. The pain at Volvo adds to mounting problems at Ford, which has abandoned pledges to break even next year and return to profit in 2010 due to a sharp fall in US sales of its large pick-ups and sport utility vehicles.
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