Volvo to cut 1,400 staff at European truck plants

Vovlo said that the global financial turmoil has resulted in the company’s clients becoming more conservative in replacing their vehicles and that “some are not being granted loans to finance new trucks.”

The Associated Press

9/30/2008

STOCKHOLM, Sweden — Swedish truck and bus maker Volvo AB announced Tuesday it plans to lay off around 1,400 workers at truck plants in Belgium and Sweden to adjust to falling demand in the European market.

The company said the cutbacks will affect its plant in Ghent, Belgium, as well as two Swedish plants in Gothenburg and Umea.

Talks with appropriate unions will start “immediately,” it said.

Volvo also said it would introduce a cost-reduction plan to meet the declining sales levels and higher raw material costs.

“The European truck demand is now slowing,” it said. “The negative market development has been accentuated by the recent events in the financial markets resulting in financial uncertainty and credit restrictions.”

It added that the global financial turmoil has resulted in the company’s clients becoming more conservative in replacing their vehicles and that “some are not being granted loans to finance new trucks.”

Volvo said the layoffs and the cost-cutting would help rebalance its production capacity “to more normal levels.”