Volvo to Lay Off 5,300 Workers

GOTEBORG, Sweden — AB Volvo has decided to cut 5,300 jobs worldwide, including about 1,000 in North America, according to Stefan Lorentzson, spokesman for subsidiary Volvo Truck Corp.

The cuts are not the result of falling sales or other problems with growth — instead, the positions are no longer needed, Mr. Lorentzson said. In fact, he said, Volvo is enjoying a good year, particularly in the truck division, which increased sales by 26% through the first nine months this year and had operating profits of $248 million, more than it made in all of 1997.

The bulk of the layoffs, which are expected to lower the Swedish company’s annual costs by about $370 million, will occur in its four major divisions. The car division will shed 1,900 jobs, the truck division 1,000, buses 900 and construction vehicles 900. Volvo Construction Equipment will divest the majority of its holding in U.S.-based Euclid and reduce its involvement in rigid haulers.

Of the 5,300 workers to be let go, 3,100 will be white-collar employees and 2,200 will be hourly wage earners. Volvo also will reduce the number of consultants it uses by 700.

Mr. Lorentzson declined to specify the number of jobs that will be lost at Volvo’s North American truck division. He said the individual operating units will provide that information in the next two weeks or so.

He did say that many jobs are no longer needed in the distribution process. Truck orders from dealers, which help determine production schedules, are now highly automated. “Just a few years ago, there were lots of people involved, but most of the work can now be handled by information technology,” he said. “We will no longer invest in positions that are not needed.”

Earlier reports estimated that Volvo would cut 2,900 to 4,300 jobs, of which as many as 2,400 would be in Sweden (TT, 11-23-98, p. 10).

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