Volvo to cut 1,400 staff at European truck plants

STOCKHOLM — 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, where 400, 610 and 370 staff face being laid off.

Talks with unions would 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, but it did not provide any financial details of it.

"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 plan would help rebalance its production capacity "to more normal levels."

Michael Andersson, an analyst at Evli Bank in Stockholm, said the news was hardly surprising.

"All figures have pointed downwards this year. Especially the order intake. It's a signal that the development in Europe will be weak next year," he said, noting also that delivery numbers have come down somewhat lately.

Andersson declined to make any greater predictions for the future, but said "there probably will be a few more announcements like these ahead."

The Volvo share rose 1.2 percent to 61.25 kronor ($9.08) each in Stockholm.

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