Ford Motor's Swedish car automotive unit Volvo, part of its Premier Automotive Group, has announced another round of job cuts that will affect some 4,000 employees worldwide following the 2,000 jobs it cut in June 2008, taking the number of jobs eliminated this year to 25 per cent of its workforce, citing ''a rapidly deteriorating auto market.''
The cuts will affect 2,000 blue-collar workers and 700 white-collar workers in Sweden, while an additional 600 employees will be laid off outside Sweden, and 700 contracts with consultants will be terminated bringing its total planned reduction in employees to 6,000.
At the beginning of the year, the employee strength was about 24,500 worldwide, including 17,000 in Sweden. A significant part of the layoffs will come from its main Gothenburg plant where it employs 13,000. Jobs will also be cut at its second plant in Ghent, Belgium, and at overseas sales subsidiaries.
As the automobile industry becomes one of Europe's first real economy casualties of the credit crisis, coupled with a weak demand and surging raw material costs, Volvo suffered a pretax loss of $271 million in the first half of 2008 and the company said it will save $562 million by downsizing.
Ford's only remaining Europe-based brand, which it acquired in 1999 had said in June 2008, that it could not sustain employment of 24,300 people because of the weak dollar, rising raw material prices and declining sales in the United States and Europe.
The company said in a statement, "To meet the rapidly deteriorating market situation in the global car industry, the management team at Volvo Car Corporation has decided to initiate further structural changes in all parts of the business."
"These are difficult times for the car industry in general, including Volvo. These actions are necessary for creating a new and sustainable Volvo Car Corporation, a company with more focused operations and structure," Volvo Car President and Chief Executive Stephen Odell said in a statement.
"The unstable economic environment has resulted in a very unpredictable situation, and the downturn in the global car industry is more drastic than expected," he added.
Ford also wants to scale back production in Britain where it makes its best-selling European delivery van. The company will also switch to a four-day work week for the next 14 weeks at its metal-stamping plant in Dagenham, England, where it employs 900 people, because of declining demand.
Volvo has been making losses and losing market share that made the Michigan-based automaker mull selling the Swedish car company in November last year but it changed its mind and went on to shed its other European luxury brands and restructure Volvo.
Experts wonder whether the layoff programme undertaken at Volvo will be enough to stem Volvo's financial problems.
The auto industry in tghe US has seen more than 100,000 jobs lost at carmakers and suppliers over the past three years. Auto sales have plunged 27 per cent in the US last month, and four of the European Union's five biggest car markets declined in September.
Most European car brands are cutting shifts and sending workers home. General Motors announced on Tuesday that it was reducing its production in Europe by 40,000 vehicles because of the slump in the market. This was followed by a series of production cuts announced across the board by all leading car manufacturers in Europe.
Europe employs 2.3 million people directly, and about 10 million indirectly in the auto sector and accounts for 27 per cent of the world's vehicle production and these cut backs in production will now affect many other jobs at the suppliers and dealerships who will be forced to shut shop.
Renault, one of France's largest carmaker, plans to cut 3,000 white-collar jobs and 1,000 positions at the Laguna production plant near Le Havre. It has finalized plans to seek 4,000 voluntary departures fro the company.
Rolls-Royce is the only car maker swimming against the tide by recruiting workers instead of firing, because its sales have shown an upward swing of more than 40 per cent as it sold 827 vehicles in the first nine months, a 43 per cent increase from last year.