Volvo has cancelled 500 consultancy contracts and cut 1400 jobs in a bid to cut costs
25 June 2008

Volvo is laying off 2000 of its Swedish staff and cancelling 500 consultancy contracts, the company has announced.The job losses are part of a cost-cutting move that will fuel speculation that Ford is poised to sell the company. Most of the Volvo employees made redundant will be white-collar workers, but 600 blue-collar workers on the third shift at Volvo's Torslanda plant (where the V70 and XC90 are built) will also lose their jobs, along with a further 300 people worldwide.Volvo gave the Swedish government official notice of its plans today and intends to restructure its workforce before the end of the year. "Volvo Cars is implementing a cost-reduction programme which is estimated to reduce the total cost level by about $700 million," said Volvo. "This is an unfortunate but necessary action if we are to achieve a better financial position," said chief executive Fredrik Arp, citing the declining US market as a key reason for the cut-backs. Reports suggest that Ford has entered into preliminary negotiations with a Chinese company, believed to be Shanghai Automotive Industry Corporation (SAIC), that is interested in buying the ailing car maker, and a Russian investor is also believed to want Ford's luxury wing.Industry rumours have suggested that BMW and Mazda are other potentially interested parties. But a Ford spokesman said: "We are focused on improving Volvo's business results."However, Ford's new major shareholder Kirk Kerkorian, who now has a 6.49 percent stake in the company, recently indicated that he would like to see the cash-strapped US giant part ways with Volvo.

Will Powell

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Comments
3

26 June 2008

Its sad news really, but if it helps keep Volvo going then good. I think Ford would be crazy to sell Volvo though. It has been an under developed brand, and with a little investment, it could be were Audi should be, ie comfortable quailty cars that arent out to be sporty in an attempt to outdo BMW

26 June 2008

Oh dear. I thought Volvo actually made a profit?

28 June 2008

All set for a sale...

Considering all recent rumors and hints, I would be seriously surprised if Volvo isn't out of the Ford stable by year-end.

To my opinion, considering Ford's condition - it's for the best.

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