Volvo cuts jobs to stop losses

Volvo cars is laying off 2,000 people worldwide, 1,200 of them in Sweden. Six hundred of those losing their jobs are production workers and the rest are white collar staff. Volvo is trying to offset the impact of slower sales – particularly in the US where they fell almost 25% in May – as well as the weak dollar and surging raw material costs.

Chief Executive Fredrik Arp said: “This is an unfortunate but necessary action if we are to achieve a better financial position. We must tackle the difficult market conditions, most of all in the US market.”

Volvo’s revenue in the first three months of this year was 2.7 billion euros, down from three billion in the same period last year. It reported a 100 million euro loss in the first quarter, compared with a 63 million euro profit in Q1 2007.

Struggling US carmaker Ford, which owns Volvo, said it is not going to sell the marque as it has done with Aston Martin, Jaguar and Land Rover. Instead it will focus on improving Volvo’s cost structure and combine more of its purchasing and development with the parent company to save money.

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