Swedish automaker Volvo Cars, hit with a first quarter loss and a faltering US market, said Wednesday it would slash 2,000 posts or 8.0 percent of its global workforce.
“As part of an extensive cost reduction programme, Volvo is planning to reduce its workforce by 1,400 white collar (consultants included) and 600 blue collar members of its workforce,” the company, a unit of struggling US auto giant Ford, announced in a statement.
“This is an unfortunate but necessary action if we are to achieve a better financial position,” Volvo Cars president Fredrik Arp said.
“We must tackle the difficult market conditions, most of all in the US market.”
The measure will see the elimination of 1,200 jobs in Sweden and 300 abroad. In addition, the contracts of 500 consultants will be cancelled.
Volvo Cars said a weak dollar, which makes Volvo products less competitive overseas and reduces the value of repatriated earnings, as well as rising raw materials prices and the “continued declining US market” had led to a first quarter loss of 151 million dollars (97 million euros).
Sales in the United States fell 8.4 percent last year compared with 2006.
From January to March this year sustained growth in emerging countries was unable to offset deteriorating conditions in Volvo's European and US markets, where buyers are opting for smaller, more fuel-efficient vehicles.
Volvo said its strategy now was to expand sales in Russia, China and eastern Europe while maintaining a strong showing in Europe.
Volvo Cars was acquired by Ford in 1999 for 6.45 billion dollars.
Most of its production is concentrated in Gothenburg, southern Sweden, but there is also a site in the Belgian city of Ghent.
There have been recurrent reports in recent months that Ford might be planning to sell its Volvo operations. Ford officials have dismissed such suggestions.
Ford itself is in the midst of a restructuring and is also suffering from a sluggish US market. The group sold its Aston Martin unit in 2007 and then Jaguar and Land Rover earlier this year.
Press reports have also said Ford is considering selling off its troubled Mercury division.
