Volvo Car Corporation has confirmed it has decided to temporarily halt production at its Torslanda plant in Gothenburg, Sweden during week 44 – from 29 October to 2 November.
The temporary production stop is in addition to an earlier decision to reduce the production pace in the Torslanda plant from 57 cars to 50 cars per hour. That change came into effect on 1 October.
The company acknowledges the temporary suspension of output is based on “a continued decline of the automotive market, primarily in Europe. Therefore a further adjustment to Volvo Car Corporation’s manufacturing operation is necessary.”
The decision to temporarily halt output means that the Torslanda plant employees will be on leave with pay through a combination of utilising time banks and leave of absence. The Geely-owned OEM has reassured “there are no plans for changes to the permanent work force at the Torslanda plant.”
Jan Gurander, Chief Financial Officer and acting President and Chief Executive Officer of Volvo Car Corporation commented: “Europe is the main market for Volvo Car Corporation and the continued recession is naturally affecting the demand for our cars. Against this background, it is essential for us to continue to use the built-in flexibility we have within our manufacturing system.”
Although the focus is on falling sales in Europe, demand in all of Volvo’s key markets has been falling, with sales in China particularly short of expectations. The company reported a significant fall in earnings and profitability in the six months ended 30 June 2012. Retail vehicle sales during this time declined 4.1% to 221,309, EBIT dropped to SEK 239m (US$35.7m) – a 0.4% margin – from SEK 1,529m (2.4%), and the net profit of SEK 1,213m reported in H1 2011 was also replaced by a loss of SEK 254m.
In mid-September Volvo Car outlined plans to cut its temporary workforce in the area of R&D. To the end of this year the company intends to end between 300 and 400 consultancy contracts. This will reduce the company’s technical consultants from about 1,200 to 800-900.
The OEM has been using temporary workers primarily in the manufacturing and R&D areas to give it greater flexibility. However, it noted that the projects for which most temps were brought in – product upgrades and new model development – were now wrapped up or nearly concluded and that the workers were no longer needed.
The OEM emphasised that the cut in temporary R&D workers would not affect Volvo’s product cycle plan which includes the introduction of the all-new SPA (Scalable Product Architecture) platform in 2014.
