Volvo Car Corp. will cut its workforce by 200 to 300 people at its Swedish factory in response to weak European demand, a union official said.
Volvo will reduce production by about 10 percent at its main plant in Gothenburg in southwestern Sweden starting Oct. 1, Michael Blohm, a spokesman for the IF Metall union at Volvo, said in a phone interview today. Management has said that production at the plant will fall from the current 57 cars per hour to about 52, he said.
“It’s sad when people are asked to leave but if there aren’t enough orders to build cars then there simply isn’t work for anyone,” Blohm said.
European car sales have fallen for nine consecutive months, according to the European Automobile Manufacturers’ Association. The group forecasts that passenger car sales in the European Union will shrink 7 percent this year to 12.2 million vehicles, 21 percent below the 2007 peak and the weakest demand since 1995.
About 500,000 European jobs at automakers and their suppliers may be lost before the end of next year, according to Lars Holmqvist, who headed European auto supplier group Clepa until April and is now senior adviser on auto issues at consultant Kreab Gavin Anderson in Brussels. The European auto industry employs about 7 million workers.
Stefan Elfstrom, a Volvo spokesman, declined to comment. Volvo will discuss potential job cuts on Sept. 5, when the company publishes its first-half results, he said.
Volvo, which Zhejiang Geely Holding Group Co. bought from Ford Motor Co. in August 2010 for $1.8 billion, has a target of almost doubling sales to 800,000 cars and sport-utility vehicles by 2020 from 449,255 deliveries in 2011.