Volvo is shedding almost 1,400 jobs at its European plants due to falling demand for new trucks. The company says the move will affect 610 workers in Gothenburg and 370 employees in Umea, Sweden, as well as up to 400 temporary staff in Ghent, Belgium. It is in talks with unions regarding the cutbacks.
Volvo says the recent uncertainty in the financial markets, which has resulted in worsening credit conditions,
was a factor in its decision. It believes some customers have been holding back in replacing vehicles as they have not been able to secure loans to finance new trucks.
Mark O'Bornick, transport analyst at Analytiqa, is not surprised by the news. "Given the current uncertainty surrounding financial markets, truck buyers are thinking twice about replacing vehicles, even if they are able to achieve credit terms on which to finance them. As a result, lower sales and higher material costs will see truck manufacturers increasingly implement savings programmes."
O'Bornick adds that global truck sales may rise in 2008 due to demand from emerging markets such as China, India and Latin America. However he also believes this growth will mask the challenging market conditions in North America and Europe. He adds: "In such markets, truck manufacturers will pin their growth hopes on customers investing to make their fleets more efficient during the period of high fuel prices."
Reed Business Information Limited.©2008
