Volvo Trucks reduces capacity in the European production system

Volvo Trucks reduces capacity in the European production system

Volvo Trucks is taking measures to downsize capacity in its European production
system to meet the declining demand for trucks in the European market. As a
consequence, the company will initiate negotiations with the unions regarding
staffing level cutbacks of approximately 1,400 employees at the company's plants
in Ghent in Belgium, and Gothenburg and Umeå in Sweden.  A cost-reduction plan
will also be implemented to meet the lower sales levels and increasing raw
material cost. 

Volvo Trucks has in recent years gradually increased capacity in response to the
growing demand. Adding night shifts has been a costly temporary solution to
reduce delivery times. The European truck demand is now slowing. The negative
market development has been accentuated by the recent events in the financial
markets resulting in financial uncertainty and credit restrictions. The
company's customers have become more conservative in replacement of vehicles and
some are not being granted loans to finance new trucks. 

The adjustments will rebalance production capacity to more normal levels. The
downsizing affects up to 400 temporary employees in Ghent, where the temporary
night shift will close by the end of December this year. In Gothenburg, the
ambition is to reduce the evening shift, which will affect up to 610 persons. In
Umeå, approximately 370 employees are affected as the cab plant is planned to
downsize in April next year. 

“The planned reductions are not only being undertaken to rebalance capacity, but
also to increase efficiency in production and to compensate for the higher raw
material prices that we are now experiencing. To mitigate the impact of
cost-inflation a cost-saving program will be introduced throughout the entire
Volvo Trucks organization and it will include measures to improve efficiency in
the commercial operations,” says Staffan Jufors, President and CEO of Volvo
Truck Corporation. 

Negotiations with the unions will start immediately.

September 30, 2008
For further information please contact:  
Stefan Karlsson, Volvo Trucks Corporate Communications,  tel:  +46 31 66 47 56,
mail: stefan.karlsson@volvo.com
Anders Olausson, Göteborg, tel: +46 31 3221512,  mail: anders.olausson@volvo.com
Lage Lindfors, Volvo Trucks Umeå, tel: +46 90 707480,  mail:
lage.lindfors@volvo.com
Patrick Collignon, Volvo Trucks Ghent, tel: +32 9 2504220, mail:
patrick.collignon@volvo.com



Volvo Trucks provides complete transport solutions for professional and
business-driven customers. The company offers a full range of medium to heavy
duty trucks, with a strong global network of 3,000 service points in more than
130 countries. In 2007 Volvo Trucks sold more than 100,000 trucks worldwide.
Volvo Trucks is a part of the Volvo Group, one of the world's leading
manufacturers of trucks, buses and construction equipment, drive systems for
marine and industrial applications, aerospace components and services. The Group
also provides solutions for financing and service.