Volvo Buses consolidates manufacture of complete buses in Europe

Following weak market developments and tough competition in Europe, Volvo Buses
is now planning to concentrate its European production of complete buses in the
company’s main plant in Wroclaw, Poland.
This planned restructure means that production at the Volvo Buses plant in
Säffle, Sweden, will be terminated at end June 2013, provided that the necessary
union negotiations have been completed by then. All told about 330 permanent
employees and about 60 consultants are affected by the closure. Volvo Buses will
retain its aftermarket function and technical support in Säffle to secure
continued good support for the company’s Nordic customers and in order to offer
local employment. The aim is to develop this operation so it encompasses about
50 jobs.

“The demand for new buses in Europe has dropped steadily over the past few
years, paralleled by considerable pressure on prices, particularly in the Nordic
markets. By concentrating the production of complete buses in one single plant,
we can reduce our costs and thus reverse our negative profitability trend,”
explains Håkan Karlsson, President Volvo Bus Corporation.

Volvo Buses has considerable excess capacity in its European complete-bus
plants, even though its market position has improved over the past year. The
company assesses that volume growth in Europe will remain low in the coming
years and that price pressure will continue. By focusing all production on the
much larger plant in Poland, Volvo Buses expects to achieve the economies of
scale that are essential in order to tackle the increasingly tough competition
on the market. The plant in Poland has four times the capacity of the one in
Säffle.

“Together with the staff in Säffle and Poland we have invested in new city bus
models and improved efficiency, but unfortunately the negative development of
the European market nonetheless forces us to take this decision regarding our
employees in Säffle,” says Håkan Karlsson.

Volvo Buses in Säffle will now commence trade union negotiations on the
relocation of production.

“At the same time we will examine opportunities for finding similar employment
within the Volvo Group,” says Håkan Karlsson.

If production is relocated, it is expected that this will negatively impact the
Volvo Group’s operating profit in the fourth quarter of 2012 to the tune of
about 100 million kronor.

For more information, please contact:
Helena Lind, Media Manager, Volvo Bus Corporation
Phone: +46 (0)31-323 62 57

Volvo Bus Corporation is one of the the world’s largest manufacturer of large
buses and coaches. The range comprises complete vehicles, chassis, bus bodies,
transport system solutions for metropolitan traffic, leasing, financing and
service contract maintenance. Volvo Bus Corporation is 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 complete solutions for
financing and service.