Scania will lower production rate due to slowing demand

Scania will lower production rate due to slowing demand

Scania foresees a continued slowdown in demand in various markets and, starting
in January, will lower the production rate at its units in Europe and Latin
America. This adjustment will be handled within the terms of existing
flexibility agreements at the company.

Economic worries in Europe and the world have made customers more hesitant about
investing in new products. In November 2011, Scania cut back its production rate
by about 15 percent at the global level, but since then demand has deteriorated
further.

“The slowdown in Europe and the Middle East has continued. Meanwhile we are also
seeing a lower rate of order bookings from other markets,” says Martin
Lundstedt, Executive Vice President in charge of Scania’s sales and marketing.

In Brazil there is uncertainty about the market trend during the first half of
2012 in light of the transition to new Euro 5 emission legislation and the trend
of global demand for agricultural products and other commodities.

At the global level, Scania will lower its production rate by about 15 percent
starting in January. The adjustment of production levels will occur at Scania’s
production units in Europe and Latin America and will be handled within the
terms of the existing flexibility agreements between the company and the
respective trade unions.

“This implies that we must gradually adjust staffing, which unfortunately means
that we will be unable to renew the contracts of more than 1,000 fixed term
temporary employees in our global production network,” says Anders Nielsen,
Executive Vice President in charge of Scania’s production and logistics.

As a result of the production cutback that Scania carried out in November, the
contracts of 900 of a total of 1,400 fixed term temporary employees at European
production units were not renewed. The adjustment that has now been decided will
mean that most of the remaining number of fixed term temporary employees in
Europe will be affected, along with a majority of the fixed term temporary
employees in Latin America.

For nearly two years, Scania has been working with short and stable delivery
times, approximately 8 weeks in Europe, with the aim of getting the right
signals to the production network as early as possible when changes occur in
order bookings. This minimises inventory build-up.

For further information, please contact:

  · Erik Ljungberg, Senior Vice President, Corporate Relations, tel. +46 553 835
57
  · Hans-Åke Danielsson, Press Manager, tel. +46 8 553 856 62