Volvo: 2,000 Jobs Slashed in Cost-Cutting; On the Auction Block?
By Michelle Krebs June 25, 2008Ford's Volvo Car Corp. announced plans to cut 2,000 jobs as parts of its efforit to slash costs by about $700 million.
The move triggered speculation from a number of European media outlets that Ford was once again considering possible sale of Volvo. Such reports included Ford negotiating with General Motors' Chinese partner Shanghai Automotive Industries Corp. (SAIC) and unnamed Russian investors.
Ford denied that Volvo is for sale.
Volvo said Wednesday it will cut 1,400 white-collar workers and 600 blue-collar workers, mainly in the Swedish city of Gothenburg. About 300 jobs will be cut outside of Sweden and Volvo will cancel contracts with outside consultants, eliminating another 500 positions.
Volvo, like all auto manufacturers, is being socked with higher raw material prices as well as weak sales in its primary markets of the U.S., especially, but also Europe. But Volvo is also suffering the effects of negative currency due to the weak U.S. dollar against the Swedish krona. As a result, Volvo reported a loss of $151 million in the first quarter, the first period in which Ford separately reported Volvo's financial performance.
Ford's newest significant investor, Las Vegas billionaire Kirk Kerkorian's Tracinda Corp., has urged the automaker to sell Volvo. Nevertheless, a Ford spokesman insisted Volvo is not for sale but rather Ford is focused on improving Volvo's financial results.
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