Times are tough for Sweden's safest automaker. Ford-owned Volvo has seen its sales decline by alarming amounts so far this year. In fact, in last month's By The Numbers post, the automaker's 51.8% drop in U.S. sales trailed only HUMMER's stratospheric plunge. Fewer cars produced means fewer workers are needed, and with numbers like that, it's no wonder that Volvo needs to cut the rank and file a bit. Volvo announced today that 4,000 jobs worldwide will be cut. That figure includes some 2,230 employees at Volvo Car Corporation in Gothenburg, Sweden as well as 1,300 people, including contractors, outside its home country. After all is said and done, the total number of job cuts, including those already announced before today, will be about 6,000. The sober-sounding press release is pasted after the break.
Chrysler has been struggling with sales declines more than most automakers during this challenging economic environment, and the some of that pain will transfer to its salaried workforce. The Pentastar is laying off 300 workers today and Friday due to the automaker's inability to reach its goal of 1,000 salary job reductions through retirements. All employees have been ordered to show up for work tomorrow regardless of any vacations or if they are scheduled to work or not. Chrysler CEO Bob Nardelli told dealers yesterday that the Pentastar has lost $400 million so far in 2008, which is likely very bad news for Cerberus investors. There are very few feelings that are worse than losing a bunch of money, but we think going into work tomorrow with a real chance of being handed a box and being told to pack your things would be worse.
Amidst constant rumors of a sale of the Volvo brand, and the constant denials from Ford, the brand has seen some massive sales declines, both in Europe and in the United States. Even if Ford does choose to keep the brand, which does seem likely at the moment, fewer cars to sell means fewer workers needed. The latest round of cuts is said to amount to about 900 jobs in 2009, all of which could come from its home country of Sweden. An entire shift will be canceled at its plant in Goteborg in the western side of the country, which may or may not include a portion of those 900 job losses. It would appear that new president and CEO Stephen Odell has his work cut out for him as he attempts to turn the automaker around.
For white collar workers that still work at the Ford Motor Company: congratulations, you've officially made the cut. Ford's President of the Americas, Mark Fields, announced at a media event that the Blue Oval has successfully achieved its targeted cuts, at least for now. Fields told reporters that Ford would "continue to look at our structure and evaluate that versus the external environment," which is fancy executive talk for "if we don't start making some money, we'll cut some more." Fields didn't reveal the exact number of cuts that were made to achieve that goal.
Ford announced in June that it would cut 15% of its salary-related costs in an effort to become more lean and conserve cash during the brutal automotive downturn. Ford is trying to conserve enough Bennies to pay for its ambitious powertrain plans that will be needed to help the Dearborn, MI automaker offer the fuel efficient vehicles customers want. Fields said that spending on engines and transmissions over the next couple years will be "unprecedented," and that Ecoboost, diesels, hybrids, and other fuel-saving technologies will get the lion's share of the spending. Ford also plans to convert three truck and SUV factories to small car production and add six European models to its product mix.
Chrysler is losing money by the truck-load, and its vehicles aren't selling, so common sense dictates that team Pentastar was going to start making cuts soon. That time is now, when Chrysler notified workers that it would be cutting 1,000 white collar workers. Chrysler spokesman David Elshoff told employees that the company would achieve its cut target through retirements, attrition, and buyouts, which means people won't be handed boxes and receive security escorts just yet. Chrysler management is making the cuts with the belief that the current economic situation here in the States isn't going to improve any time soon. A quick look at the Pentastar's car lineup shows the privately owned company would be in trouble even if the economy had a rosy outlook. No timetable was given for the white collar cutback.
Ford might be looking to sell Volvo to a Chinese company according to a report by Dagens Industri and followed up by Automotive News. Sources are saying that Shanghai Automotive Industry Corp. may be one of the potential suitors, while a Russian investor has also expressed interest in Ford's Swedish arm. FoMoCo's CEO, Alan Mulally began a strategic review of the automaker last year and the possible sale of Volvo was reported to be in the cards. However, Ford denied such a plan at the time and when AN contacted a Ford spokesperson for comment about the report today they said, "We have been consistently saying since the end of last year that Volvo is not for sale. We are focused on improving Volvo's business results."
Regardless, news of the possible sale of Volvo comes on the same day Ford announced that 2,000 workers will be laid off in an effort to cut costs due to an overall weak market and rising material costs. Volvo is hoping to slash around $662 million in costs, with the primary cuts coming from workers in Sweden. 1,200 workers were informed of the cuts today, and overall, 1,400 white-collar staff and 600 blue-collar jobs are on the chopping block.
