Restructuring for Volvo manufacturing

The Volvo Group says it has made a directional decision to implement changes in the European industrial structure for truck manufacturing. The stated aim is to enhance the efficiency of manufacturing and thus strengthen competitiveness.

Over the next two years, Volvo will relocate cab trim operations from Umeå to Gothenburg,  concentrating the assembly of heavy duty trucks in Gothenburg to one line. The assembly of medium duty trucks will be concentrated in Blainville, France. This decision is expected to result in staff cutbacks and operational changes.

“Today’s European industrial structure for truck manufacturing is partly the result of acquisitions and we now intend to use the various plants in an optimal way”, said Olof Persson, Volvo’s President and CEO. “This will generate more efficient truck manufacturing operations, which will improve our potential to compete successfully in global markets.”

The plants in the European industrial system for truck manufacturing affected by the change are the facilities in Umeå and Gothenburg in Sweden, Ghent in Belgium and Blainville in France. The changes are intended to transform the resources for truck manufacturing in Europe into a joint system, whereby each plant will be more specialised and optimised for its respective area.

Cab trim operations will be relocated from Umeå to Gothenburg, and the plant in Umeå will be further specialised in its main core business, sheet-metal pressing, welding and painting of cabs. 
The assembly of heavy duty trucks in Gothenburg will be concentrated to one line from the two lines of today.

The assembly of medium duty trucks will be consolidated to the plant in Blainville, as one assembly line is relocated from Ghent to Blainville. The relocation is intended to contribute to improved logistics in Ghent while at the same time the manufacturing of medium duty trucks should be made more efficient.

In Blainville, there is already a manufacturing line for medium duty trucks, complete with cab manufacturing and cab trim operations for both Volvo and Renault Trucks. This change means that cabs manufactured in Blainville will no longer have to be transported to Ghent.

This decision will result in staff cutbacks, as well as operational changes and will be subject to trade union consultations. The changes are intended to be made gradually over a period of two years and the number of affected employees depends on several factors, including future manufacturing volumes and the results of the coming trade union discussions. A total of 900 individuals, with  approximately 700 in Sweden, are currently working in the areas of the manufacturing operations which will be relocated.

Overall, the Group-wide efficiency program is estimated to incur restructuring costs of approximately $900 million. Most of the restructuring costs are expected to impact operating income in 2014. Annual savings are estimated at $725 million and will gradually generate results in 2014, to then achieve full effect at year-end 2015.

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