Volvo makes 1,300 staff redundant in Sweden
29 April 2020
29 April 2020 Volvo Car Group is issuing redundancy notices to 1,300 white-collar employees in Sweden. Further cutbacks look likely as a continued review takes place alongside a reduction of consultancy contracts. Owned by Geely Automotive Holdings, the carmaker currently employs some 24,000 people in Sweden as well as 2,000 consultants. In a statement, Volvo said the exact nature and amount of redundancies would be decided over the coming months, following negotiations with unions. However, the manufacturing arm does not look to be affected by the cutbacks. COVID-19 cuts While the move falls under plans to â€²position the company for long-term growth’, the impact of coronavirus (COVID-19) has spurred the company to act more quickly. CEO HÃ¥kan Samuelsson explained that COVID-19 Â exposed the need for Volvo to speed up its transformation. This means cutting back in some areas to expand in others, like online business, electrification and mobility. â€²We want to come out of the corona-crisis stronger, and that is why we are doing this,’ Samuelsson told Reuters. â€²It will be important that we have the right cars when we get through this period, lots of electric cars, and I also think that people will learn to shop more online.’ â€²The coronavirus pandemic is affecting us in the short term, but we expect volumes and growth to return,’ said Hanna Fager, head of people experience at Volvo. â€²So we need to continue investing in our ongoing transformation and new business areas, by reducing structural costs.’ The company also hopes to become more agile as hierarchies that slow decision-making and execution are reduced. Merger motivation The COVID-19 crisis has hit the automotive industry hard, Volvo included. Various short- and long-term plans for dealing with the fallout are being put into place. From hand sanitisers to hierarchical change, carmakers are having to adapt to a COVID-19 world. For Volvo, this restructuring might also have a lot to do with a potential merger with Geely. Announced in February this year, the two carmakers confirmed they are considering combining their businesses to create a new global group. The aim within this would be the acceleration of financial and technological synergy between the two companies. Lynk & Co and Polestar would become incorporated too, alongside Geely’s new energy brand, Geometry. â€²A combination of the two companies would result in a strong global group,’ said Li Shufu, chairman of Geely Holding Group. â€²We look forward to working with HÃ¥kan Samuelsson, president and CEO of Volvo Cars, to further investigate this opportunity with the goal to strengthen the synergies within the Group while maintaining the competitive advantage and the integrity of each brand.’ Volvo slimming down its hierarchical and decision-making structures would further streamline assimilation into Geely’s management system. A more efficient business model would also be more attractive to the Chinese conglomerate. These merger considerations follow in the tracks of plans laid out last year by Geely and Volvo to combine their existing internal combustion engine (ICE) operations. This stand-alone business would establish itself as a new global supplier that would develop next-generation ICE and hybrid powertrains.