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STOCKHOLM (Reuters) - Volvo Car Corporation, owned by struggling auto giant Ford Motor Co (F.N), said on Wednesday it would cut 2,000 jobs across its operations.
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Volvo Cars said it planned to slash its work force by 1,400 white collar staff and 600 blue collar workers, its biggest ever round of job cuts, to offset the impact of a weak auto market and surging raw material costs.
The company, which has about 25,000 employees, has long been the victim of negative currency swings from dollar weakness as well as surging steel prices. Recently the situation had worsened, it said.
"Previously, this had been balanced with the help of cost reduction and efficiency program," it said in a statement.
"However, with a continued declining U.S. market, continued price increases on raw materials, and weaker market conditions in Europe, the situation has deteriorated."
Ford in November took Volvo, which reported a first-quarter pretax loss of $151 million, off the auction block and said it planned to integrate its subsidiary more closely into purchasing and development efforts and that it would focus on improving Volvo's cost structure.
Over the past several months the U.S. automaker has sold high-end brands, including Jaguar and Aston Martin, to raise cash as it struggles to return to profitability.
Last week, Ford warned its automotive results would be weaker this year than in 2007 and said it would be difficult to reach break even next year due to slumping U.S. sales.
Most of the job cuts announced at Volvo, whose U.S. vehicle sales tumbled almost 25 percent in May, would be carried out in Sweden with 1,200 employees given notice at its operations in Gothenburg on the country's west coast.
Volvo said the lay-offs were part of a scheme to slash costs by 4 billion Swedish crowns ($662 million) and included cutting one of three shifts at its Torslanda plant in Gothenburg where it produces its bigger car models.
"We must tackle the difficult market conditions, most of all in the U.S. market. The market contribution to cover Volvo Cars' costs is very small," Volvo Chief Executive Fredrik Arp said in the statement.
A Volvo Cars spokesman said the staff reductions, which included 300 jobs outside Sweden as well as 500 consultants, were expected to be carried out over the coming six months.
The company, which produces roughly 450,000 cars per year, said it would continue to review its operations throughout the autumn with its new organizational structure expected to be in place by the turn of the year.
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