Volvo cuts 1 300 office jobs but leaves Ghent untouched

Volvo is the next car manufacturer to lay off staff in the wake of the electric transition challenging the automotive industry. To streamline its efficiency, the company is reducing its office-based national workforce by 6%, corresponding to 1 300 jobs. So, the cuts are made entirely in Sweden.

In an official statement, CEO of Volvo Jim Rowan said that previously pursued cost actions started to bear fruit but “that it’s clear that we need to do more. Economic headwinds, increased raw material prices, and increased competition will likely remain challenging for our industry for some time.”

Not an exact number yet

Volvo’s restructuring plans affect 1 100 office workers at its headquarters. The remaining 200 people will come from its other operations in Sweden, with a final decision following a review.

No staff from the administrative and manufacturing units in foreign countries are affected, and neither are production-line jobs in Sweden. However, Volvo adds that the exact number of reductions still needs to be determined.

Rowan adds that the necessary cuts are driven by the digitalization and electrification trends: “The industry is also transforming quickly – on electrification, software, and core computing technologies, as well as direct customer engagement.” Furthermore, he pointed to the long-term nature of the automotive industry’s current headwinds.

Joining Stellantis, Tesla, Ford…

Last month, Stellantis announced a similar move, founded by a similar motivation. In the US, the car giant has put forward a reduction plan for diminishing its employee base by 33 500. However, the company seeks to accomplish the cuts through a voluntary leave system and is currently negotiating with unions.

The announcement of Volvo adds to the wave of layoffs flooding the automotive industry. For example, Tesla announced a hiring freeze, accompanied by a ten percent reduction of its staff late last year. Likewise, Ford of Europe is saying goodbye to 3 800 jobs in Europe as the car maker unfolds its electrification strategy.

Half a million supplier jobs

Several start-ups have a lower resistance against economic adversity and joined the line. Luxury EV maker Lucid eliminated 18% of its workforce, and electric van disruptor Arrival cut half its personnel. These companies face the additional burden of kickstarting and scaling up a production line from the ground up.

Several actors within the industry have been warning about these losses as the electric vehicle business shakes up the well-established structure of automotive brands.

Supplier’s group CLEPA has repeatedly highlighted that, in Europe, half a million jobs (of 1,7 million) are threatened as the component switch cannot be compensated by the growth in EV parts.