A downturn in the European truck market has forced Volvo Trucks to reduce local production capacity with the axing of about 1,400 jobs and make other cost savings.

"Declining demand" will affect employees at truck plants in Ghent, Belgium, and Gothenburg and Umeå, Sweden, the company said on Tuesday.

"A cost-reduction plan will also be implemented to meet the lower sales levels and increasing raw material cost," it added.

Volvo Trucks said it had gradually increased capacity to meet growing demand in recent years but adding night shifts had been a "costly temporary solution to reduce delivery times".

"The European truck demand is now slowing. The negative market development has been accentuated by the recent events in the financial markets resulting in financial uncertainty and credit restrictions. The company's customers have become more conservative in replacement of vehicles and some are not being granted loans to finance new trucks," it added.

The cut would "rebalance production capacity to more normal levels".

It will affect up to 400 temporary employees in Ghent, where the temporary night shift will close by the end of December.

In Gothenburg, Volvo wants to to reduce the evening shift, affecting up to 610 workers. In Umeå, about 370 employees will lose their jobs as the cab plant downsizes next April.

"The planned reductions are not only being undertaken to rebalance capacity, but also to increase efficiency in production and to compensate for the higher raw material prices that we are now experiencing. To mitigate the impact of cost-inflation a cost-saving programme will be introduced throughout the entire Volvo Trucks organisation and it will include measures to improve efficiency in the commercial operations," said company president and CEO Staffan Jufors.

Negotiations with unions will start immediately, Volvo added.