Volvo Cars on Wednesday said it was axing 1,400 white collar workers in Sweden and overseas, 500 consultants plus 600 blue collar workers on the third shift at the company's Torslanda plant.

Spokeswoman Maria Bohlin last month told just-auto that the third shift employs 700 building the V70 wagon and its XC70 four wheel drive variant, the S80 large sedan and XC90 crossover.

Volvo Cars chief executive officer Fredrik Arp had told a local newspaper that the cuts were necessary but no firm decisions on the number of workers or timing had been made. It was possible some would be offered jobs on other shifts.

Wednesday's notice axes 1,105 employees at Volvo Car Corporation in Gothenburg, 45 at Volvo Car Sweden and 50 at Volvo Cars Body Components in Olofström. The third Torslanda shift is ending with 600 redundancies.

Contracts with around 500 consultants will be cancelled and about 300 people in other countries will also be made redundant.

Bohlin told just-auto on Wednesday that the company had yet to decide where in other markets cuts would be made. This would occur after the restructuring in Sweden as a result of today's annoucement.

A Volvo Cars UK spokeswoman said she was not aware of any cuts affecting the local operation.

"Negative currency effects, mainly due to the weak US dollar, and increasing raw material prices, have for a long time had a significant impact on Volvo Cars' financial situation. Previously, this had been balanced with the help of cost reduction and efficiency programmes. However, with a continued declining US market, continued price increases on raw materials, and weaker market conditions in Europe, the situation has deteriorated. This resulted in a financial loss for the first quarter of US$151m," Volvo said in a statement.

"In order to improve the business, Volvo Cars is implementing a cost reduction programme which is estimated to reduce the total cost level by SEK4bn (about $700m). Staff reductions are a part of this cost saving programme."

"This is an unfortunate but necessary action if we are to achieve a better financial position", Arp said in the statement.

"We must tackle the difficult  market conditions, most of all in the US market. The US market contribution to cover Volvo Cars' costs is very small", he added.

Volvo said on Wednesday it had had recently begun negotiations with union representatives over ending the third shift at Torslanda and that these were "ongoing".

The automaker said formal notice to Swedish authorities today marked the start of an organisational structure review which would continue throughout the autumn, and be in place by the end of the year.

"A number of activities will be carried out with various business partners to assist employees in finding alternative employment," Volvo said.

"The purpose of these actions is to return to profitability."

Volvo said it would continue its successful growth in markets like Russia, China and eastern Europe and "also maintain a strong position in the established European markets".

"For the US market, a selective strategy will be used in order to ensure improved profitability."

Torslanda night shift threatened

Auto market intelligence
from just-auto

• Auto component fitment forecasts
• OEM & tier 1 profiles & factory finder
• Analysis of 30+ auto technologies & more