Volvo announced that they will stop production at their main Swedish auto plant from Oct. 29 through Nov. 2 due to the lack of car demands.
Most believe that the recession going on in Europe has finally taken its toll on the auto industry, as the demand for new cars is lower than they have been in a while. The move doesn't come as a total shock however.
On Oct. 1 the company announced they would be lowering the cars produced per hour number from 57 cars to 50 according to the Associate Press. During the week long closure, the company won't be producing approximately 3,000 vehicles, or .07 percent of the total number of cars sold last year according to the Wall Street Journal.
"Europe is the main market for Volvo Car Corporation and the continued recession is naturally affecting the demand," said Jan Gurander, Volvo's CFO and Acting President to the Associated Press. "Against this background, it is essential for us to continue to use the built-in flexibility we have within our manufacturing system."
Currently the company is spending more money per day then they are making through sold models, which is not something the company is willing to accept.
The Torslanda auto plant said the work stoppages will affect over 3,300 employees. Employees will be paid for the week regardless the company announced, probably to avoid a potential workers strike.
Volvo made most of their 450,000 cars sold in 2011 at their auto plant in Belgium last year, but the auto maker announced that even there they had to cut back on car manufacturing.
"The recession in Europe is deepening and that impacts customers' willingness to buy new cars," said Per-Ake Froberg a spokesman for Volvo to the Wall Street Journal. "Therefore we have to continue to adjust production."
The company has not announced if they will be cutting back car manufacturing elsewhere or if permanent work scheduling changes will take place. Volvo believes they are still on track to reach their goal of selling over 800,000 cars by 2020.
In 2010, China's Zhejiang Geely Holding Group purchased Volvo hoping to make the company an auto powerhouse. Needless to say that hasn't exactly happened yet.
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