Volvo to cut car production by 10 percent: union

STOCKHOLM Thu Aug 30, 2012 7:30am EDT

An employee walks past newly assembled Volvo cars lined up at a parking lot of a Ford manufacturing plant in Chongqing municipality, April 20, 2012. REUTERS/Stringer

An employee walks past newly assembled Volvo cars lined up at a parking lot of a Ford manufacturing plant in Chongqing municipality, April 20, 2012.

Credit: Reuters/Stringer

STOCKHOLM (Reuters) - Swedish carmaker Volvo, owned by Chinese Zhejiang Geely, GEELY.UL is to cut production in Sweden about 10 percent and axe 200-300 jobs due to slower than expected sales, a union said on Thursday.

Volvo, bought by Geely from Ford Motor (F.N) in 2010 for $1.8 billion, has said it aimed to increase sales by 2020 to 800,000 from just over 400,000 cars. That includes 200,000 cars in China, a leap from the 47,000 sold there in 2011.

Michael Blohm of the IG Metall blue collar union at Volvo's Torslanda plant in the western city of Gothenburg said management had told staff a slowdown in sales meant production would have to be reduced.

"They want to go down from 57 cars an hour to 52 or 50," said Blohm. That would also mean that between 200 and 300 people working at the plant from a recruitment company would not have their contracts extended, he said.

"They (management) said before the summer break that sales had gone down. When we came back, they said they had gone down further," he said, adding that about 2,000 staff work on the production line at Torslanda.

He said the plant had already been closed for four days before the annual mid-year break, which also had the effect of reducing production.

A Volvo spokesman declined to comment, but noted the company was due to release its first-half results next week. The United States is the biggest single market for Volvo at 67,273 units in 2011. Sweden came second at 58,463 and China was third.

Figures from industry group Bil Sweden showed that Volvo sales in Sweden over the period January to July fell 10 percent compared with the same period of 2011.

Figures from European industry group ACEA showed Volvo car sales fell 9 percent in the January-June period year-on-year to 116,364 in the European Union.

(Reporting by Patrick Lannin; Editing by Helen Massy-Beresford)

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