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Volvo to lay off up to 1,500 workers

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Reuters / August 23, 2005 DETROIT -- Ford Motor Co.'s Volvo Cars division plans to lay off up to 1,500 workers, or 5 percent of its global work force this year, part of an effort to cut costs by more than $130 million, a company spokesman told Reuters on Tuesday. Volvo, purchased by Ford in 1999, has been hit hard by a weak U.S. dollar and strong competition in the U.S. market, Volvo spokesman Olle Axelsson said. U.S. sales at Volvo, whose solidly built cars are marketed to upper middle class buyers, are down about 5 percent so far this year. "We need to balance that negative effect," Axelsson said. Axelsson said the company will cut between 1,000 and 1,500 jobs to achieve a target of $131 million in cost savings. He was unable to lay out a time frame for the goal. Volvo is expected to begin negotiations with union representatives over the job cuts this week, Axelsson said. "They are informed but we will start formal negotiations now," he said. "If all goes well, we would execute before the year end." All of Volvo's operations will be affected by the cost-cutting move, but most of the job eliminations will take place at the carmaker's facilities in Gothenburg, Sweden. Volvo already has a multi-year plan in place that aims to reduce its personnel by about 5 percent every year, mainly through attrition. The new cuts would be in addition to that, Axelsson said. Parent company Ford, struggling with high costs and falling U.S. sales, is also gearing up for more layoffs and plant closings to stem steep losses in North America. Volvo employs about 20,000 people in Sweden and about 8,000 elsewhere, mostly in the United States.

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