SDLG to take over backhoe and grader production
Volvo Construction Equipment has announced it will end the supply of Volvo-branded motor graders and backhoe loaders, transferring these product lines to its Chinese company SDLG, as the company looks to improve profitability.
As part of an overall cost-cutting initiative within Volvo Group, the company has announced it would cease development and production of the two product lines in Europe and the Americas.
This will result in the closure of the factory in Wroclaw, Poland, where backhoes are manufactured, as well as job losses in the US and in Brazil. The change will result in a workforce reduction of about 1,000 employees.
“The current product lines of technologically advanced and high-spec Volvo-branded backhoe loaders and motor graders have addressed a relatively small premium segment of the market,” said a company spokesperson.
“SDLG-branded backhoe loaders and motor graders will better serve customer demands in the large and growing value segment of the market.”
The decision follows a review of the group’s operation, in a bid to adapt the cost structure and to address the profitability of certain products.
Last year there was a reduction of 4,400 white-collar employees and consultants across Volvo Group. And in October this year it reduced the number of members of its Group Executive from 16 to 10.
Volvo is hoping to reduce its overall structural costs by $1.34 billion (SEK 10bn) by 2016, compared with 2012, once the full effects of its costs-cutting measures are in place.