Volvo to Slow Production at Ghent Plant as Demand Falls
Volvo will cut line speed and reduce agency staff at its Ghent plant in Belgium from 2013, responding to lower European demand for its core models.
Volvo Car Corporation is set to cut production at its Ghent plant in Belgium from the start of 2013, in response to a downturn in automotive demand across Europe. This move will see the plant’s assembly line speed reduced and contracts for several hundred agency workers not renewed, as the company seeks to adjust its output to match market realities. The decision comes after a period of record sales for Volvo, but also amid growing pressure on the European car industry as a whole.
Production Changes at Ghent
The Ghent facility is a cornerstone of Volvo’s manufacturing operations in Europe. It builds some of the company’s most important models, including the S60 saloon, XC60 SUV, C30 hatchback, and V40 compact. In 2011, Volvo achieved global sales of 449,000 vehicles, with the Ghent plant playing a significant role in that total. The facility employs approximately 5,200 people, making it one of the largest private employers in the region.
From 2013, the assembly line speed at Ghent will be lowered from 59 to 54 cars per hour. Alongside this change, Volvo will not renew contracts for 300 agency staff at the site. At present, there have been no announcements of permanent redundancies for full-time employees.
| Location | Key Models Produced | Employees | Line Speed (from 2013) | Agency Roles Affected | 2011 Global Sales |
|---|---|---|---|---|---|
| Ghent, Belgium | S60, XC60, C30, V40 | Approx. 5,200 | 54 cars per hour (previously 59) | 300 contracts not renewed | 449,000 vehicles |
Reasons for the Cutback
Volvo’s decision to reduce output at Ghent follows a period of strong growth, with 2011 marking a record year for the company. Recently, however, demand for new cars in Europe has declined. The company has stated that it needs to rebalance production output to reflect current customer demand and avoid excess inventory. These changes are intended to help Volvo maintain operational efficiency during a challenging period for the automotive sector.
The adjustment at Ghent is part of a broader pattern. Just a week before the Ghent announcement, Volvo revealed it would halt production for a week at its Torslanda plant in Sweden, also citing weak demand. Across Europe, several carmakers have responded to the difficult market by reducing shifts, cutting jobs, or temporarily suspending operations.
Impact on Workers and the Local Economy
The most immediate impact of the changes at Ghent will be felt by the 300 agency workers whose contracts will not be renewed. For the rest of the workforce, the reduction in assembly line speed may lead to adjustments in shift patterns or working hours, but no permanent job losses for full-time employees have been announced. Given the plant’s importance as a local employer, any changes to its operations are closely monitored by the community and local authorities.
By opting for a partial reduction in output rather than a more drastic measure, Volvo aims to preserve as many jobs as possible while adapting to reduced demand. This approach reflects the company’s effort to balance economic pressures with social responsibility to its employees and the wider region.
Context: European Car Market Slowdown
Volvo’s actions at Ghent are not unique. Other manufacturers, including PSA Peugeot Citroën and Honda, have also cut production or reduced their workforce in response to falling car sales across Europe. The European car market has experienced a notable drop in demand since the financial crisis, leading to restructuring across the industry. Manufacturers are seeking ways to remain competitive and avoid overproduction in a market where consumer confidence remains fragile.
Volvo’s Ownership and Strategic Response
Since being acquired by Zhejiang Geely Holding Group in 2010, Volvo has sought to maintain its European manufacturing base while adapting to new market conditions. The company has also recently changed its top executive in an effort to restore growth. Despite the current slowdown, Volvo continues to focus on its core models and to invest in its key facilities, including Ghent.
The reduction in production speed at Ghent is part of a wider realignment within the European automotive sector, as manufacturers respond to economic challenges and shifting consumer preferences. Volvo’s strategy appears to be one of targeted adjustments, aiming to remain flexible and resilient in the face of uncertainty.
Looking Ahead
The outlook for the European car market remains uncertain, but Volvo’s decision to scale back production at Ghent is intended to keep the company agile and responsive to market changes. By making selective reductions rather than sweeping cuts, Volvo hopes to weather the downturn and be well positioned for recovery when demand returns. The company’s continued commitment to its European manufacturing operations, particularly at Ghent, underlines its intention to remain a significant player in the region despite current challenges.
