Sweden-based global truck and bus maker Scania is cutting its production rates back a further 15% and plans to lay off some 1,000 workers as it said demand for heavy vehicles continues to decline in Europe, Latin America, and elsewhere.
The manufacturer said it already cut back production by about 15% at the global level and laid off some 900 workers at its European production facilities in November, but since then demand has deteriorated even further, noted Martin Lundstedt, Scania’s executive vp-sales and marketing.
“The slowdown in Europe and the Middle East has continued,” he said. “Meanwhile we are also seeing a lower rate of order bookings from other markets.”
In particular, Lundstedt pointed to Brazil, where there is growing uncertainty about the market trend during the first half of 2012 in light of the transition to new Euro 5 emissions legislation and the trend of global demand for agricultural products and other commodities.
As a result, at the global level, Scania – which booked net sales of SEK 78 billion ($11.39 billion U.S.) and net income of SEK 9.1 billion ($1.32 billion U.S.) in 2010 – said it will lower its production rate by another 15% starting in January at its factories in Europe and Latin America.
“This implies that we must gradually adjust staffing, which unfortunately means that we will be unable to renew the contracts of more than 1,000 fixed term temporary employees in our global production network,” said Anders Nielsen, Scania’s executive vp for production and logistics, noting that the company employs some 35,500 people worldwide in about 100 countries.
He added that Scania has made a significant shift in production strategy over the last two years so it could establish shorter yet more stable delivery times of approximately 8 weeks in Europe, with the aim of getting the right signals to the production network as early as possible when changes occur in order bookings.
This strategy, stressed Nielsen, has helped Scania minimize inventory build-up and remain more flexible in terms of adjusting production volumes in the face either falling or rising demand.