Covid crisis forces truck makers to cut staff

By Categories: NewsPublished On: Wednesday 23 September 2020

Some of Europe’s leading truck manufacturers are cutting their workforces in response to the Covid-19 crisis and the need for increased research and development spending.

Traton subsidiary MAN is to reduce its staff by up to a quarter, and is consulting on the closure of three of its factories as it seeks to restore profits with the stated aim of funding initiatives such as the electrification and automation of vehicles. It is looking to improve its return on sales by eight per cent by 2023.

Two factories in Germany and one in Austria are at risk. The Austrian plant is the former Steyr truck factory, which now assembles MAN’s military vehicles. About €1.8 billion could be saved by cutting up to 9,500 jobs.

The truck-maker has reported its operating loss in the first half of 2020 as €423 million, and a 26 per cent drop in revenue, with Covid-related supply chain problems and reduced customer demand taking its toll.

However, pre-crisis profits were already significantly below those of Traton stablemate Scania, which itself said in June that it would cut 5,000 jobs, representing approximately 10 per cent of its staff. MAN had reportedly made cost-cutting plans to react to a drop in demand that was exacerbated by the pandemic.

An MAN spokesperson said: “The commercial vehicle industry is undergoing radical change.

“Already in a few years’ time, it will be virtually impossible to build a successful business model on the technologies and structures of today.”

Meanwhile Volvo Group – which, besides Volvo Trucks, also controls Renault Trucks in Europe, and Mack in North America – said it would reduce its white-collar staff by 4,100 starting in the second half of 2020, following reduced demand caused by the pandemic.

Around 15 per cent of those were said to be consultants, and 1,250 of the redundant positions are Sweden-based.

Volvo Group CEO Martin Lundstedt said: “The coronavirus pandemic and the global measures taken to fight it have led to a market situation impacting our business severely.

“The effects are expected to be lower demand going forward, and we need to continue to adjust our organisation accordingly.

“In parallel, we will accelerate the competence shift needed for new technologies and business models.”

The manufacturer said that the need for workforce cuts would have been increased had it not been for government support measures, which allowed short-term layoffs and the like.

“The Volvo culture will continue to be our guiding star in this work, where we will work as one team together with the unions to make this adjustment in a responsible way,” Lundstedt said.

“With these changes, the Volvo Group will maintain a position of strength, be adapted to the new market situation and continue to be a leader in the transformation towards sustainable transport and infrastructure solutions.”

Volvo Group’s workforce is said to be 104,000 strong, with net sales last year of $45.6 billion. Profits for the period ending 31 March this year were reportedly down by 44 per cent compared to the same period last year.