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Volvo CE transfers backhoe loaders, motor graders to SDLG


November 18, 2014
By Rock to Road

volvograderNovember 18, 2014 – As part of the Volvo Group’s ongoing
activities to improve profitability and reduce costs, Volvo Construction
Equipment will discontinue development and production of its current product
line of Volvo-branded backhoe loaders and motor graders. In the future, Volvo
CE’s Chinese company SDLG will manufacture the machines.

volvograderNovember 18, 2014 – As part of the Volvo Group’s ongoing
activities to improve profitability and reduce costs, Volvo Construction
Equipment will discontinue development and production of its current product
line of Volvo-branded backhoe loaders and motor graders. In the future, Volvo
CE’s Chinese company SDLG will manufacture the machines.

 

As communicated in conjunction with the report on the third
quarter of 2014, further cost-saving measures will be implemented in Volvo
Construction Equipment (Volvo CE) to adapt the cost structure and to address
the profitability of certain products. A review of the operation has now been
performed, resulting in the decision by Volvo CE to discontinue product
development and production of backhoe loaders and motor graders in Europe and
Americas and transfer these operations to its Chinese company SDLG. Combined
with other efficiency enhancement measures, this will result in a workforce
reduction of about 1,000 employees, of whom the majority are in Poland, the US
and Brazil.

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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. SDLG-branded backhoe loaders
and motor graders will better serve customer demands in the large and growing
value segment of the market.

 

Currently, motor graders are built at Volvo CE’s production
sites in Shippensburg, US, and Pederneiras, Brazil, while backhoe loaders are
manufactured in Pederneiras, Brazil, and Wroclaw, Poland. Ceasing European
production of backhoe loaders will result in the closure of Volvo CE’s
operations in Wroclaw.

 

The measures within Volvo CE are a part of the series of new
activities within the increased scope of the Group’s Strategic Program
2013-2015, which was published in conjunction with the report on the third
quarter 2014. Combined, these activities are expected to reduce the Group's
structural costs by SEK 3.5 billion. Together with ongoing activities, the
ambition in the Strategic Program is to reduce the Group’s structural costs by
SEK 10 billion compared to 2012 and that all activities are implemented by the
end of 2015 with a full-year savings-effect in 2016. For further information,
refer to the Volvo Group’s report on the third quarter 2014.