Volvo 2008 Annual Report Download - page 30

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Signifi cant events
The fi rst quarter
Strike at New River Valley plant
On February 1, The United Auto Workers
(UAW) union called a strike for the slightly
more than 2,600 members at the New River
Valley assembly plant in Dublin, Virginia, USA.
The strike stopped practically all production in
the plant for almost two months. In total, the
strike had a negative impact on operating
income during the fi rst quarter amounting to
approximately SEK 250 M.
On March 15, it was announced that employ-
ees represented by the UAW had ratifi ed a
new three-year agreement that ended the
strike. Employees returned to work on March
24, when the plant began ramping up produc-
tion to make up for the production that was
lost during the strike.
However, given the weak demand in the
North American truck market, in April a deci-
sion was taken to adjust production to a level
more consistent with market demand. Origin-
ally, the production adjustment was planned to
take place in February, before the strike broke
out. The adjustment entailed moving from two
shifts to one in May and consequently about
1,000 employees were laid-off.
Volvo Buses restructuring in Finland
In March, it was announced that Volvo Buses
intented to close the bus body plant in Tam-
pere, Finland. The plant was closed in August.
There were also plans to reorganize opera-
tions at the body plant in Turku to increase the
competitiveness. In total, 237 employees was
affected. Volvo Buses had an overcapacity in
its European bus body production system and
foresaw that this would be the case also in the
coming years. The adjustment of production
capacity was a part of the strategy to
strengthen Volvo Buses’ profi tability. During
the fi rst quarter, a provision amounting to SEK
120 M was made regarding Volvo Buses’
adjustment of the production capacity.
Subsequently in August, Volvo Buses
divested the Turku plant. The Turku plant manu-
factured the body for Volvo 9700 and was the
smallest body plant in Volvo Buses.
AB Volvo reached settlement with
US authorities
In March, it was announced that AB Volvo had
entered into a consent agreement with the
U.S. Securities and Exchange Commission
and a deferred prosecution agreement with
the U.S. Department of Justice resolving
issues related to the activities of two of its
2008 was an intensive year with a new joint-venture in India,
strong sales and earnings growth during the fi rst half of the
year and a signifi cant weakening in demand, sales and profi t-
ability during the second half.
26 Board of Directors’ Report 2008