STOCKHOLM, Sweden (AP) -- Swedish truck and bus maker Volvo AB announced plans Tuesday to lay off around 1,400 workers at truck plants in Belgium and Sweden because of falling demand in Europe.
The company said 400 jobs will go at a plant in Ghent, Belgium, and 980 at two Swedish plants in Gothenburg and Umea. Talks with unions would start "immediately," it said.
Volvo said it would cut costs because of falling sales and higher raw material costs, but did not provide financial details.
"The European truck demand is now slowing," it said. "The negative market development has been accentuated by the recent events in the financial markets resulting in financial uncertainty and credit restrictions."
Volvo added that the global financial turmoil meant some buyers were replacing their vehicles less often and "some are not being granted loans to finance new trucks."
Michael Andersson, an analyst at Evli Bank in Stockholm, said the news is hardly surprising.
"All figures have pointed downwards this year. Especially the order intake. It's a signal that the development in Europe will be weak next year," he said. Deliveries are also down, he added, saying "there probably will be a few more announcements like these ahead."
In a separate announcement Tuesday, another Volvo unit, Volvo Construction Equipment, unveiled plans to move its motor grader activities from Goderich in Ontario, Canada, to its plant in Shippensburg, Pennsylvania in the U.S.
Volvo said the move will improve competitiveness and reduce its exposure to exchange rate fluctuations within North America. The stronger Canadian dollar has elevated costs and hurt exports in that country.
The unit's move would "affect 500 employees," out of a global workforce of 16,000, but Volvo didn't say whether it would lead to any layoffs.
Bill Law, a Volvo Construction Equipment spokesman at the global headquarters in Brussels, said some staff would be offered jobs at the Shippensburg facility, but that it would "ultimately" also lead to some staff cuts. He gave no further details.
The plan, estimated to cost about $45 million, is expected be completed by 2010.
Volvo sold its car division to U.S.-based Ford Motor Co. in 1999.