Volvo Group announced in mid-November that, as part of its ongoing effort to improve profitability and reduce costs, its Volvo Construction Equipment unit will discontinue product development and production of backhoe loaders and motor graders in Europe and the 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 U.S. and Brazil.

Volvo CE’s lineup of high-spec Volvo-branded backhoe loaders and motor graders has 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, Pennsylvania, USA, 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, said Volvo, are a part of an effort within the increased scope of the Group’s Strategic Program 2013-2015, that are expected to reduce the group’s structural costs by SEK 3.5 billion (approximately $475 million). Together with ongoing activities, the objective of the Strategic Program is to reduce the group’s structural costs by SEK 10 billion compared with 2012.