Volvo to open new plant in Durban

Swedish motor-manufacturer Volvo, the world’s second largest truck maker said on Tuesday that its board had decided to close its Gaborone production plant in Botswana and open a new plant in Durban, South Africa.

The company said in a statement that the formal decision to close the Gaborone plant would affect around 82 people.

Volvo Truck & Bus (Botswana) Ltd has been assembling CKD (completely knock down) kits for both truck and bus products since 2000, when it took over the plant established by the previous local importer company.

However, the company said that in line with an aim to achieve higher global efficiencies, the decision has been taken to set up a production plant in Durban, South Africa.

According to Volvo, its board’s decision was based on consideration of the reductions in lead-time, less capital tied up and lower freight costs that will in turn improve efficiencies.

“With the majority of the vehicles being built in Botswana being intended for the South African market, it is relevant that land freight is currently more costly and is higher than the sea freight from Sweden, and as this is a highly competitive market measures to address this imbalance need to be taken.”

 

The company added that with the production plant in Durban, lead times will be eight to 10 days better and in view of the positive industrial development taking place in South Africa, the conditions are ideal for the relocation of this key division within the Volvo organisation.

This decision is in line with Volvo’s long-term strategy for achieving profitability and continuing to upgrade their global operations.

The vehicles already planned for assembly in the Botswana plant will be completed and management has worked out a financial scheme for the employees that are affected by the close down, the group said.

 

“It is sincerely regretted that the 82 employees cannot be offered employment in the new Durban facility owing to immigration policies in the region. Volvo Truck & Bus (Botswana) Ltd Employees, however, will be offered half a year’s salary if they stay until the close down.”

Volvo pointed out that the employees have benefited over the years from training in all aspects of their daily duties and in other areas such as safety, quality and environmental issues.

“It is firmly believed that the workforce will attract interest from other companies and indeed other service organisations. Having been an ISO9000-accredited company for some two years Volvo employees are fully aware of working within a structured organisation.”

The group said that it intends to call in qualified and reputable employment consultants to interview the employees with a mandate to try and place as many people as possible in suitable positions within the local industry.

“The land area for the new plant has been prepared and building has commenced. Production should start in December 2005.” -I-Net Bridge

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