Over the next three years, Volvo Construction Equipment last week said it will invest nearly SEK 1.1 billion (about U.S. $160 million) in its Component Division in Eskilstuna, Sweden. Work will begin in the spring. The money will be spent in extending the factory, new machine equipment, a production and assembly concept and cross-functional working methods.
“The investment will make us more competitive and will secure jobs,” said Jörgen Svenningsson, president of the Component Division, which has around 1,200 employees in Eskilstuna.
The current area of 53,000 square meters will be extended to 63,000 and the entire layout of the factory will be adapted to flow-orientated production methods similar to those in the car industry. Money will also be invested in a second furnace in the new hardening plant.
The Component Division develops and manufactures power trains for Volvo construction equipment. Volvo CE’s success in both old and new markets has meant that the Component Division’s Eskilstuna factory has reached full capacity and is therefore unable to meet future growth targets set by Volvo CE, despite operating with five daily shifts, the company said.
“Nowadays it’s a question of such large volumes that we are forced to change from work-cell based assembly to line assembly,” said Svenningsson, who expects the investment to make it possible in the long run to downsize to three shifts on the processing line and two shifts on the assembly line. “It’ll also mean more flexibility while at the same time reducing vulnerability.”
The production capacity of the Component Division has almost doubled since 2002. The investment will mean a further doubling of that capacity in stages, without requiring additional employees to be recruited.
“When the transformation is completed, we will be more efficient and make more components of a higher quality with approximately the same workforce as today, although we may possibly need additional employees during the running-in period,” Svenningsson said.
Volvo has a total of 2,300 employees in Eskilstuna, of which 1,800 work with Volvo Construction Equipment. In 2006, Volvo CE invested a total of SEK 500 million (about U.S. $71.4 million) in the plants in Eskilstuna, Braås, Hallsberg and Arvika, Sweden.
Volvo Group is a publicly held company headquartered in Gothenburg, Sweden.