Activities in 1998 were characterized to a great extent by product renewal. Accordingly, major efforts were made in training and information at reducing lead-times and creating new and/or common systems.

 

The number of employees in the Volvo Group increased by 6,920 to 79,820 during the year.

Detailed information on Volvo’s employees and payroll costs, and on benefits to members of the Board of Directors and senior executives is provided in Notes to consolidated financial statements, Note 29 and the Eleven-year summary.
Where it once took up to six months to retool, changeover time was reduced to eight weeks when production of the Volvo S80 in the Torslanda plant was being planned.

To achieve this required well-planned training for the more than 3,000 assemblers who are now working on the Volvo S80, Volvo's most technically advanced car to date. The work was started about 2.5 years prior to production start with the training of approximately 160 assemblers who participated in preproduction of the Volvo S80. This was done in order to be able to affect product details and the production process at an early stage, viewed from an assembly perspective, and also to obtain detailed knowledge about the product. The task of each of the assemblers was to be an instructor and spread knowledge in his or her area of responsibility in the plant.

The aim was to give each assembler leading-edge expertise for his or her specific job. This was most apparent in the electrical and electronic sector, since the electronics in the Volvo S80 are much more advanced than in earlier models. Training was carried out following a basic analysis of skills, after which the assemblers' knowledge was tested.

The Torslanda plant in Göteborg, Sweden met its objectives in terms of quality, quantities and delivery precision. During 1998, 32,800 Volvo S80s were produced, compared with the introduction of the Volvo 850 model in 1991 when 7,400 cars were produced.

With the new platform as a base, and with the experience gained from this training program, the need for test-construction of cars is expected to decrease and the time required for production retooling is expected to become shorter.

Prior to the introduction in 1998 of Volvo Trucks' new heavy truck family Volvo FM, similar training was carried out during the year.

Training and integration in connection with acquisitions 		 
On May 7, 1998, Volvo Construction Equipment acquired Samsung Heavy Industries´ construction equipment division in Changwon, South Korea, with 1,700 employees. With the signing, a process of integration in which all employees participated also started. The aim was that all Samsung employees would quickly understand and perceive the attitudes, values and cooperation methods which Volvo represents.

At the take-over, a number of activities were initiated for all employees in the Changwon plant. The first part consisted of information measures designed to answer employees´ questions about the future of Changwon unit.
Also included were training courses via internal TV, an attitude survey, a change of work clothing, a Volvo Day, a Volvo exhibition, and changes of signs and color to identify the plant as a Volvo facility.

The phase that is now under way in Changwon includes establishing communications methods and channels as well as an information level that is common to the Volvo Group overall. The key elements are this connection in the communication teams that were formed. A newsletter was established and the employees have access to Volvo Global, the Group publication, as well as to Volvo Intranet and e-mail. The long-term integration program also includes implementing specific Volvo IT systems and training employees in their use. Activities are being followed up continuously in order to adjust and improve them, with the aim to integrate Volvo Construction Equipment Korea with the rest of the Volvo Group in a natural manner and to rapidly develop into a fully integrated unit in Volvo Construction Equipment.
 

Profit-related bonuses and 60-year Fund 		 
As an important component in creating solidarity, commitment and a focus on growth in earnings, an agreement on a profit-related bonus exists between Volvo and the union organizations for the year 1998. The profit-related bonus is based on Volvo's return on shareholders' equity, which must amount to at least 10%. A profit-related bonus based on a scale of between 10% and 18%, but not more than SEK 350 M, will be paid on the amount exceeding the return requirement.

The collective savings program designated the 60-year Fund has been expanded. The objective is to strengthen the financial position of the employees when they retire. A full share in the 60-Year Fund is currently the equivalent of SEK 210 per month deposited in an account in their name. The profit-related bonus system and the 60-Year Fund cover employees of AB Volvo and its wholly owned subsidiaries in Sweden.
 

Operational development 		 
The Volvo Group's ambition is to establish work forms that increase productivity, enhance quality and consequently improve competitiveness and profitability. Increased knowledge, process orientation, less bureaucracy and greater assumption of responsibility by employees are cornerstones in the continuous process of change which is necessary for sustainable competitiveness.

Volvo's work with operational development has yielded favorable results since the start with several pilot projects in 1996. Accordingly, the number of projects has grown successively and an increasing number of employees are involved in the process. Evidence of the intensity of this work was provided in 1998 when Volvo Trucks won the Swedish Quality award, with the following motivation:

“Operations are permeated by a strong and clear vision to create value for the customer. The foundation is committed leadership, a well-structured strategic planning process and good communications with customers, suppliers and employees. A successive breakdown of visions and goals creates involvement, commitment and pride in the company's successes. In a large global organization, the company has succeeded with a systematic improvement process that successfully permeates most of its operations Volvo Trucks is a fine example of quality development in Sweden.”

All programs, which have been under way for more than 12 months, have contributed to significant improvements in the form of increased productivity, higher quality and shorter lead times. During 1998, several programs were started in Volvo's plants in Europe and the US.