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Introduction Contd...
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Gyllenhammar's apprehensions proved correct when Volvo closed down Kalmar plant
in 1994. However, Volvo's efforts in bringing changes in work design offered
valuable lessons to both the academic and corporate community.
Analysts appreciated Volvo for its constant emphasis on learning from
experiences and implementing the lessons so learnt in its new initiatives. This
contributed significantly to the development of human-centric production
systems. These systems brought to life several theories and concepts, which had
earlier only been enunciated in textbooks but rarely practised with the kind of
seriousness with which Volvo did.
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Background Note
Volvo was founded on July 25, 1924, when Gaustaf Larson (Larson), an
engineer and Assar Gabrielsson (Gabrielsson), an economist, met over a meal
and agreed to build a car suited for Sweden's roads and climatic conditions.
The two founders had worked earlier for SKF, a famous Swedish bearings
manufacturer, where they nurtured the dream of building a car. In 1926, the
duo prepared 10 prototypes of the car to convince SKF into investing in
their company.
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SKF not only agreed to invest SEK 200,000 kroner, but also lent its
patented name, AB Volvo. On April 14, 1927, the new company rolled
out its first car, the OU4, from a factory near Goteberg, Sweden.
The day marked the official date of inception of AB Volvo (Volvo)3.
In September 1929, Volvo reported its first ever profits. In 1934,
Volvo launched its first bus, the B-1. The product rapidly gained
acceptance as a vehicle fit for rural areas.
By the time World War II broke out in 1939, Volvo had established
itself as a profitable automobile manufacturer with a broad product
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The company's automobile engines were known for their
reliability and were used in cars, buses, boats, fire tenders and military
tanks.
Volvo began exporting vehicles on a major scale to Latin America, Japan, China,
Israel, Ireland, Holland and Belgium. Volvo's financials were boosted during the
war period (1939-1945), when it supplied a large number of vehicles to the
military.
In 1946, Volvo introduced its first diesel bus, the B-56, which became immensely
popular as a city bus as well as a tourist coach. By 1948, Volvo emerged as a
major tractor manufacturer. In 1949, Volvo rolled out its 100,000th vehicle from
its assembly lines. In 1955, the company began exporting to the US.
In 1963, Volvo commenced car production in Canada, becoming the first European
automobile manufacturer to set up such facilities in North America. Its
manufacturing facility in Belgium became operational in 1965. Volvo created a
separate truck division in 1968.
The 1970s witnessed a significant change in Volvo's operations, under the
leadership of Gyllenhammar. In 1972, the Volvo Technical Centre (VTC) was
established, which had R&D facilities, including a safety centre and an Emission
Laboratory...
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