Swedish battery manufacturer Northvolt, which specialises in lithium-ion technology for electric vehicles, has announced it will lay off 840 people as it continues to fight to stabilise its finances.
On October 22, the company’s management said the workers would be let go at Northvolt’s factory in Skellefteå, which has been troubled by a series of apparent safety incidents.
Elsewhere in Sweden, mining giant LKAB said it was pausing its investment in fossil-free sponge iron in Kiruna.
Such iron was sold as “green” because it produces less emissions but a significantly large amount of electricity is needed to manufacture it.
At Northvolt, leadership had been negotiating the layoffs with IF Metall, the union representing the workers.
Hans Andersson, IF Metall’s ombudsman, told public broadcaster SVT Nyheter: “It feels terrible. There are so many tragedies for so many people.”
In early September, the company announced it would close down, sell, or consolidate factories in the European Union and the US.
One in four jobs in Sweden were on the line, or 1,600 roles.
Earlier in October, management had already told 338 white-collar workers at five different locations that they would lose their positions.
A total of 1,144 jobs have been cut from Skellefteå alone, a gigafactory that received close to €1 billion in support from the European Investment Bank.
According to IF Metall, employees who had joined the company most recently were to be let go.
For other employees, the union and the firm were able to work out alternatives including relocations and a modified shift pattern.
Northvolt is scrambling to secure $300 million (€277 million) with investors to bolster its financial stability into 2025.
On October 23, it struck a deal to borrow an amount of money in the short term.
“The cash was only expected to last for a few weeks at most, allowing the company to pay wages on Friday,” Reuters reported earlier in October.
The company had been in talks with investors and lenders to seek short-term funding and stabilise its precarious financial situation. It has said it was making significant progress towards a deal.
Northvolt has been struggling with production difficulties, a drop in demand and Chinese competition, forcing lay-offs and downsizing.
Christian Sandström, senior associate professor in digital business at the Jönköping International Business School, told Brussels Signal he was highly sceptical about the company’s future.
“They keep the business alive, but the debt burden of 60+ billion SEK [€5.2 billion] along with severe production problems indicate that the problems remain.
“Northvolt has bought time, but the nothing fundamental has changed,” he said.
When asked whether Northvolt needed to upscale rather than downsize to be profitable, Sandström replied: “They need to survive, and in order to do so the monthly expenses need to be lowered significantly.”
Rather than being an independent green innovator, Northvolt uses old Chinese technology, with 20-year-old equipment that was already out of date when put in place. https://t.co/oCI3Guhuj5
— Brussels Signal (@brusselssignal) October 9, 2024
At Swedish mining giant LKAB, according to calculations the energy needed for the planned production of sponge iron would amount to 70 terawatt hours, which is almost equivalent to the entire electricity production of Finland.
Plans are now being reduced and spread over time, with LKAB aiming to cut energy requirements by about two-thirds of the original goal of the 2030s by the 2040s.
