THE THIRTY-YEAR HISTORY OF VOLVO Written by ASSAR GABRIELSSON founder of the Volvo Company and its president until 1956 Assay Gabrielsson, the founder of the Volvo Group which is one o f the largest in .Swedens engineering industries, states the following interesting and occasion- ally rather unconventional viewpoints concerning automobile manufacture in general and Swedish automobile manu- facturing in particular. Reprinted from Transbladet, house magazine of Rederi AB Transatlantic. Jacob-the very first Volvo-on the assembly line in 1927. This car had a 28 b.h.p. four-cylinder side-valve engine. THE THIRTY-YEAR HISTORY OF VOLVO It was not only a desire for adventure that led available in Sweden to a large extent. Swedish to the founding of Volvo. All the essential require- engineering skill was of a highly developed char- ments for a profitable Swedish automobile manu- acter. The Swedish worker had centuries of tradi- facturing industry existed to a reasonable extent: tion behind him. Sweden had earned the reputation for manufacturing high-quality products. Sweden was a well-developed industrial country. In 1901, C. E. Johansson in Eskilstuna had in- Swedish rates of pay were low. vented combination gauge blocks and thus laid the Swedish steel had a world-wide reputation. foundation for the Swedish engineering industry There was a demand for automobiles built for which was essential for the series production of Swedish roads. automobiles with fully deplaceable component parts. At that time, Swedish industry had advanced Ford, who realized the value of Johansson, per- pretty far in many fields. Names such as SKF, suaded him to come to the United States in 1923 ASEA, Bofors, Husqvarna and many others were but the quarter-century spent by Johansson in wellknown both in Sweden and abroad. A compli- Eskilstuna had a permanent significance. He had cated thing like an automobile requires many taught Swedes the art of precision measuring and different manufacturing processes which, in their had given them the tools with with to carry out turn, must have a complete series of machines es - the job. pecially built for the purpose. These machines were The second condition, low rates of pay, was equally 1 significant. At that time in the United States, the workers were being paid about the same in dollars as Swedish workmen were getting in kronor. And the Americans were to be our first competitors since their products dominated the Swedish auto- mobile market. Swedish iron ore, Swedish pig-iron and Swedish steel had a large turn-over on world markets and were sold in large quantities even in countries with their own iron ore resources and steel production. All over the world people knew that Swedish steel was better than the steel from other countries. Experts discussed the "body" of Swedish steel- a word used to describe the superiority shown by The first buses were not exactly beautiful-but they experience but impossible to explain. ran well. Swedish steel was good but Swedish roads were bad, particularly when compared to American pensate for the labour-saving automation and the roads. Most of the cars sold in Sweden were built lower tool costs per manufactured part which was for straight concrete roads. They had soft spring- possible in the larger series produced in the United ing and were built for highspeed driving. Neither States. We who founded Volvo thought that they of these qualities were particularly suited for the would. twisting, pot-holed, dirt roads of Sweden. What After we personally had accepted the economical needed was an automobile with harder suspension risks and had built a test series of ten automobiles -an automobile that would hold the road. All more or less by hand, we managed to raise enough Swedish people remember the "washboard" roads. capital for a preliminary series of 1,000 automo- Only a really rugged automobile would escape biles. Our program was fairly ambitious: 1,000 being shaken to bits on such roads. automobiles the first year, 4,000 the second year There were certainly enough essential require- and 8,000 the third year. Our plans did not go any ments for a Swedish automobile industry. But further than this since we were convinced that there were problems to be solved too. having manufactured 8,000 automobiles, we would The most important of these was to build a be running with a profit. Swedish automobile so economically that it would In reality, however, things did not quite work out be able to complete with American automobiles. the way we had planned. We got manufacture Mass production was, naturally, the solution. But started but sales during the first year-that was since the market would be limited to Sweden, at 1927-did not exceed 300 automobiles, the second least during the first few years, the rate of mass year 900, the third year 1,400 and so on. production possible could hardly be on the same One problem which caused us a good deal of scale as in the United States. The question was worry from the beginning was how to spread our whether the low Swedish rates of pay could com- sales out evenly during each year. After all we were building automobiles and in Sweden these are mostly sold during the spring and summer months. In order to maintain the same production level all the year round, we had to find some way to dispose of the surplus automobiles during the fall and winter. We decided to favour the Argentine and other countries south of the Equator with this surplus and of the thousand built during the first year we had reckoned on exporting 400. In point of fact not one was exported during the first two years and export was not essential either since we could not produce as many automobiles as we had planned and there was no difficulty in disposing of them in Sweden. We managed to even out sea- sonal variations during truck production which was begun during the second year. We found that The PV 4-the first Volvo sedan with a leatherette- covered wooden body. truck sales were fairly even all the year round 2 with a slight tendency to increase at the end of Swedish firms to compete in the manufacture of the year. various component parts, we could always find When I said that we managed to raise enough foreign firms. The result of this was that Swedish capital for the first series of one thousand units, sub-contractors often accepted the price we offer- this did not mean that we were able to equip fac- ed. Otherwise, if he did not accept it, the order tories to produce these automobiles either com- went abroad. Due to the fact that we were aware pletely or partially. Even the American factories to the possibilities of purchasing abroad, we had a bought certain units for their cars from firms certain advantage over our own foreign compe- which specialised in certain branches. Volvo took titors. The large industrial countries in which our things even further and ordered all parts, all ma- competitors work can be regarded as sealed units. terial and all units from various industries in A British car manufacturer would never think of Sweden. Design and assembly work was done by buying a carburetor in Germany or France even us. We used the expression "Building the Volvo if it was better. The American automobile industry way" to cover this type of working. limit itself exclusively to the United States in the The advantage of this system, apart from the same way as German and French manufacturers fact that it did not require so much capital invest- restrict their manufacturing activities to within ment, was that we could exploit the long manufac- their own frontiers. But when we at Volvo bought turing experience of the firms from which we had abroad we did not favour any particular country. ordered the component parts. In a publicity cam- We bought where we found the best product. Our paign we ran during the first years, we underlined purchasing field became larger and more varied how old-established and experienced these various since we did not need to have any consideration industries were. Bofors had been established in for nationalist feelings. 1646, Svenska Stalpressningsaktiebolaget (Swedish In 1928 when we produced our first sedan type Pressed Steel Company), Olofstrom in 1735, Hus- automobile, neither the body factory at Olofstrom q varna Vapenfabrik in 1689 etc. This, we found, nor any other firm in Sweden could series produce great success. There was, undoubtedly, a great complete metal bodies and we were forced to pro- deal of truth in our statement that the inherited duce the automobile with a wooden body covered skill and traditional quality of the foremen and with leatherette-a system that was very popular workers in these industries was incorporated in in France. Gradually we managed to get bodies Volvo automobiles. which were metal from the waistline downwards, Without in any way detracting from the sales the upper section consisting of wood with leather- problems during the first years, it is true to say ette covering. The next phase as a metal body that manufacturing problems were the greatest. on which only the roof itself was covered with These were divided into two groups: leatherette and in 1936 we had advanced to the 1. How to reduce the costs of the component parts point where we introduced all-welded steel bodies. manufactured by our sub-contractors so that our A significant phase in our development was automobiles were really competitive. when we persuaded our Swedish sub-contractors to send technicians to foreign countries, primarily 2.