SKF AB (Sweden; Stockholm: SKFB; 5251R9N7) announced it has reached agreement with its workforce about how to handle the declining demand for bearings and still keep its factories running efficiently.

Through 2009, SKF used several approaches to cut bearing output from its plant in Gothenburg, Sweden. However, into 2010, the company decided a more permanent approach had to be taken.

Working with its employees, SKF developed a program, just concluded, to address the need for fewer workers and lower output for the longer term.

Approximately 150 people have selected one choice : early retirement; a voluntary separation package, including payment; shifting jobs to lower pay and responsibility; and retraining.

SKF said the total cost of restructuring the Gothenburg workforce will be in the neighborhood of SEK 90 million (USD $11.7 million). The program savings will come in at nearly SEK 50 million per year by the time it is fully implemented in the third quarter of 2010.

Carl Orstadius, MD of SKF Sverige, said: "We have worked very hard together with the union representatives for over a year to avoid making people redundant, at the same time as we have adapted our cost levels to lower demand. We are very glad that we have found a long-term solution that means we can keep important skills and avoid production disruptions."