The Volvo group announced Tuesday it would cut about 500 jobs in Ontario, as it moves work from its Goderich, Ont., plant to a U.S. factory.

The Swedish company — separate from the Volvo carmaker owned by Ford Motor Co. — said Tuesday that its Volvo Construction Equipment division will move some equipment-making activities from the town on the Lake Huron shore to Shippensburg, Pa.

The company's work on motor graders, a type of industrial vehicle used to level surfaces, will be affected the most.

Volvo stated that the move, to be completed in phases by 2010, "was taken to improve the competitiveness and profitability of the total road machinery business and will also reduce our exposure to exchange-rate fluctuations within North America."

The exact timing of the layoffs is unknown, pending a discussion with the union for the hourly workers at the plant, said a Volvo spokeswoman.

"Nobody has been laid off today. They will all receive at least 90 days notice," said Volvo's Beatrice Cardon.

"We have a union contract that is valid until the end of June and we plan to advise people as early as we can when there will be no job for them. But ultimately, we are leaving by the end of 2010."

The plant's management met Tuesday with representatives of the International Association of Machinists and Aerospace Workers to inform them of Volvo's plan and begin consultations.

"They will have their wishes and we will have our wishes and we will try to find the most harmonious way and work at trying to get people into new places as well," Cardon said.

The Goderich plant has about 165 salaried workers and 335 hourly workers. The restructuring is expected to cost the company $45 million US this quarter.

The company has promised affected workers it will give them counselling, training and help in finding new employment.

While some of the staff would be offered jobs in Shippensburg, there will "ultimately" be job cuts, said a Volvo Construction Equipment spokesman from Brussels, Belgium.

Volvo, the world's No. 2 truck maker, also announced plans to lay off 1,400 people at truck plants in Belgium and Sweden to adjust to falling demand for trucks in Europe.

In the European downsizing, 400 jobs will be eliminated in Ghent, Belgium, and 980 at Swedish plants in Gothenburg and Umea.

Volvo cited falling sales and higher raw material costs, but did not provide financial details.

With files from the Canadian Press