Mack Trucks will undergo a major restructuring plan that includes moving its administrative headquarters and most support functions from Allentown, PA, to Greensboro, NC, as well as transferring assembly of all Mack highway vehicles from the Volvo New River Valley, VA, plant to the Mack plant in Macungie, PA, according to parent company Volvo Group.
The Greensboro headquarters is where many of the Volvo Group’s North American support functions--such as information technology, parts logistics, human resources, and finance—are already headquartered, including Mack’s sister OEM Volvo Trucks North America.
The move to the Macungie plant allows production of Mack and Volvo trucks to be concentrated in a single factory for each brand, as the Macungie plant is where Mack’s construction and refuse vehicles are currently assembled. The New River Valley plant will continue to produce all vehicles for Volvo Trucks North America.
Volvo Group also plans on consolidating product development and purchasing functions in the Greensboro location. The Allentown Test Center will be converted into a customer demonstration and reception center, as well as hold office space for personnel supporting Macungie production, Mack said.
John Walsh, director of media relations for Mack, told FleetOwner that the company’s customer order fulfillment and customer engineering functions supporting production will remain at its Allentown facility, close to the Macungie plant. Mack has operated manufacturing facilities in Allentown since 1905, with the company’s headquarters moving to the city in 1965.
“Producing all of our trucks in Macungie will also improve efficiency and reduce cost,” Walsh added. “Mack has undergone a tremendous period of product renewal, and we now have far more shared parts between our highway and vocational trucks. So it simply makes sense to build both in the same location. This approach also allows us to provide a Mack total product and brand unique experience for our customers, dealers and others visiting the plant.”
In addition, the company will restructure its parts distribution network by creating a new central warehouse while closing warehouses in Columbus and Dallas and downsizing facilities in Baltimore, Chicago, Jacksonville and Memphis. The location of the central warehouse has not yet been determined, Volvo Group said in its press release.
Volvo Group plans on moving Mack highway vehicle production to Macungie in the fourth quarter of 2008, which will create at least 200 new positions at the plant, the company said. The movement of the administrative and support functions is planned for 2009, with the functions currently performed at the Allentown Test Center scheduled to move in 2010 and the restructuring of the parts network set to begin in 2009, the company said.
“We understand that these changes will be extremely difficult for many of our employees and their communities,” said Dennis R. Slagle, Mack president & CEO. “While the additional investment and new positions at our Macungie plant and the conversion of our Allentown Test Center into a customer demonstration and reception center will mean a major continued Mack presence in the Lehigh Valley, we will do everything we can to facilitate this transition responsibly and sensitively for affected employees.
“Taking these steps will make us a more efficient, agile, and cost-effective organization in almost every aspect of our business, from product development, to production, to aftermarket support,” Slagle added.
Volvo Group also plans to invest approximately $20 million to improve the Macungie plant’s paint operation and $50 million to install a new engine block machining line in its Hagerstown, MD powertrain facility.
It is uncertain what Volvo will do with the freed capacity at the New River Valley plant. Volvo manager of media relations Jim McNamara told FleetOwner that the company does not discuss future production plans.
Volvo Group said all affected employees represented by the United Auto Workers (UAW) would be offered positions in other locations, with negotiations on a new labor contract between Mack and the UAW set to resume on September 2.