Editor’s Note: CORRECTS to show layoffs cover Volvo Group employees, including Mack and Volvo Trucks North America
Mack Trucks and Volvo Trucks North America are laying off 450 salaried workers at their North Carolina headquarters as part of global downsizing by Swedish parent Volvo Group (OTC: VLVLY).
But Mack is holding the line for now against trimming more production jobs in Pennsylvania.
Even before the COVID-19 pandemic erased seven weeks of production in the second quarter, Mack expected a 30% decline in business following strong results in 2018 and 2019.
The projected decline is now “significantly sharper,” Mack spokesman Christopher Heffner told The Morning Call newspaper in Allentown, Pennsylvania. Mack laid off 305 hourly workers in February.
“We are not planning further layoffs at this time,” Heffner said. “We will continue to monitor the market and will make employment decisions based on those conditions.”
450 salaried job cuts coming
The 450 salaried layoffs by the end of the year cover reductions across various Volvo Group functions that support multiple businesses its headquarters in Greensboro, North Carolina. Two layoffs will be in Mack’s Lehigh Valley Operations.
The layoffs are a portion of 4,100 white-collar jobs the Volvo Group plans to eliminate in the second half of 2020. Overall sales at the maker of trucks, buses and construction equipment fell 38% in the quarter.
“Before the pandemic, we expected the overall North American heavy truck market to be down about 30% compared to 2019. Now the decline will be significantly sharper,” Heffner said.
The Lehigh Valley Operations plant in Lower Macungie recovered quickly from a 12-day strike by the United Auto Workers union in October 2019. The first strike in 35 years at the plant idled six facilities in three states.
The strike impact came as orders slowed. Mack postponed two scheduled down weeks in December 2019 to make up critical builds in the off-highway and garbage truck segments, where it is an industry leader.
New medium-duty trucks delayed
Coinciding with the down weeks hit the calendar in January, Mack said it was reentering the medium-duty truck market after a 20-year hiatus. The Class 6 and 7 MD Series will be built in a former comic book publishing plant near Roanoke, Virginia. Mack is investing $13 million to retool the plant. It is creating 250 new jobs.
Production starts Sept. 1. The pandemic delayed a planned July kickoff, according to WFIR Radio in Roanoke.
The MD Series competes with Navistar’s International brand; the Peterbilt and Kenworth nameplates from PACCAR Inc. (NASDAQ: PCAR) and Freightliner by Daimler Trucks North America. Mack’s sister brand, Volvo Trucks North America, does not sell medium-duty trucks.
“We’ve got orders to cover several months after production starts,” Jonathan Randall, Mack senior vice president of sales, said at the public reveal of the MD Series at the NTEA Work Truck Show in March.
The Cummins (NYSE: CMI) Series B6.7-liter diesel engine powers all MD models.
No word on battery-electric version
Mack executives decline to say whether an electric version of the MD Series is coming. California requires 9% of all new trucks to have zero-emission by 2024. The industry focus is on regional haul and delivery trucks that return to base for overnight recharging.
“We don’t discuss our product or technology portfolio before we have public announcements, but the world’s moving quickly with battery-electric vehicles.” President Martin Weissburg told FreightWaves in a January interview.
Freightliner is testing an eM2 medium-duty electric truck with Penske Truck Leasing in California. International, Kenworth and Peterbilt all plan medium-duty electric trucks.
Mack delivered a battery-powered LR garbage truck to the New York City Department of Sanitation in January. It uses Volvo technology from Europe.