Volvo buying Mack

April 26, 2000|By KERRY LYNN FRALEY

Shareholders of Swedish automaker Volvo on Wednesday approved the company's plans to buy Mack Trucks Inc., a subsidiary of Renault S.A., along with Renault's RVI truck division, according to a Volvo spokesman.

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If it gains other necessary approvals, the deal - involving the exchange of 100 percent of Renault V.I./Mack shares for 15 percent of AB Volvo shares - will make Volvo the second largest manufacturer of trucks in the world, improve its competitiveness and position it for future growth, according to the companies.

Beyond statements that it would have "no immediate impact on employment," the companies weren't saying Wednesday how the sale might affect Mack's Hagerstown engine and transmission manufacturing plant on Pennsylvania Avenue.

"It's too early in this process to be able to discuss any details," company spokesman John Mies at Mack headquarters in Allentown, Pa., said.


Marc Gustafson, president of Volvo Trucks North America, said Tuesday during a news conference at Volvo Trucks North American headquarters in Greensboro, N.C., that he "didn't care to speculate what employee levels will be post-merger."

Mack's Hagerstown plant employs 1,426 workers and produces 215 engines and 37 transmissions a day, Mies said.

Mack is the sixth largest employer in Washington County, according to the Hagerstown-Washington County Economic Development Commission's 2000 Business and Industry Directory.

The sale is subject to approval by antitrust authorities in Europe and the United States, and isn't expected to be completed until late 2000 at the earliest, according a press release issued Tuesday by Volvo Trucks North America, based in Greensboro, N.C.

At this point in the process, it would be premature to speculate how the deal could affect the different groups within the companies and the various facilities, said Phil Romba, a spokesman for Volvo Trucks North America.

"There's a lot of work to be done," Romba said.

According to a Renault press release issued Tuesday, Volvo and Renault VI/Mack "would retain their respective identities, their brand names, separate sales organizations and assembly plants tied to each brand," if the sale goes through.

Volvo Trucks North America's press release stated: "The operations of Volvo and Renault VI/Mack pertaining to powertrain, purchasing and product development will be merged in order to achieve the strongest possible synergy effect."

The deal offers "substantial opportunities for cost savings," particularly in the purchasing and powertrain areas, according to the release.

"About half of the savings would be achieved in purchasing, but opportunities for major savings have also been identified in the engine sector, by adapting joint engine programs to the different brands," the release said.

Volvo Trucks North America's assembly plant in Dublin, Va., is in the midst of a $148 million expansion expected to create nearly 1,300 full-time jobs by 2002.

Volvo assembles trucks in the United States but, unlike Mack, doesn't manufacture any of the engines for its trucks in the United States, Romba said.

In January, Mack announced it had increased its share of the heavy truck market for the seventh consecutive year.

The company closed 1999 with a record 34,264 sales of heavy-duty trucks in the United States, which represented 13.1 percent of the heavy truck market.

"If approved, this agreement would make Mack part of the world's second largest truck group, and provide us with even greater opportunities for continued profitable growth," Mack President and Chief Executive Officer Michel Gigou was quoted as saying in a press statement issued Tuesday.

"This is a passing lane opportunity for two strong companies to combine their forces," Gustafson said at the Tuesday news conference.

Truck sales occur in a market where buyers are under pressure from shippers to deliver loads within minutes of scheduled times, Gustafson said.

In heavy truck rankings, the new company would be second only to the German-owned DaimlerChrysler, which owns Freightliner truck plants in Cleveland, Mount Holly, Gastonia and High Point.

The deal would give Volvo a 25 percent share of the European and American markets and a significant presence in Latin America and Asia.

The Associated Press contributed to this story.

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