Mack also will receive a $3 million loan from the Maryland Economic Development Assistance Fund, a $400,000 grant from the Maryland Industrial Training Program and a $300,000 incentive package from Washington County government, according to Maryland Department of Business and Economic Development documents.
Mack plans to spend $124 million to add a new production line at its Pennsylvania Avenue plant, the documents said.
After Volvo bought Mack in 2001, the company sought a location to center its North American manufacturing operations.
Volvo had considered sites in Pennsylvania, South Carolina and Mexico for the project, the Hagerstown-Washington County Economic Development Commission has said.
"This package was an important piece of the total evaluation," Johnston said.
Volvo's decision to put the operation in Hagerstown was also a vote of confidence for the employees, Johnston said at the time.
There was a chance the Legislative Policy Committee would not approve the loan because of the state's budget deficit, said Del. John P. Donoghue, D-Washington.
Both Donoghue and Sen. Donald F. Munson, R-Washington, said they lobbied members of the committee to approve the loan.
The state will forgive the loan as long as Mack, which has been in Hagerstown since 1961, fulfills its commitment to the project.
The Department of Legislative Services estimates the state will recoup the cost of the loan in 13 months from sales and income taxes generated by the project.
Mack employs about 1,100 full-time employees and expects to have between 1,038 and 1,301 workers through 2009.
Hagerstown Community College will administer Mack's $400,000 work force training grant.
Washington County's incentive package includes a guaranteed rate for water and sewer costs and grants that may be used for additional work force training.