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Volvo Powertrain plant idles 59 workers this week

June 19, 2008|By ARNOLD S. PLATOU

HAGERSTOWN -- The Volvo Powertrain plant in Hagerstown laid off 59 workers this week as the heavy-duty truck market continues to skid, officials said Wednesday.

The layoffs, effective this past Monday, are in addition to the 99 workers idled here in April.

The two furloughs reduce Volvo's work force at the local plant, which makes engines and transmissions for Mack and Volvo trucks, to 1,278 employees.

"What's happening now is the fact that the market has not yet turned around as we were hoping it would due to softness in the U.S. economy in general, high fuel prices and weakness in housing construction," said John Walsh, director of media relations for Volvo Trucks North America.

Walsh said the company had expected the market, in a downturn since late 2006, to rebound soon, but that hasn't happened.

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Now, he said, the company anticipates this year's sales industrywide "will be the same as '07, essentially, very flat." However, he added, "We do believe we are at, if not very close at, the bottom of this particular cycle."

In addition to the layoffs here, workers also have been laid off at the company's assembly plant in Macungie, Pa. Walsh said 112 employees were idled there, effective June 6, in addition to the approximately 360 laid off more than a year ago, most by the end of 2006.

Volvo has different spokesmen for each of its operations and it couldn't be determined Wednesday afternoon whether any workers were idled in Hagerstown last year.

Walsh said the difficulties began in late 2006, just before U.S. Environmental Protection Agency standards took effect for new trucks in January 2007. As Volvo and other manufacturers had expected, 2006 was a strong sales year as a result.

And, as they had expected, sales during 2007 fell markedly.

Industrywide, just 208,000 heavy-duty trucks were sold in the United States, Canada and Mexico during 2007, compared to 349,000 in 2006, said Jim McNamara, manager of media relations for Volvo Trucks North America.

In 2006, "we had a real surge in demand ... and we increased employment (in Macungie) to meet that demand," Walsh said. "But then in late 2006, anticipating a downturn in the market ... we announced plans to take employment down."

In Hagerstown, a total of 28,230 engines and 10,605 transmissions were made during 2007, said Ilse Ghysens, manager of communications for Volvo Powertrain North America.

The two production numbers are different because most customers buying Volvo trucks choose other manufacturers' transmissions, whereas many buying the Mack brand do use the transmissions made here, McNamara said.

Ghysens said she could not disclose the Hagerstown plant's current production rate, but said it has fallen from a year ago as the company adjusts to lower demand.

Volvo, which is headquartered in Greensboro, N.C., and Mack, which is based in Allentown, Pa., also have an assembly plant in New River Valley, Va.

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