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Volvo adding to Hagerstown operations

August 15, 2008|By ANDREW SCHOTZ

Volvo is investing about $50 million to install an engine-block machining line at its plant north of Hagerstown, a company spokeswoman said Friday.

The additional work will create about 50 more jobs at the plant, which now has 1,200 employees, Volvo Powertrain North America spokeswoman Ilse Ghysens said.

The new operation is expected to begin by the end of 2010.

"A block, also referred to as 'cylinder block,' is the biggest component of an engine, which holds the pistons, crankshaft, etc.," a Volvo summary page says.

Volvo's decision shows its commitment to the Washington County plant, said David Perkins, the president of United Auto Workers Local 171, which represents workers there.

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Three years ago, Volvo invested $150 million in plant upgrades.

The engine-block machining line was announced Thursday along with a Mack Trucks restructuring plan that includes moving Mack's headquarters from Allentown, Pa., to Greensboro, N.C.

Volvo Powertrain's Washington County plant makes truck engines and transmissions for Volvo and Mack.

Volvo, which is based in Sweden, acquired Mack and Renault in 2001.

The new work in Washington County also comes two years after Volvo said it would lay off up to 600 employees, or roughly one-third of its local work force, because of a slumping market.

Perkins said at the time that "a massive pre-buy," just before tighter emissions standards, was expected to hurt 2007 sales.

By mid-2007, though, Volvo had only reduced its work force by about 340, through both temporary and permanent moves, including retirements.

Subsequent market fluctuations have further reduced the plant's work force to about 1,200 jobs. Some layoffs are seasonal, and employees might be called back, Perkins said Friday.

The Volvo summary page says the company has had capacity issues with its foundry in Skvde, Sweden, and its machining operations in Skvde and Brazil.

The Washington County investment will "reduce our logistic costs in North America, provide a currency hedge, and increase the NAFTA content" of Volvo products, the sheet says. "NAFTA content" refers to North American Free Trade Agreement rules.

The summary page says Volvo is looking for a North America supplier for the blocks.

Perkins said some details of the machining won't be decided until the company agrees to a new labor contract.

He said a three-year contract expired Oct. 2, 2007, but employees still are working under those terms. Contract negotiations are expected to resume next month, he said.

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