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Md., Washington County to loan $1 million to Volvo expand plant

August 22, 2008|By JOSHUA BOWMAN

WASHINGTON COUNTY -- Washington County and the State of Maryland have agreed to loan a combined $1 million to Volvo to help the company install an engine-block machining line at its Hagerstown-area plant.

The agreement, announced Thursday, came one week after Volvo Powertrain North America revealed plans to invest $50 million in the new engine-line operation, which the company says will create about 50 jobs at the Washington County plant.

"Volvo is an important part of our business community, and this is a great project that will keep and create jobs in Washington County," said John F. Barr, president of the Washington County Commissioners.

"We very much appreciate the solid support we've always received from the state of Maryland and from Washington County, and we are very excited about this opportunity to reach the right level of competitiveness for our company in Hagerstown," Carlos Hungria, senior vice president of Volvo's Hagerstown plant, said in a statement.

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Under the agreement, the Maryland Department of Business and Economic Development (DBED) will loan $900,000 to Volvo, and Washington County will loan $100,000 to the company.

The County Commissioners likely will take a formal vote to approve their portion of the loan in the next few weeks, County Administrator Gregory B. Murray wrote in an e-mail Thursday.

The commissioners reached a consensus to participate in the loan agreement during a Sept. 25, 2007, closed session meeting with the Hagerstown-Washington County Economic Development Commission, Murray said.

The meeting was held in closed session to keep negotiations and Volvo's plans for the engine line confidential, Murray said.

The county's portion of the loan likely will come from hotel-motel tax revenue, Murray said.

The loan agreement requires Volvo to invest $50 million in the machining line and retain the plant's current work force of about 1,200 through December 2013, DBED Spokeswoman Karen Glenn-Hood said Thursday.

If those conditions are not met, DBED and Washington County can reclaim at least part of the loan, Glenn-Hood said.

In the last two years, the Hagerstown plant's work force has dropped from about 1,800 to about 1,200.

Ilse Ghysens, spokeswoman for Volvo Powertrain North America, said the company is "very confident" that it will maintain its current work force as required by the loan agreement.

The loan agreement also makes Volvo eligible for up to $150,000 in grants that can be used to help pay the costs of training its machinist staff, Glenn-Hood said.

The engine block machining line operation, which is expected to start up by the end of 2010, was announced last week along with a restructuring plan that will move Mack Trucks' headquarters from Allentown, Pa., to Greensboro, N.C.

Volvo's Hagerstown-area plant makes truck engines and transmissions for Mack and Volvo, which bought Mack in 2001.

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