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Mack's Gigou: Merger is Win-Win

May 5, 2000

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Mack Trucks president Michel Gigou says the combination of Mack, RVI and Volvo will form a strong new company in which "1 + 1 + 1 equals more than 3." And he said Mack does not have plans to kill any future product development.

"We knew we (Mack Trucks) had to be part of one of the top three heavy truck manufacturers in the world in order to secure our long-term future," he said in an interview with truckinginfo.com. "This was our goal 10 years ago when it became clear that the cost of new technology and product development would require huge resources in the future."
Volvo AB announced on April 25 it would acquire all of Renault truck business, including Mack, in exchange for 15% of Volvo stock.
Gigou reiterated it will be the end of the year before the merger is completed, assuming no legal problems. The deal is yet to be approved by shareholders and the three governments involved. Gigou is currently on a whirlwind tour covering Mack's three manuacturing and assembly plants, having face-to-face meetings with Mack workers and managers. He also is meeting with Mack distributors whenever he can to assure them that Mack products will continue to be developed and marketed through Mack's own distributor network.
He said that Mack/RVI new products for the U.S. and Europe will continue as planned at least til 2005. This includes a new line of vocational trucks for both the U.S. and Europe. In the U.S. code-named "Granite," the new line will be introduced here early in 2001 as planned, he said. He identified the new trucks as being lighter in weight and engineered specifically for U.S. bridge formula states. The bridge formula spells out both gross weights and axle weights by truck wheelbase and length.

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Gigou also said that additional products would be introduced complementing the "Granite" products about 18 months later. All would continue to offer Mack's own engine and powertrains.
"Everything we have been doing in product development at Mack and Renault VI will continue on schedule," Gigou stated. "It's business as usual." He referred to the new truck lines as the first of bridge products jointly developed between RVI and Mack teams in which there are economies of scale by using common parts/assemblies in both the U.S. and European product.
As an example, he said that Mack's newest model, the Vision, and RVI's Premium, both have identical cooling systems. The economies of scale eventually will show up in common purchasing worldwide and "back office" functions such as accounting. Marc Gustafson, president of Volvo Trucks of North America, said earlier that the combined companies expect a $400-million annual savings after the first two years. Eventually there will group engineering, product and systems development and purchasing. "We will start to unite, not merge," he said. Mack and Renault prior to the Volvo acquisition, have been working on products for introduction in 2004.
In response to questions about worldwide consolidation taking in other brands, Gigou said the Volvo-Mitsubishi agreement already in Canada might lead to other ventures but he pointed out that currently Daimler-Chrysler has a large stake in Mitsubishi. RVI also has a substantial investment in Nissan Diesel leading to speculation that down the road there could be five brands intertwined: Volvo, Renault V.I., Mack, Nissan and Mitsubishi.
Gigou said the future looks brighter for Mack than ever before and that with a stronger
financial base and resources "Mack is full of enthusiasm for the future."

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