Mack Restructuring Plans Include Moving HQ

Mack Trucks today announced a major restructuring plan, including moving its headquarters to Greensboro, N.C., and moving the production of Mack highway trucks to Mack's Pennsylvania plant.

Officials say the changes are designed to improve the company's competitiveness and position it for long-term industry leadership.

Key components of the restructuring plan - which also involves other business units of the Volvo Group, of which Mack is a member - include:
* Moving the company's administrative headquarters and most support functions from Allentown, Pa., to Greensboro, N.C., where many of these support functions - like Information Technology, Parts Logistics, Human Resources, Finance, etc. - are already headquartered, in order to improve organizational efficiency. Mack plans to lease office space near the existing Volvo campus for the new Mack headquarters building. Office space is also being added on to the Greensboro Tech Center.
* Transferring assembly of all Mack highway vehicles from the plant in Virginia's New River Valley to the plant in Macungie, Pa., (where Mack's construction and refuse vehicles are currently assembled) to take advantage of efficiencies arising from consolidated assembly of the entire product line, and create a brand-unique environment for Mack customers. The New River Valley plant will continue to produce all the vehicles in Volvo Trucks North America's range.
* Consolidating product development and purchasing functions currently located in the Allentown Engineering Development & Test Center to the Technical Center in Greensboro, N.C., to take advantage of synergies. The Allentown facility will be converted into a Customer Demonstration/Reception Center that will also house personnel supporting Macungie production.
* Restructuring the parts distribution network serving its dealers and customers. This will include creating a new Volvo Group North America central warehouse in a location to be determined; closing the Columbus and Dallas warehouses; and downsizing facilities in Baltimore, Chicago, Jacksonville and Memphis - in order to improve the network's competitiveness and aftermarket parts support.

In conjunction with this restructuring, an investment of approximately $20 million is planned to improve the Macungie plant's paint operation. An investment of approximately $50 million is also planned to install a new engine block machining line in the Hagerstown, Md., powertrain facility, in order to complement the Volvo Group's global capacity, and reduce both logistics costs and exposure to currency fluctuation.

"Through hard work and substantial investment over the last seven years, Mack now has a completely revitalized vehicle line-up, an entirely new engine range, and a dealer network that's stronger than ever," said Dennis R. Slagle, Mack president and CEO. "But our focus is on long-term leadership in a very challenging market, regulatory and economic environment, and this demands that we continue to improve our profitability and competitiveness."

"We understand that these changes will be extremely difficult for many of our employees and their communities," Slagle said. "While the additional investment and new positions at our Macungie plant and the conversion of our Allentown Test Center into a Customer Demonstration and Reception Center will mean a major continued Mack presence in the Lehigh Valley, we will do everything we can to facilitate this transition responsibly and sensitively for affected employees."

Just over 1,500 people work in the three Lehigh Valley facilities affected by the restructuring: about 680 at the Allentown headquarters, about 540 at the Macungie plant, and about 300 at the Test Center. The New River Valley plant currently employs about 1,600 people.

The movement of Mack highway vehicle production to the Macungie plant is planned for the fourth quarter of 2008. This move is expected to create at least 200 new positions at the plant. The company also plans to move approximately 200 people from the headquarters to the Customer Demo/Reception Center to support production.

The movement of Allentown-based administrative and support functions to Greensboro is planned for 2009, while those functions currently performed at the Allentown Test Center are scheduled to move in 2010. The restructuring of the parts network will begin in 2009 and be completed in 2010.

The impact on employees represented by the United Auto Workers will be subject to negotiation with the union, however, the company intends to offer all affected UAW members positions in other locations. Mack and the UAW have agreed that negotiations on a new labor contract will resume on September 2, 2008.