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Volvo already expected its Mack brand to see a 30% market drop in 2020. The pandemic is only sharpening the decline


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Jon Harris, The Morning Call  /  July 17, 2020

For [Volvo Group subsidiary] Mack Trucks, 2020 already was a down year, a cyclical occurrence in the heavy-duty truck market. The coronavirus pandemic has downshifted expectations even further.

The truckmaker received 2,973 orders in the second quarter, down 21% from a year earlier, according to a report Friday from Volvo Group, its Swedish parent company. The number of delivered Mack trucks in the quarter hit 2,302, a 71% drop from almost 8,000 a year ago when the Lower Macungie Township assembly plant worked through a hefty order backlog when times were good.

“Before the pandemic, we expected the overall North American heavy truck market to be down about 30% compared to 2019, and now the decline will be significantly sharper,” Mack spokesperson Christopher Heffner said.

The Lower Macungie plant already had adapted to reduced market demand, laying off 305 employees in February. The plant, which suspended production March 19 to stem the virus’ spread before resuming production mid-May, now employs about 2,100 people and most of them are back at work, Heffner said. He confirmed the plant has had “a few confirmed cases” of the virus among its employees, cases that activated Mack’s tracing and cleaning protocols.

“We are not planning further layoffs at this time,” Heffner said. “We will continue to monitor the market and will make employment decisions based on those conditions.”

To reduce costs, Volvo is, however, shrinking its white-collar workforce by about 4,100 positions during the second half of 2020. While about 1,250 job cuts will come in Sweden, Heffner said the company plans to eliminate about 450 positions at its U.S. headquarters in Greensboro, North Carolina, reductions that will affect some Mack employees stationed there. Only two positions will be eliminated in the Lehigh Valley.

While the North American truck market was significantly stalled in April, Volvo’s report said customer activity has gradually improved since.

“However,” Volvo President and CEO Martin Lundstedt wrote, “there is still significant uncertainty about the future economic development and demand for our products.”

Mack’s market share in North America, however, increased to 7.6% in the quarter, up from 6.4% a year ago.

“The market mix does favor our traditional strengths in segments like construction and refuse, and at the same time we’re seeing sales with new customers in those traditional segments as well as growth segments like regional and long haul,” Heffner said.

Also in the quarter, Mack announced June 25 that its Mack Defense subsidiary relocated its headquarters from Upper Macungie to the Mack Customer Center in Allentown [a cost-cutting measure], giving the defense contracting business access to the facility’s test track and industrial space.

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