Volvo AB of Sweden said yesterday that it would embark on a $50 million expansion and add 50 workers to its Mack Powertrain Division plant in Hagerstown as part of a sweeping restructuring across the company.
But the truck maker also announced it would lay off up to three-quarters of its 120 workers at a parts facility in Baltimore as the company moves to streamline some operations.
The changes in Maryland are a small piece of a plan outlined by Volvo, which acquired Mack in 2001, that executives said would make the truck company more cost-efficient.
Mack also said yesterday that it was moving its administrative headquarters from Allentown, Pa., to Greensboro, N.C., where Volvo Trucks North American division is headquartered. The company began making its trucks in Allentown in 1905.
The Hagerstown facility, which employs about 1,200 people, will be expanded to support the production of engine blocks - the heart of an engine. Engine blocks are now made in Volvo plants in Sweden and Brazil and shipped to Hagerstown, where engines are assembled for Mack and Volvo heavy-duty trucks.
"Now we will have additional capacity in Hagerstown to do it all in one place," said John Mies, vice president of corporate communications for Mack.
Mies said the expansion should be completed by 2010.
The Baltimore facility is being downsized as Mack restructures its parts distribution network. It is also cutting workers at distribution plants in Chicago, Jacksonville, Fla., and Memphis, Tenn And distribution facilities in Dallas and Columbus, Ohio, will be closed. Mack plans to build a central distribution warehouse, although it has yet to decide on a location.
About 70 to 75 percent of the workers at the Baltimore facility will lose their jobs, Mies said. He said the company still has to negotiate with the United Auto Workers union, but the company hopes to offer many of the employees jobs at other Mack facilities.
Union officials could not be reached for comment yesterday.
The promise of added jobs was welcome news to Hagerstown economic development officials.
Just last year Mack, the county's sixth-largest employer, laid off 600 workers, or a third of the work force, after new emissions standards reduced demand for its diesel truck engines and transmissions.
The layoffs came after Mack had invested $150 million into renovating the plant, including a $35 million engine testing laboratory. Mack has made trucks in Hagerstown since 1961.
"It's just good news that a company as strong and international as Volvo is making another investment in Hagerstown," said Robin Ferree, deputy director of the Hagerstown/Washington County Economic Development Commission.
"They've had some layoffs due to the economic conditions of trucks and this will give them a chance to hire some people back," Ferree said.
Other changes Mack announced include transferring assembly of all Mack highway vehicles from a plant in Virginia's New River Valley to its plant in Macungie, Pa. The company will invest $20 million in the Macungie plant.
The Virginia facility will continue to produce all the vehicles in Volvo Trucks North America's range. The Allentown headquarters will be converted to a customer service facility.
"Taking these steps will make us a more efficient, agile, and cost-effective organization in almost every aspect of our business, from product development, to production, to aftermarket support," Dennis R. Slagle, Mack president and CEO, said in a statement.