Mack Trucks VP: 'We're here to stay'

[kscarbel2]

The Morning Call / November 11, 2015

The news surrounding Mack Trucks in the Lehigh Valley has seemed contradictory as of late.

In mid-October, Lower Macungie Township's Board of Commissioners unanimously adopted a resolution of support for Mack's local operations. If Mack were mulling an expansion, officials wanted to make sure the heavy-duty truck manufacturer chose to grow in the Lehigh Valley.

Then, this month, news surfaced that the local Mack plant will likely be hit with layoffs amid an anticipated 10 percent decline in the heavy-duty truck market next year.

So an event Wednesday titled "Mack Trucks in the Lehigh Valley and in the World" came at a opportune time, giving Wade Watson, who started as vice president and general manager of Mack's Lehigh Valley operations in May, a chance to clear the air in front of 200 area business professionals.

Watson didn't mince words.

"We have been here for a long, long time," Watson said, tracing Mack's local roots to 1905. "We're here to stay."

Don Cunningham, president and CEO of Lehigh Valley Economic Development Corp., said the group wasn't convinced that was the case three or four months ago.

"We were a little worried that they might be looking outside of Pennsylvania, so we had to do some work," he said.

Enter the resolution adopted last month in Lower Macungie, in which the board agreed to facilitate and execute permits and approvals related to construction and renovations of Mack's local operations in a "prompt and efficient manner." Mack is Lower Macungie's largest employer.

Watson on Wednesday announced two proposed expansion projects at Mack's Lower Macungie plant, improvements aimed at boosting efficiency and customer experience. Now, Cunningham said, LVEDC is working with Mack on the acquisition of some pockets of land in the vicinity of the plant.

"It's a very critical statement to have the new executive say, 'We've been here and we want to grow here,' " Cunningham said. "The people in the Lehigh Valley have to understand, the reality is that operations like Mack Trucks could go anywhere. So our first job as a region is keep what we have and keep it growing.

"Because of the constraints at the plant physically, it takes a high level of cooperation to allow them to grow in place," he said.

Watson gave a 40-minute presentation at LVEDC's Fall Signature Event, held over lunch at the Mack Trucks Customer Center in Allentown. While he started his presentation with a business overview and history, Watson's main message was Mack Trucks is alive and well in the Lehigh Valley, eager to make its operations here more efficient as it attempts to grab more market share, especially in the long-haul sector.

That means determining how to better use its facilities, including its 1 million-square-foot plant in Lower Macungie, where all Mack trucks built for the North American market are assembled. That facility is pumping out 116 trucks a day.

"We're reaching capacity," Watson said. "I wouldn't say that we're there. We're using the entire footprint today. There's some things that we can do inside the building to reshuffle how we build and to better use the space."

According to Watson, the plant's layout creates complex delivery routes. So, he said, Mack wants to expand the building's south end by adding receiving docks, which would improve efficiency.

Watson said the plant, now in its 40th year, requires some refurbishing, including a planned new facade.

Watson said the civil engineering work on the two proposed improvements — the docks and facade — is done, and next is getting the "business case through the Volvo executive group." Sweden-based Volvo Group is Mack's corporate parent.

If all goes according to plan, Watson said, he hopes to have both improvements completed by the end of 2017.

"We're committed to the Lehigh Valley," Watson said. "We're looking at ways to invest and make it a more efficient operation here, so that's the intent."

Higher efficiency can lead to higher production, and heavy-duty truck production is expected to peak this year. Volvo has said it expects the total North American retail market for heavy-duty trucks to approach 310,000 trucks in 2015. The company is anticipating lower — but still solid — demand of 280,000 trucks in 2016.

"We're coming off of a peak, smoking-hot market and going to a very high market," Watson said.

Watson said the anticipated local layoffs are due to Mack's "adjusting to the market." The exact layoff figure is not yet set, he said.

The market is cyclical, Watson said, meaning "we're always going to be riding that wave up and down."

As Watson pointed out, Mack Trucks had 812 employees in the Lehigh Valley in December 2009. Now Mack has 1,866 employees locally.

Of those employees, 52 percent of them have less than eight years' experience, coming in with fresh, valuable ideas, Watson said. That meshes with Watson's outlook as a self-described "fixer" who moved with his wife and 3-year-old son to Zionsville this year.

Or, as Watson, who helped bring in $70 million in investments at his last post at Volvo Group in Maryland, succinctly put it Wednesday: "I like to change stuff."

.

[Red Horse]

I guess the key phrase is...........".Watson said the civil engineering work on the two proposed improvements — the docks and facade — is done, and next is getting the "business case through the Volvo executive group." Sweden-based Volvo Group is Mack's corporate parent."

Once again, Volvo will make the decision. Big question is what is the utilization rate at the Volvo plant in Va? If they have to spend X dollars at Macungine, what would that same expenditure do for the Volvo plant? Plus if the Mack CH cab is to be replaced with a Volvo cab (ugh!) and with common engines in both trucks, I have to believe this will be a key decision. The more Mack loses its specific identity, the tougher the case for long term survival

I'm sure many at Volvo think this is a no brainer and they can easily pick up the Mack volume. IMO, don't bet on it! If Volvo pulls the plug, I have to believe the big winners will be Paccar and F'liner-and in particular Western Star.

[james j neiweem]

Thats what the Mack civil engineering group came up with DOCKS and FACADE. Those types of changes are sure to improve Macks product line up and market penetration. As snoopy would say -"Good Grief" Sounds like Volvo would be better off hirering cartoon characters than product designers .

[br549]

The MACK truck name may stay but the true American design "MACK" truck is almost gone. Component by Component it is being replaced by Volvo design. One of our driver was eating breakfast at a truck stop in Pa and a Mack truck engineer sat down next to him in 2003 and told him Mack had no say in anything anymore and the Mack engineering would disappear and he was right. Newbe's might not think so but older Mack people know, So Sad

[kscarbel2]

The MACK truck name may stay but the true American design "MACK" truck is almost gone. Component by Component it is being replaced by Volvo design. One of our driver was eating breakfast at a truck stop in Pa and a Mack truck engineer sat down next to him in 2003 and told him Mack had no say in anything anymore and the Mack engineering would disappear and he was right. Newbe's might not think so but older Mack people know, So Sad

Wade looks like such a happy, gung-ho Volvo guy. He's seen the light.