Mack Trucks laying off 400 workers at Macungie

[kscarbel2]

The Morning Call / December 15, 2015

Mack Trucks said Tuesday it will lay off about one-fifth of its Lehigh Valley workforce in late January, one of the largest local job announcements from the heavy-duty truck manufacturer since it decided to move its headquarters from Allentown to North Carolina six years ago.

"Regretfully, based on the need to adjust production to meet the reduced demand in the market, we will unfortunately have to lay off about 400 people at Mack Lehigh Valley Operations*," Mack spokesman Christopher Heffner said.

* The former Macungie Division of Mack Trucks Inc.

While Heffner said the company began notifying employees at its Lower Macungie Township plant at 8 a.m. Tuesday., the United Auto Workers Local 677, which represents the Mack workers, and other Mack employees said many learned about the layoff from news reports — not from the company.

"It's just a rotten way to find out you're getting laid off," said Ed Balukas, who has been president of UAW Local 677 since 2007. He said affected employees will work their last day on Jan. 22.

Mike Reap, a production technician who has worked at Mack since 1998, said employees were "blindsided" by the announcement. He said some wives were texting their husbands who work at Mack, asking: "Are you getting laid off?"

"After it hit the news, you could feel a very high level of stress in the plant," said Reap, a 47-year-old Catasauqua resident who will be taking a voluntary 13-week layoff from Mack. "A lot of guys were upset, and felt betrayed and disrespected."

While employees did not know the layoff figure before Tuesday, they were aware a reduction was in the works, as the union said in a Nov. 2 letter to its members. But, to some, the layoff of 400 — representing more than 21 percent of Mack's current employment figure of 1,850 in the Lehigh Valley — was higher than expected.

"We thought it would be somewhere close to this, but we didn't think it would be this high," Balukas said.

The market for Mack trucks also has a direct impact on ancillary businesses, such as Westport Axle, which makes chassis for Mack at a plant nearby in Breinigsville. In a Worker Adjustment and Retraining Notification filed with the state Friday, Westport Axle said it will lay off in excess of 50 assembly and warehouse employees in Breinigsville within 60 days. Westport Axle officials did not return calls seeking comment Tuesday.

While fluctuations in Mack's workforce are not uncommon because the company monitors the market and adjusts employment needs accordingly, the announcement Tuesday ranks among the largest layoffs from the company in recent years.

During the 2008-2009 recession, low truck orders prompted Mack Trucks to reduce staff in Lower Macungie and launch a series of plant shutdowns. For example, Mack laid off 25 employees in May 2009 and held three week-long shutdowns in April and May that year, which sent 425 workers to collect unemployment compensation.

And when Mack relocated its headquarters to [the Volvo Headquarters facility in] Greensboro, N.C., in 2009, it resulted in the net loss of 580 Lehigh Valley jobs over two years.

Slightly larger than Tuesday's announcement was the news from Mack in October 2006, when the company announced it would lay off 450 of the Lower Macungie plant's 1,040 workers because of a sales slowdown following a boom.

Now, Mack says, it is again adapting production at its Lehigh Valley operations to meet market demands.

Heavy-duty truck production is expected to peak this year, and Mack's Lower Macungie plant, where all Mack trucks built for the North American market and export are assembled, has been pumping out 116 trucks a day.

While Mack's corporate parent, Sweden-based Volvo Group, expects the total North American retail market for heavy-duty trucks to approach 310,000 trucks in 2015, the company is anticipating lower demand, about 280,000 trucks, in 2016.

Volvo's anticipated 10 percent decline is actually optimistic compared with other market estimates.

In a Dec. 7 report, Stifel Financial Corp. decreased its 2016 North American heavy-duty truck production estimate from 280,000 units to 250,000 after order data underwhelmed for the second consecutive month in November. Stifel's projection of 250,000 units represents an expected 24 percent decline from this year's estimated production of around 327,000.

Preliminary heavy-duty truck orders for November of 16,600 units "were disappointing to us considering that November is typically a seasonally strong month for orders," Stifel analysts wrote in the report. That total was down 59 percent from the 41,000 units ordered in November 2014 and down 36 percent from the 26,000 ordered in October, according to the report.

As to the main factors slowing the 2015-16 order season, Stifel analysts wrote in the report that freight volumes have softened in recent months, used tractor prices are falling, lower diesel prices are lessening the incentive to upgrade to the newest equipment and heavy-duty retail inventories are higher than they were a year earlier.

While Mack deliveries were up 10 percent through October, the company's orders in North America have been headed in the opposite direction.

Mack orders declined 51 percent in the third quarter, the result of "dealers focusing on reducing their inventories and the comparison with a good quarter last year," Volvo said.

Similarly, in the second quarter, Mack orders were down 50 percent, mainly "a result of cancellations of some of the large quantities of dealer orders placed in the fourth quarter of 2014 combined with a softening in demand in some of Mack's core market segments," such as energy, the company said.

The anticipated decline in demand and its consequent employment impact has not been limited to Mack.

Also on Tuesday, Volvo said it would lay off about 200 workers at its powertrain-manufacturing facility in Hagerstown, Md., in the first quarter of next year.

About two weeks earlier, Volvo said it would lay off 734 employees at the New River Valley Assembly Plant in Dublin, Va., beginning in February.

Locally, Balukas said the union's contract expires next October, with negotiations slated to begin in August. As long as the contract's recall rights remain the same, Balukas said those employees who are laid off would have the right to return to Mack first if the company starts hiring again.

Heffner said affected employees will have recall rights, with the exception of probationary employees. In addition, he said outplacement support through the local CareerLink office will be offered. While bargaining-unit employees will not receive a severance package, Heffner said they will get certain benefits based on the collective-bargaining agreement.

Jeffrey Sheridan, press secretary for Gov. Tom Wolf, said in a statement the state Department of Labor and Industry's Rapid Response Unit has been in contact with Mack's Human Resources Department, the United Automobile Workers union and the local United Way.

"The Wolf administration is working on a plan to address the potential negative economic impact for the Lehigh Valley region and to provide assistance to the workers affected by the news concerning Mack," Sheridan said.

Despite the upcoming layoffs, Wade Watson, vice president and general manager of Mack Trucks Lehigh Valley Operations, has said that Mack is here to stay in the Lehigh Valley. He has also announced some planned changes at Mack's 1 million-square-foot plant in Lower Macungie, which include expanding the building's south end by adding receiving docks and putting a new facade on the 40-year-old plant.

While Balukas and Reap are fully aware that Mack is a cyclical business — sometimes hiring and laying off by the hundreds — they remain discontent with how the company went about its announcement Tuesday.

Typically, Reap said, town hall meetings were held [at the former Mack Trucks Inc.] to provide employees with information surrounding a layoff.

"It really sucks. It's a bad time of year," Reap said, referencing the upcoming Christmas holiday. "And to be handled this way is very disrespectful to the employees who spend their time and effort building the trucks."

Related reading:

http://www.bigmacktrucks.com/index.php?/topic/42910-volvo-trucks-to-lay-off-734-workers-at-its-virginia-plant/

http://www.bigmacktrucks.com/index.php?/topic/42949-union-authorizes-volvo-strike/

http://www.bigmacktrucks.com/index.php?/topic/42752-volvo-to-cut-production-in-december-january/

http://www.bigmacktrucks.com/index.php?/topic/42494-layoffs-likely-to-hit-mack-trucks/

[kscarbel2]

I have an issue with this article, as a employee of Mack Trucks. Neither the company nor the union local 677 have notified us of the date of layoff or the number affected. If they told you otherwise, it is a bold face lie. And I am willing to meet with you, [Morning Call reporter] Jon Harris and the person who told you this information face to face. This is noting but a slap in the face to the employees of Mack Trucks since we found out through the local news outlets and NOT from any representatives of the company or union. If you want to discuss further, I am available after 3:10 every weekday.

Mike Reap
Joepa18067@aol.com« less

http://www.mcall.com/news/breaking/mc-mack-trucks-announces-job-cuts-20151215-story.html

[kscarbel2]

Union deal allows Mack Trucks workers to 'share the pain' of 400 layoffs

Lehigh Valley Live / December 15, 2015

United Auto Workers Local 677's president calls the arrangement unique, but he doesn't pretend it'll entirely erase the burden Mack Trucks Inc. workers will face when 400 layoffs go into effect next month at Mack's Lehigh Valley plant.

Mack Trucks announced the layoff plan on Tuesday.

The 400 job losses represent a more than 20 percent reduction in the plant's workforce of about 1,850, a spokesman for the company said.

UAW Local 677 President Ed Balukas, whose union represents the majority of that workforce, said there's no way to put a positive spin on what is happening to workers, but a provision in the union's contract should at least soften the blow.

It has a program in place that allows workers to take layoffs in increments of 13 or 26 weeks and collect unemployment during that time instead of languishing in some cases for years without getting a call back to the plant.

Senior workers who would likely be shielded from losing their job volunteer to take the temporary layoffs to allow junior workers to continue punching in, Balukas explained. Once the 13 or 26 weeks is up, ideally, the senior worker returns to a position opened up by another worker voluntarily taking a layoff for the same period of time, he said.

"We can share the pain with each other," the union president said.

He said the arrangement is "in these days very rare," noting that sister plants run by Volvo, Mack Trucks parent company, don't do it.

"Those people go right out into unemployment with no chance of returning until there's an actual upturn," Balukas said.

Balukas is confident there will again be an upturn in truck manufacturing, perhaps as early as the first or second quarter of 2017. It's a cyclical industry. Usually, layoffs happen every few years, but the economic recovery in recent years from the recession slowed the latest cycle, he said, adding that Mack Trucks hasn't had layoffs of this magnitude since 2007.

Mack spokesman Christopher Heffner also invoked the cyclical nature of the business in an email about the layoffs. The company anticipated the market for Class 8 heavy-duty trucks, the kind manufactured at the plant, would peak this year, he said.

"We regret having to take this action, but we must adapt to market demand," Heffner said.

The layoffs take effect Jan. 25.

In a separate move, Volvo announced Tuesday it plans to lay off 200 people from its powertrain facility in Hagerstown, Maryland. The facility manufactures Mack engines, transmissions and axles.

[james j neiweem]

The new Scania man is off to a rocky start.

[kscarbel2]

The new Scania man is off to a rocky start.

Thanks to Olof Persson, he inherited a rocky situation.

[grayhair]

I get the need to reduce workforce according to market conditions.  But that' s a hell of a note, finding out you are unemployed, not by notice from your employer, but instead getting a text message from your wife.  If that is in fact the truth, then it really points to very low-brow management.  No wonder the generation coming up, for the most part, don't trust any employer and view most jobs as temporary.  (Who can blame a youngster when they see their parents treated this way.)

For comparison, now vs. then, I offer this example:  

50 years ago when I was a 17 year old teenager I was living with my parents.  One day the doorbell rang and I answered the front door. There were two men standing there.  My Dad had been very sick and unable to work for some time.  These two men traveled 400 miles to our house to terminate my Dad.  They apologized to him, and then apologized to my Mother.  And after my Dad died, they made pension and medical payments for my Mother for the next 40 years.  One of those two men was the President of Allied Signal and the other was the Chairman.  I've always had great respect for the way they did what they had to do.  So there's your comparison, now vs. then.  Oh how things have changed...

Edited April 19, 2016 by grayhair