With Slumping Demand, Mack Trucks Plans Production Shutdowns

[kscarbel2]

Transport Topics  /  July 20, 2016

With heavy-duty truck demand sagging, Mack Trucks has scheduled several weeklong production shutdowns at its Lower Macungie Township, Pennsylvania, assembly plant.

The weeks of Aug. 8 and Nov. 28 were previously scheduled, but Mack added the weeks of Sept. 12, Oct. 17 and Dec. 12 "based upon current order intake, North America market forecasts and dealer stock," according to an announcement sent to employees July 8.

The shutdowns, or temporary layoff weeks, will idle a significant portion of Mack Lehigh Valley Operations' approximately 1,500 employees. Some employees, depending on department, classification and shift, may be required to work during any temporary layoff week, the announcement notes.

In a statement e-mailed July 19, John Walsh, Mack's vice president of global marketing and brand management, said four of the down weeks — one each in August, September, October and December — are in addition to the plant's annually scheduled three down weeks, which includes two for a summer shutdown and the week of Nov. 28 for hunting week.

"We will continue to monitor market conditions and adjust to meet demand," Walsh said.

News of the shutdowns came on the same day that Mack's parent company, Volvo Group of Sweden, reported decreased second-quarter truck orders in North America. The company also again cut its full-year forecast for heavy-duty trucks in North America and promised to further reduce truck production in North America.

"Production in the group's North American manufacturing system will be lowered further to meet the lower demand and allow for inventory reduction at dealers," Volvo wrote in the report.

Fresh off a 21% decline in deliveries in the first quarter, Mack Trucks' numbers were again headed in the wrong direction during the second three-month stretch of the year.

Mack delivered 5,588 trucks worldwide in the second quarter, a 22% decline from the 7,160 it sent out during the same period in 2015. That's the weakest second quarter for Mack since 2011, when it delivered 5,099 trucks during the period, Volvo reports show.
And while Mack's net order intake actually increased 15% in the second quarter to 3,007, that figure is still down 32% year-over-year through the first six months.

The decline is not unexpected. Volvo and Mack have consistently said that demand would weaken in 2016, especially compared with the peak year the heavy-duty truck market benefited from last year. In its report, Volvo said the total North American retail market for heavy-duty trucks declined 14% through the first six months of the year.

To meet the expected reduced demand, Mack announced in December it would lay off about 400 people at Mack Lehigh Valley Operations, which took effect in late January.

Mack's 1-million-square-foot plant in Lower Macungie is where all Mack trucks built for the North American market and export are assembled.