Volvo-Mack: Finding the Right Combination

The acquisition was final nearly a year ago, but the work seems to be just beginning as Volvo AB’s commercial truck group tries to integrate Volvo, Renault V.I., and Mack Trucks without alienating customers loyal to their brands.

In late September, Volvo Global Trucks (VGT) announced plans to close Mack’s Winnsboro, S.C., plant by the end of next year and consolidate customer and dealer support functions to eliminate any duplication of effort between Volvo Trucks North America and Mack.

“While the restructuring program involves difficult decisions with major impact on our North American industrial structure, it’s clear that the extraordinary market conditions we are facing require extraordinary and urgent actions,” said Volvo AB CEO Leif Johansson.

Just how bad is it? As a result of the ongoing economic slump in North America, the total market for heavy trucks has fallen from a high of about 309,000 units in 1999 to an expected 2001 volume of 170,000, Johansson said. Meanwhile, total industry capacity is about 380,000 units, with North American manufacturers currently running at a level of 120,000-and about 30,000 new heavy-duty trucks in industry-wide inventory. The group’s three assembly plants-Mack’s Macungie, Pa., and Winnsboro, S.C., facilities, and Volvo’s New River Valley, Va., plant-are operating at about 30% of their total capacity of more than 130,000 trucks per year. When Winnsboro closes, production will be transferred to the New River Valley facility.

There were changes among senior managers at Volvo Trucks North America. Chris Patterson, vice-president of sales and marketing, left the company and his sales responsibilities have been taken over by former Volvo Trucks Canada executive Bill Dawson, who was named senior vice-president of sales. Reporting to Dawson will be the regional vice-presidents of sales, national accounts, sales administration, and dealer development. Dawson was formerly vice-president of customer support.

At a recent meeting with industry journalists at Volvo Trucks North America headquarters in Greensboro, N.C., VGT president and CEO Tryggve Sthen affirmed that the company will retain Volvo, Mack, and Renault as three distinct brands. Mack and Volvo will maintain separate dealer and service networks, separate management and head offices, and will develop trucks that will compete in various markets and vocations. This is in contrast to persistent rumors that Volvo will eventually leave vocational markets to Mack, and that Mack will drop its highway models in favor of Volvo.

Sthen added that customers stressed the need to keep the brands distinct, even if key areas such as research and development are combined behind the scenes. Asked about engine design and production and the move to common power sources throughout VGT, Sthen reiterated that the market demands Mack truck has a Mack engine and Volvo has Volvo power. However, he noted that Volvo engines-spec’d in nearly 40% of Volvo trucks in North America-come from Sweden. He wants them made in the United States.

Sthen would not be drawn out on specific product plans, but did allow that telematics, wireless connectivity, and automatic transmissions will figure largely in future Volvo trucks in North America.