Mack Trucks plans down weeks, potential layoffs at Lower Macungie plant as market slows down – Morning Call

After two years of strong demand, the heavy-duty truck market is shifting into a lower gear, a slowdown that will likely lead to layoffs at Mack Trucks’ assembly plant in Lower Macungie Township.

“We have communicated to our employees that we’ll have to adapt production to reduced demand sometime in the first quarter of 2020,” Mack spokesman Christopher Heffner told The Morning Call on Wednesday. “Unfortunately, we do expect that this will mean layoffs, but it’s too soon to say how many or when.”

Advertisement

In addition, Heffner said, Mack is planning two down weeks at the plant near the end of the first quarter to meet the lower demand. Another two down weeks — which means a majority of the plant will be on temporary layoff — will come early in the second quarter, allowing Mack to complete work on its chassis-insourcing project, he said.

The news of additional down weeks and potential layoffs is not unexpected at the plant, which grew to 2,400 workers as orders flew in during 2018 and production surged through much of this year. But things are now slowing down, as they do every few years in the cyclical industry, a reality that prompted fellow truck-makers to announce layoffs in recent weeks.

The last significant layoff at the Mack plant came in early 2016, when the company laid off about 400 of the facility’s then-1,850 workers.

Walt Smith, president of United Auto Workers Local 677, which represents the plant’s employees, did not return a call seeking comment.

Union members, which number more than 3,500 across six Mack facilities in Pennsylvania, Maryland and Florida, have been back at work nearly two months following a 12-day strike in October over job security and concerns over health benefits. The members ratified a four-year labor agreement in early November, a contract that maintains health care premiums and protects truck production in Lower Macungie.

Because the strike idled production for two weeks, Heffner said in late November that Mack canceled its two previously scheduled down weeks in the fourth quarter “to catch up on production.”

But now, Mack is adjusting to market conditions.

Steve Tam, vice president of Americas Commercial Transportation Research Co., said the Columbus, Indiana, firm is projecting U.S. heavy-duty truck production to end this year at about 287,000, which includes around 211,000 highway trucks and 76,000 vocational trucks (a segment that includes construction and garbage trucks, where Mack is particularly strong).

In 2020, Tam said, ACT Research expects truck production to drop to 180,000, which includes a projected 121,000 highway trucks and 59,000 vocational trucks.

ACT Research’s projections for this year and 2020 are both lower than estimates a couple months ago.

“There has been a lack of momentum in key economic sectors heading into next year that is the biggest reason for the lower expectations,” Tam said. “As such, activity is not consuming capacity as quickly as anticipated. This also pushes the timing of the anticipated recovery further into the future.”

Other truck-makers are cutting back. For example, Mack sister company Volvo Trucks announced plans to lay off about 700 employees in January at its Dublin, Virginia, assembly plant, which employs more than 3,000 workers. Daimler Trucks North America in October cut about 900 jobs at two Freightliner plants in North Carolina.

Sale of Volvo truck unit

Meanwhile, Mack’s parent company, Sweden’s Volvo Group, on Wednesday announced it was selling its UD Trucks division to Isuzu Motors for about $2.3 billion, the latest example of consolidation within the industry.

The sale of the Japan-based UD Trucks to Isuzu, also headquartered in Japan, is part of Volvo’s plans to form “a strategic alliance” with Isuzu “in order to capture the opportunities in the ongoing transformation of the industry.”

Advertisement

Heffner said the sale of UD Trucks will not have any “direct impact” on Mack.

Go to Source
Go to Source