Volvo Group, soon to be the new owner of Mack Trucks Inc., will expand its engine-making capacity in the United States, according to its president and chief executive officer. Leif Johansson addressed management Tuesday at Mack World Headquarters in Allentown to explain his company’s upcoming alliance with Mack.
“We will build for new engine generation,” Johansson said, though he declined to clarify whether Volvo would add to Mack’s current engine-making facility in Hagerstown, Md., or build another plant somewhere else.
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The Swedish company announced in April it would buy the truck division of Renault SA, including Mack, for $1.83 billion in stock and assumed debt.
The U.S. Department of Justice, with which Volvo has filed the appropriate agreements of sale, prevents company insiders from giving too many details while approvals are still being decided.
The deal should be completed in two to nine months, Johansson said.
In lieu of details, he offered his own opinion on Volvo’s new purchase.
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By GlobalData“There are few times in an industrialist’s life when he can do something with such strong positive and no negative effects. There will be no layoffs,” he said.
However, Mack said in May it would reduce production at all its sites, cut the second shift at its South Carolina assembly plant and lay off 360 workers, about 6 percent of its 6,200-member work force.
That was due to a general slowdown in the North American truck market, Johansson said, not the merger.
The market is slower, but still good, and the soft landing is not a crisis, but a correction over time.
“I can take great responsibility for how I sail the ship, but not for the weather,” he said.
Volvo was interested in Mack almost 10 years ago. Though regulatory approvals were given, a deal was never consummated.
More recently, Volvo, which sold its car-making unit to Ford Motor Co. last year, has been searching for a partner since European Union antitrust regulators rejected its planned $6.9 billion takeover of Scania AB in March.
Renault, which is buying a 70.1 percent stake in Korea’s Samsung Motor Inc., is focusing on cars, not trucks.
They found each other again, and fast.
After the Scania deal fell through, Renault became Volvo’s “ideal partner,” Johansson said, because Mack is a fully integrated truck maker — it makes its own engines and transmissions to go with the trucks.
Renault and Volvo discovered they had a common vision, said Patrick Faure, Mack’s chairman, and they quickly figured out how to make it work.
Mack, Renault and Volvo will keep their brand identity, he said, but the architecture of the trucks will be similar, because they will share a common platform and other major internal parts.
Consumers will see separate dealer organizations and separate product lines, though eventually customers will see a wider selection in a blended Volvo, Renault and Mack product.
“There’s bound to be overlap, but we’ll do our best and let the customer decide,” Johansson said.
Standard differences naturally will remain between any European and American trucks, but there will be no “manipulated coordination.”
The brands will be allowed “to be,” Johansson said.
