Volvo
Global Trucks has announced the closure of one of its three US assembly plants
– Winnsboro – as part of a restructuring programme in response to depressed
market conditions in North America.
The main actions in the restructuring programme are:
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o reducing North American industrial capacity by closing the Winnsboro plant;
o consolidating North American support functions to eliminate duplication of
effort between Volvo Trucks North America and Mack Trucks, Inc.;
o strengthening of the customer support system and the product offering.
The company estimates a one-time restructuring charge of SEK 1,280 M (120 MUSD).
These actions will result in improved annual profits of SEK 1,600 M from 2003
(150 MUSD).
"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 Leif Johansson, President and CEO of AB Volvo.
"With this initiative Volvo Global Trucks will significantly improve its
North American profitability and break-even point, allowing us to better withstand
the cyclicality of the industry, and creating a highly competitive North American
structure for the future," said Tryggve Sthen, President and CEO of Volvo
Global Trucks.
As a result of the ongoing negative business cycle in North America, the total
market for heavy trucks has plummeted from a high of about 309,000 units in
1999 to an expected 2001 volume of only 170,000 (140,000 in the U.S.).
Meanwhile, total industry capacity is about 380,000 units, with North American
manufacturers currently running at a level of only 120,000 – with about 30,000
new heavy-duty trucks in industry-wide inventory.
A substantial reduction of Volvo Global Trucks’ North American manufacturing
capacity is therefore a key component of the restructuring program. The group’s
three assembly facilities – Mack’s Macungie (PA) and Winnsboro (SC) plants,
and Volvo’s New River Valley (VA) plant – are operating at only 30 percent of
their total capacity of more than 130,000 trucks per year.
Operations at Mack’s Winnsboro facility will be phased out within the next
15 months, at which point Winnsboro production will be transferred to the New
River Valley facility – and remain Mack-branded.
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