Renault wins bid to take over Mack

October 02, 1990|By Kim Clark

Mack Trucks Inc., founded 90 years ago by descendants of a man who emigrated from France to escape religious persecution, has been taken over by the huge French government-owned automotive conglomerate, Renault Vehicules Industriels.

Renault announced yesterday that its controversial $6.25-a-share bid for control of the Allentown, Pa.-based truck-maker had succeeded, setting off industry speculation about restructuring of the money-losing operation.

Renault announced that it had won control of 93.1 percent of Mack's shares by the 9 p.m., Sept. 28 deadline. Renault had owned 45 percent of Mack for more than a decade.

The few shareholders who hadn't tendered their stock to Renault by the deadline have about two more weeks to sell their stock to the new owner, Renault officials said yesterday.

Spokesmen for Renault in New York refused to comment on Renault's plans for Mack's four factories and 7,700 workers, including the 1,500 employed at Mack's engine and transmission plant in Hagerstown.

Ralph Reins, Mack president, declined to comment on the news except for a written statement expressing "enthusiasm and optimism for the future of Mack Trucks."

"We are beginning a new era and, with a new agenda, I truly believe we can rebuild Mack Trucks to a leadership role in the heavy-duty truck industry," Mr. Reins said.

But truck-industry observers predicted that Renault will have to make painful cuts in staff and operations to staunch the flow of red ink at the maker of bulldog-emblazoned trucks. Mack lost more than $185 million last year and has said it expects to lose even more this year.

Renault had warned that if the takeover bid did not succeed, Mack might be forced into bankruptcy.

Once famous for making "bulldog-tough" trucks, Mack fell on hard times in the 1970s and 1980s when management disputes with workers led to problems with quality. In addition, Mack suffered during the 1981-1983 recession because it was the only truck-maker to produce all of its own parts and therefore had higher costs than did competitors who bought parts from outsiders.

Industry observers said Mack's new owners will have to fix the quality and cost problems to turn the company around.

"There will be a lot of bloodletting," predicted Gurudutt M. Baliga, a truck-industry analyst for McDonald & Co., a Cleveland investment firm.

"You will see Mack reshape itself into something significantly smaller in scope," he predicted, saying that Mack probably will concentrate on dump trucks and heavy-duty trucks, markets it already dominates.

In addition, Mr. Baliga noted, Renault also has engineered a partial merger with Volvo, which owns the GM-White truck plants in North America.

Owners of Mack products who were interviewed yesterday said they were sorry to see an American institution taken over from abroad but that they were glad someone was saving the truck-maker.

"You try to leave as much business to America, instead of the Japanese, French or whatever," said Alicia Major, president of American Construction Services in Baltimore.

But Ms. Major, who owns four Mack dump trucks, said she hopes the new owners will make needed improvements in Mack's operations.

"I'll be honest with you. My position is that if the costs of parts go down and we get good service, then more power to them. Some of these Mack truck parts are outrageous," she said.

Those who live in communities with Mack operations said they, too, were glad someone had stepped in to prevent bankruptcy but that they were a little worried about the future.

Officials of the United Auto Workers union, which represents Mack's hourly workers, did not return calls asking for comment.

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