Volvo opts to keep Mack in Maryland

Hagerstown plant will be upgraded

$150 million investment

October 10, 2003|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Swedish automaker AB Volvo said yesterday that it will invest $150 million in its Hagerstown Mack Truck plant and retain at least 1,000 workers, saving the facility from the phase-out that many had feared. The plant has been a vital part of the region's economy for decades.

Volvo's decision to produce all of its North American Mack and Volvo truck engines in Hagerstown hinged on a nearly $5 million financial package the company is to receive from the state and Washington County.

The state will provide $3.5 million in conditional loans and a $1 million training grant, including $400,000 it has already dispersed, plus $100,000 per year for six years, said Bob Brennan, assistant secretary of the Maryland Department of Business and Economic Development. In return, Volvo, the parent company of Mack Trucks, has agreed to make the equipment upgrades and retain at least 1,000 workers through 2008, Brennan said.

"There's been a lot of discussion over the past year as to where Volvo would put its North American powertrain division," Brennan said. "We view this as a tremendous win for the state. We're securing one of our premier manufacturers in Washington County and Hagerstown and in the larger marketplace to Maryland for a very long time.

"It will mean sustaining employment at this facility for the long term," he added. "After they spend $150 million, that tells me they're committed to this marketplace."

The plant, which has been manufacturing Mack brand engines since 1961 and can produce up to 50,000 diesel engines per year, will be retooled to build the next generation of engines for the Mack and Volvo brands, said Jim McNamara, a spokesman for Volvo Trucks North America.

"We're going to be building an entire new family of engines, the most modern heavy duty diesel engines in the world," McNamara said.

Volvo truck engines for the North American division are now being built at Volvo Powertrains plant in SkM-wvde, Sweden. Production of the new engines should start by 2007 at the latest in Hagerstown, McNamara said.

Volvo had initially announced those plans in May 2002, when the state began preparing an aid package of tax credits, loans, worker training funds and other financial incentives. But Volvo reconsidered, in the spring of this year, state officials said yesterday.

"They went back and re-thought the process, and they were looking at all their options," Brennan said. "We felt like we were back to square one. ... There was concern this facility would have been in jeopardy."

Brennan said the original state assistance proposal included the same $2 million "Sunny Day" loan that has been completed, another loan that would have totaled $3 million instead of $1.2 million, and a training grant of $700,000, with a portion offered over three years. The final aid package includes a $1 million grant, with a portion offered over six years.

In another incentive, which has not been completed, the state has also proposed helping, with private assistance, to develop a "vendor village" on land adjacent to the plant, which would help support just-in-time inventory for the plant.

State and local officials said yesterday they had worked closely with the company over the past several months.

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