Mack to Invest $70 Million in Pennsylvania Assembly Plant

Mack Trucks plans to invest $70 million over the next three years to modernize and expand its Lehigh Valley, Pennsylvania, plant, a signal that the company is committed to keeping the facility churning out big rigs for at least the near future.

The company announced the plan April 15, laying out enhancements to its 1 million-square-foot Lehigh Valley plant that include a 75,000-square-foot expansion, new manufacturing information technology systems, equipment and tooling, and a new building to conduct quality audits on finished vehicles.

Chassis pre-assembly work now being done at Westport Axle in Breinigsville, Pennsylvania, will be moved to the Mack plant. Westport, which announced 50 layoffs in December, will continue to provide other "critical support operations" for Mack, the company said.

Mack Trucks investing $70 million in Lower Macungie plant. https://t.co/w3l5YInubR

---

---

— The Morning Call (@mcall) April 15, 2016

"For more than 40 years, Mack's Lehigh Valley Operations has built high-quality trucks that our customers can depend on," Mack Trucks President Dennis Slagle said in a statement released by the company. "This investment strategy will help ensure we continue to deliver Mack's legendary durability through a more efficient, integrated and modern manufacturing operation."

Workers were briefed on the plans at a town hall meeting April 14, said Ed Balukas, president of Local 677 of the United Auto Workers.

"Any money coming into the plant is a good thing," Balukas said. "I think some of the improvements they have in mind will make us more efficient and add toward the quality of the product and position us for the next upturn in the trucking industry."

The $70 million investment includes $12 million in projects that will be completed over the next three years and were part of a $26 million upgrade that was made public in 2014.

The union has been trying for years to get Mack to bring chassis assembly in-house, Balukas said. That's a process that involves more than 310 people at Westport Axle. It's likely to require some additional hiring at Mack whenever it takes place, he said.

Mack spokesman Chris Heffner said employment in the truck manufacturing industry is based on market volumes, so it's difficult to say whether additional hiring will be needed.

"Insourcing the chassis assembly process gives Mack greater control over more of the manufacturing process, enabling us to deliver even higher-quality trucks to our customers," Heffner said.

The truck-making business is cyclical, highly dependent on economic conditions. Mack's local workforce has fluctuated over the years as demand for its trucks has waxed and waned. While demand slowed early this year, 2015 was among the company's best.

"We are looking at 2017 being a comeback year," Balukas said. "Even though we had some layoffs, they have been minimal compared to some of our competitors."

The heavy-duty truck manufacturer delivered 27,411 vehicles in 2015, its strongest year since it delivered 36,838 vehicles in 2006, according to a report from Volvo Group of Sweden.

Volvo said last year's high demand for heavy-duty trucks in North America was the result of fleet renewal and fleet expansion combined with good customer profitability because of a good freight environment, low fuel prices and low interest rates. Ninety-two percent of Mack's worldwide deliveries in 2015 were in North America.

All Mack trucks built for the North American market and export are assembled at the Lower Macungie plant. The plant employs about 1,430 workers and is Lower Macungie's largest employer.

Interesting 2 days of Mack news: Friday, Mack announces a $70M expansion, and today we learn VP and GM Watson is out https://t.co/dNFxwyvHIA — Jon Harris (@ByJonHarris) April 16, 2016

One day after the announcement, Mack said its top-ranking Lehigh Valley official is no longer with the company. Wade Watson, who was vice president and general manager of Mack Trucks Lehigh Valley Operations for less than a year, is no longer employed by Mack or its corporate parent, Gothenburg, Sweden-based Volvo Group, Heffner confirmed April 18. Citing company policy, Heffner declined to say when Watson left or provide a reason for his departure. "We will soon name an acting general manager who will lead the operations until we identify Wade's successor," Heffner said.

Morning Call reporter Jon Harris contributed to this story.