Mack Trucks Brings All Cab Assembly In-House

A model medium-duty truck and the silver bulldog at Roanoke Valley Operations in Salem, Va. (Transport Topics)

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Volvo Group closed a $40 million deal to buy Commercial Vehicle Group’s Kings Mountain, N.C., cab assembly operations in early October, it said when releasing third-quarter 2024 earnings.

With the deal, Volvo brought all of Mack Trucks’ cab assembly operations in-house, which the Swedish parent company expects will rectify long-term supply chain issues at Mack.

In-house heavy-duty cab assembly already took place at the Mack Lehigh Valley Operations in Macungie, Pa. The 1 million-square-foot plant has three cab assembly lines and two chassis assembly lines.

The Hagerstown plant in Maryland, meanwhile, develops and manufactures all of the company’s heavy-duty diesel engines, transmissions and drivelines.

Mack’s medium-duty trucks are produced at the 280,000-square-foot Roanoke Valley Operations in Salem, Va. That plant opened Jan. 30, 2020. The opening of the plant marked Mack’s re-entry into medium-duty trucks after a more than 20-year absence.

Salem lies about 45 miles northeast of the New River Valley manufacturing facility in Dublin, Va., where all of Volvo Group’s North American Volvo-branded trucks are assembled, including the redesigned flagship Class 8 on-highway tractor, the VNL.

Kings Mountain, which employs about 230 staff, is more than 200 miles south of the Salem plant.

Volvo Group CEO Martin Lundstedt said Kings Mountain had been slow in supplying bodies-in-white for Mack, which precipitated the deal.

“Mack has been hampered by supply disturbances of cabs, which resulted in significantly lower volumes than expected,” Lundstedt said. “Order books for Mack are elevated. So it is a very high priority to serve our customers on this topic. Now, this production is brought in-house. I was personally involved — together with a fantastic team during the summer — to conclude this. We took it over at the end of [Q3]. By adding resources, and leadership, output will gradually improve here.”

Mack North American deliveries in Q3 fell 28% year on year to 5,261 from 7,338 a year earlier. Mack’s Q2 North America deliveries fell 1% to 7,475 from 7,555. Also, Mack’s Q3 North American orders dived 56% to 5,197 from 11,760 a year earlier, with order slots at a premium due to the supply chain issues.

Lundstedt added that while this issue has hampered Mack for a while, he is optimistic things will improve for the brand.

“This has been a tricky situation for quite some time,” he said. “A tricky situation in terms of really getting our arms around it.”

“This is super important for Mack,” he added. “We have more customers [and] more volumes out there than we — for quite some time now — have been able to execute for Mack. Mack has such a strong position and is deserving more when it comes to the market sales.”

Mack has a full order book for 2024 and much of 2025’s book is full too, executives told analysts.

As a result of the slower-than-expected cab supplies, Mack was the only truck manufacturing operation handicapping the parent company’s balance sheet even as European commercial vehicle demand swoons, the company’s top executive added.

“I feel frustrated, not because of our organization, they are doing a fantastic job here, but because of course, we have a solid and good order book, we have great customers, and we want to deliver [trucks] as quick as possible,” Lundstedt said. “And that’s the reason why we took the decision also to take over this operation, so we can control it, to get the resources to get the job done.”

“What I feel good about is that it is now in our hands,” he added.

The Kings Mountain facility already benefited from upgrades, according to public statements from CVG.

The turnaround at Mack “can, if all the stars are aligned, go rather quick, but I think we need to be realistic. The most important thing is that we have a clear view that we will get the job done. And of that, I am 100% certain confident,” Lundstedt said.

Mack was paying CVG between $185 million and $235 million a year for the cab assembly work, according to changes to New Albany, Ohio-based CVG’s sales guidance for 2024.

CVG cut its 2024 net sales forecast to a range of $730 million to $780 million from a range of $915 million to $1.015 billion.

“The sale of Kings Mountain is a positive transaction for both companies and supports CVG’s efforts to optimize our portfolio toward higher-growth products and markets in line with our ongoing strategic transformation plan,” a spokesman for CVG told Transport Topics, adding that the company still retained business with the Volvo Group but was not at liberty to provide any more details.