The heavy freight truck industry is cyclical in nature, and manufacturers are preparing for a drop-off in orders in 2016. For North American truck giants Mack and Volvo, 2015 was a peak year with high sales and large amounts of new trucks being manufactured. Compared to 2014, Volvo saw an increase of 6 percent, and Mack reported increases of 10 percent. Unfortunately, those high levels hit the breaking point during the summer, with many companies canceling orders and reducing their inventories.
According to Mack’s third quarter financial reports, sales were down in North America by 51 percent in the quarter and 27 percent over the whole year. Volvo, Mack’s parent company, reported similar figures, with third quarter orders down 30 percent. Volvo estimates that orders in 2016 will be down another 10 percent to just 280,000 new trucks, compared to 2015’s 310,000 trucks.
Although this downturn was anticipated, it will still have a massive impact on the heavy truck job market going into 2016. At the beginning of December, Volvo announced that it would be laying off over 700 employees at the company’s largest production plant, New River Valley, located in Dublin, Virginia. This plant, employing about 2,800 workers, is tasked with assembling all of the Volvo trucks to be sold in the North American market. These layoffs are projected to take effect in February 2016.
On Tuesday, December 15th, both Volvo and Mack announced that they would be cutting even more jobs. Volvo’s powertrain plant in Hagerstown, Maryland will lay off 200 of its 1,800 workers in the first quarter of 2016. This plant is responsible for manufacturing engines, transmissions and other parts and equipment for Volvo and Mack trucks.
In the largest layoff of the three, Mack will be eliminating about 400 of the 1,850 jobs at its Allentown, Pennsylvania plant. This constitutes over 20 percent of that facility’s workforce. These planned layoffs will take effect January 25th, 2016. This plant’s responsibility is to assemble all of the Mack trucks for sale throughout North America.