Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, October 2, 1994 TAG: 9410040010
SECTION: BUSINESS PAGE: F1 EDITION: METRO
SOURCE: STEPHEN FOSTER STAFF WRITER
DATELINE: LENGTH: Long
It held statistics on the trucking industry, and his company's share of it.
The numbers are big ones: 8.2 million people involved in America's trucking industry as drivers, fleet operators, mechanics, dealers or other ways. That's about the same number as the entire population of Sweden, Johansson's homeland and the headquarters of Volvo GM's mother company, AB Volvo of Goteborg.
More numbers: 2 billion tons of freight shipped each year; 1.3 million Class 8 trucks - those weighing over 33,000 lbs. and the type Volvo GM predominately manufactures - are on the road today.
"What you should read out of this whole thing is, 'We need trucks,'" said Johansson, vice president of marketing for Volvo GM.
And then there's the two numbers that mean the most to a truck manufacturer: 188,000 and 25,000 - projected heavy truck sales figures for the industry and Volvo GM this year, respectively.
"That's through the roof," Johansson said. "No one expected 1994 to be this strong."
Indeed, this was expected to be a good year. The U.S. Department of Commerce said sales would remain flat compared to 1993, when U.S. truckers bought about 158,000 Class 8 trucks. That would have been acceptable to many in the industry, which has been rebounding over the last three years from a pitiful 99,000-sales year in 1991.
And if 19 percent more of the big trucks - 188,000, Volvo GM is predicting - are sold this year, it would be the best year the industry has ever seen.
For Southwest Virginia, Volvo GM's decision this spring to invest $200 million to expand its Dublin plant was the most obvious sign of the company's good fortune and soaring sales.
For the state, it was also a sign of Gov. George Allen's goals, whose administration organized a $30 million package of incentives to help persuade Volvo GM to stay put, rather than move out of state as had been rumored. When Allen attended the May ground-breaking, he had the state's second largest incentive package to buttress his claim that "Virginia is once again open for business." The incentives given Volvo GM are now, practically speaking, the largest in Virginia considering Thursday's announcement by Walt Disney Co. that it would abandon plans to build its Disney's America theme park in Northern Virginia.
Politicians and economic development gurus praised the number of jobs the expansion would create outside the plant, and over several months those numbers have started adding up.
The clearest evidence of that came just Wednesday, when Volvo GM confirmed it had made a deal with MascoTech, a Michigan company, that is expected to set up shop in the region to assemble the engines and axles that currently are made inside the truck factory. Volvo GM currently uses about 80 workers to do that work now but MascoTech would not project its employment.
Other companies, like Pearisburg's Renee Composite Materials Ltd., a maker of truck hoods and other parts, and Wytheville's National Seating Co., which makes seats for Volvo GM's trucks, have announced expansions and plans for additional hires.
\ But even with a state committed to helping business, booming truck sales and a big plant expansion, what does the future hold for Volvo GM trucks - and the workers who makes them?
Hard to say, say Volvo GM officials and truck owners and dealers. Who can predict how soon and how sharply the economy will turn?
Since Volvo first started producing trucks in this country in 1981, its market share has risen from 5 percent to 12.3 percent - a slice it has held for four years and which ranks it as the country's third largest Class 8 truck manufacturer based on production of truck units. Volvo GM makes WhiteGMC Class 8 trucks - retaining the names of the company it bought White Motor Co. in 1981 and the heavy line of trucks from General Motors GMC, which bought a 17 percent interest in 1986.
Frank Adams, executive vice president for industrial operations at the Volvo GM's corporate headquarters and a former plant manager at Dublin, said the $200 million the company is investing at Dublin to build cab-making- and paint-facilities will help it make trucks less expensively and allow it to make more trucks over the long term.
It means, he said, the Dublin plant will be a part of Volvo GM's plans for a long time. Even for AB Volvo, which had sales last year of almost $12 billion, a $200 million investment is too big a sum to sink into a project and leave anytime soon.
"I'm not investing that kind of money for my health," Adams said.
He hinted that a new line of trucks will soon be built at Dublin. And if the company wants more market share, which it does, it'll mean building more trucks - and it needs more capacity to do that.
Currently, workers are putting in 10-hour days Mondays through Thursday and at least eight more on Fridays. They're working overtime every week to fill orders, if the industry "was any better, we probably couldn't support it," Adams said.
But there is another side to expansion optimism.
Dublin's boons have been a bane to Orrville, Ohio. There, a Volvo GM cab-making facility, stamp-making plant and truck assembly plant employ about 1,200. About 170 of those jobs will be lost when the expansion at Dublin is complete.
And Adams won't say Volvo GM workers won't suffer layoffs in the future. "Market conditions kind of dictate where you're going," he said. The normal business cycle - upturn and downturn combined - for the truck manufacturing industry is about five years. Sales have been climbing for three years, and are expected to be strong next year, but after that, who knows? Inevitably the downturn will come.
Economy turns notwithstanding, the success of Volvo GM, like any company, hinges on building a better product and providing better service to its customers. Right now, said Adams, "business couldn't be better."
\ Volvo GM trucks are usually known for their lower cost, relative to competitors such as Kenworth, International and Freightliner. "They're real tough for us to do anything with as far as price," said Pete Witt, a salesman at Hollins' Virginia Truck Center, which sells Freightliners, the top selling truck.
He said that Volvo GM tends to have shorter lead time - how long it takes from placing an order to delivering a truck - than some of its competitors.
But some dealers said that where Volvo GM might win in initial price competition, it's perceived to lose on resale value. And while the Volvo GM brand is considered a good, solid truck, it's not a luxury model. Said one industry insider who requested anonymity: "If you've got Paccar [which owns both Kenworth and Peterbilt] as the Cadillac, WhiteGMC is the Buick."
Big trucking companies like Roadway Express, Overnite Transportation Co., and others pay $50,000 to $85,000 for each truck in their fleet. But in a mature industry, most said there's only so much one can do to build a better truck.
"There are no bad trucks out there," said Paul Spokas, who manages sales of used trucks for Volvo GM. "We all build good products."
Still, "you can have a $2 part stop a $70,000 truck real quick [and] people will not wait here for a $2 part. They'll go down the road," said Keith Brandis, a Volvo GM dealer at Fulton Trucks in Roanoke. Volvo GM is asking its dealers to stay open longer, work weekends, and the company is providing 24-hour call-in service. And the industry in general is focusing more attention on service and maintenance, to supply truckers 24 hours a day and keep their livelihoods running.
"They have done us a good job with the equipment we have bought from them," said Jim Clark, vice president of Roanoke's Wilson Trucking, which bought 33 trucks this year from Volvo GM. "They've backed us up with our equipment. They stand behind their equipment. When we dispose of our trucks, we have a waiting line."
And Keith Dobson, vice president of fleet service for Richmond-based Overnite Transportation Co., which has more than 5,000 trucks, said Volvo GM excels in service after the sale. His company began buying primarily Volvo GM-made trucks in 1991 as it standardized its replacement parts inventory, a cost-cutting measure that many of the larger fleets are moving toward.
Said Dobson simply: "They're easy to do business with."
\ At their ceremony announcing the Dublin expansion, Volvo GM officials continuously praised the "work ethic" in Pulaski County - more often mentioning it than the $30 million the company received in public incentives.
But in terms of something on paper, as important as "work ethic" is a six-year contract signed between the union and the company this spring. And probably as important is morale of the plant's 1,400 employees, something workers say is as high as it has ever been.
For the company, the contract is one less cost consideration to worry about when figuring out if a $200 million expansion will work. "You know what your expenses are going to be," said plant manager Bill Brubaker. "We've got a six-year horizon on labor expenses." For the workers, "It's job security, number one," said United Auto Workers Local 2069 President Sherman Blankenship.
That sense of security can't help but boost morale, which has climbed ever since a strike at the plant in 1991. Workers place Brubaker in the same category as Adams, who was made plant manager then and fostered better lines of communication between management and labor. As a matter of daily ritual, Brubaker walks the production line, chatting with workers and checking the trucks as they move along the line.
"We're working hard to make them [the workers] a part of the managing style," Brubaker said. He and other top managers point to the company's commitment to total quality management, a spreading business philosophy which relies on the input of workers at all levels to improve the production processes.
On the labor side, there's good words from workers like Lloyd Sawyers and Connie Beasley. "The people in here are phenomenal, from the lunch room to the board room," said Sawyers, an 11-year Volvo GM employee who works as an assembler on the engine line.
"Everybody works together. That's a plus," said Beasley, a recent hire who came to Volvo a year ago after being laid off from the Radford Army Ammunition Plant, where she had worked nine years. She rises at 4 a.m. every day to make it to work by 6:30 a.m.
"The reason you don't mind getting up and going to a job every day is because of the people that you deal with and that deal with you."
That's not to say that building trucks is easy - or that workers in Dublin can't think of things they'd like to see changed.
Politicans' views notwithstanding, inside Volvo GM's labor ranks, the movement of jobs from inside the plant to other companies - like work dealing with engine and axle construction, small parts production and painting - aren't viewed with pleasure.
"Any time you're talking about out-sourcing, that's a sore subject," said Blankenship. "What we need to talk about more is in-sourcing. Once [those jobs] go out they aren't coming back."
So far, no one has lost a job to out-sourcing, because workers are being shifted to other duties, but workers would rather do what they've been doing than shift to another job, he said. There's also been some complaints about the quality of those out-sourced jobs.
But Brubaker, the plant manager, said those problems will be filtered out as soon as the companies get used to the jobs. And, he said, workers at the plant are willing to live with the situation because, "they understand that the whole idea is to create more jobs in the factory. It's better to have problems with growth than to have problems with downturns" in the economy. The company says the jobs are being out-sourced so the plant can have room for more total numbers of trucks.
Jeff Walke, acting president of the UAW local union, said the out-sourcing isn't liked, but everyone knew it would come with the greater good of the expansion. "It's a little hard sometimes, but we're not losing anybody," he said.
Some workers, like Thompson, could do without the required 10-hour days that they'll be working through the end of the year, as the plant tries to keep up with its orders. "I'm not an overtime kind of guy," he said. "Me, I'm an eight-hour man."
But others, like Sauwyers, take another approach. "The more work you have, the better. The demand is there. It has to be done."
If nothing else, overtime means more money, time-and-a-half on top of wages that average $14.50 an hour, plus good benefits, bonuses and profit sharing. Those things tend to overshadow most out-sourcing or overtime complaints.
There's consensus that a job at Volvo GM means, "you gotta work for your money," said Marcus Thompson, an 18-year employee of the plant who can remember when it was producing only five trucks a day. "It's no pie job."
"As far as hard work, it's harder than the arsenal," Beasley said. "You really get your bruises and scratches." She shows her closely trimmed fingernails - no point in trying to grow them any longer.
Beasley fills in on various jobs for workers who are on vacation or out sick. One day, she might be installing air cleaners: lifting 70 or so a day at 40-50 lbs. apiece, resting them on her knee before bolting them on. Another day she might be carrying wheels to mount on a chassis overhead. With the trucks moving from station to station about every seven minutes, she has to be quick, work steady, and stay focused.
At the end of a day, "you know that you gave your all - and you had to to keep up," she said.
Hard work or not, there's no question that a lot of people outside the plant would like to be inside. Volvo GM requires that applications go through the Virginia Employment Commission - where there's between 5,000 and 6,000 on file.
So, when someone does get hired, they know what they've got. "Every time a new hire walks through that door," said Saunders, "they're not frowning."
by CNB