Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, November 21, 1995 TAG: 9511210060
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: ELISSA MILENKY STAFF WRITER DUBLIN
DATELINE: LENGTH: Medium
Just a few months ago, workers at Volvo GM Heavy Truck Corp.'s assembly plant here were working nine- and 10-hour days to meet customer demand for 90 trucks a day. Last week, the plant slowed production to 75 trucks a day, a number that will drop to 64 in January after 100 to 150 workers are laid off.
Volvo GM is not the only company feeling the crunch. Fewer orders combined with outright cancellations are hurting truck manufacturers industrywide, experts say. Ken Vieth, an independent consultant in Indiana who works with trucking companies, attributes the decline to overproduction and a general downturn in the economy.
When the economy was strong in 1994, Vieth said, a large amount of freight was being hauled, creating a high demand for trucks. Increasing orders created a backlog, and people had to wait longer before getting their trucks.
But truck orders began falling during this year's second quarter. "The truckers said, `maybe I don't have to keep placing orders,''' Vieth said.
Cancellations also have hurt the industry, said Chris Winkler, a research scientist at the University of Michigan Transportation Research Institute.
"I don't think everybody believed that they were all legitimate orders," he said. "There was a lot of door stop ordering, foot in the door ordering; and now that the economy is pulling back, the orders are evaporating."
Volvo GM's Dublin plant manager James Cox said the company knew orders would slow but thought it would be a "soft landing," rather than the sudden decrease the plant is experiencing. Orders had been up at the plant for the last three years.
During the past 18 months, Cox said, the company hired 500 people in preparation for its new cab assembly plant and high-volume paint facility, which are still slated to open in late 1996. In fact, union officials said, people still were being hired within the last few weeks.
"They did try to hire those people for the long haul," said Jeff Walke, vice president of United Auto Workers Union Local 2069.
Cox said the market continued to worsen. A few weeks before the layoff announcement, the company scheduled a five-day production shutdown to lessen the blow. The shutdown went as planned during the second week in November, giving the plant's 1,700 employees the choice of taking time off or coming to work for training and maintenance work.
But it was not enough to prevent layoffs, Cox said. A seniority list was posted before the shutdown, showing workers who will be the first to be let go once company officials come up with a figure. Those layoffs - to include both hourly and salaried workers - could come as soon as mid-December.
If as many as 150 full-time employees are furloughed, the economic impact would be about $82,000 per week in lost wages, based on the hourly wage of a starting assembler at $13.78. Those workers can be called back or rehired as new employees until the year 2000, union officials said.
"This time, it was hard to predict this trend, that it would go as quick as it did," Cox said.
The slowdown is affecting Volvo GM's competitors, too. Pennsylvania-based Mack Trucks Inc. is planning layoffs and a reduction in the number of trucks built at its plants for the beginning of 1996, though no numbers have been announced. Navistar International Transportation Corp., based in Chicago, recently said that up to 499 workers at its Ontario plant could be laid off by the end of January, with further layoffs possible at its Springfield, Ohio, facility.
Two other major manufacturers, Oregon-based Freightliner Corp. and Washington-based Paccar Inc., have not announced layoffs. Debbie Nicholson, a Freightliner spokeswoman, said "orders are down, but we still have a healthy backlog."
The manufacturing plants are not the only ones affected by a decrease in orders. Volvo GM's Dublin plant contracts out some of the truck assembly work to about 15 companies, many of them in Southwest Virginia. For now, officials from several local companies said Volvo GM's decrease will have a small effect on their businesses.
Flexalloy Inc., which makes fasteners and assembly components for Volvo GM, will not add jobs at any of its six facilities - including Dublin - for the next two years. Expansion plans at the Dublin plant also will be put on hold, said Andrew Rayburn, company president.
Other companies, such as Findlay Industries Inc. and Fontaine Modification Co., will concentrate on other aspects of business while production is down at the Volvo GM plant.
Rayburn said subcontractors understand the truck manufacturing industry is cyclical.
"We're used to it," he said. "When you hook up with someone like Volvo, it's been great for four years, now it'll be down for two years. ... You've got to roll with it."
by CNB