ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, January 11, 1996 TAG: 9601110085
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: STOCKHOLM, SWEDEN
SOURCE: Associated Press
Swedish carmaker AB Volvo said Wednesday it is considering building cars in the United States, and that manufacturing and delivery costs, rather than local incentives, would be given the most weight in the evaluation.
The announcement came just days before Volvo and a joint-venture partner expect to lay off workers at a Pulaski County truck factory.
Volvo GM Heavy Truck Corp., which is 87 percent owned by Volvo, has a truck manufacturing plan in Dublin, Va. On Friday, 190 salaried and hourly employees will be laid off from the plant, following a decline in truck orders.
However, the company is continuing its $200 million expansion plans to build a cab assembly and high volume paint facility by late 1996.
Volvo GM also has a heavy truck plant in Orrville, Ohio. In 1994, sales totaled 23,729 medium- and heavy-duty trucks, for a 6.7 percent U.S. market share, according to Ward's Automotive Yearbook.
The plan to make cars in the U.S. would follow in the tracks of German and Japanese carmakers, which have been attracted to the U.S. by the relatively weak value of the dollar, cheaper labor costs and the sales appeal of cars that are technically American made.
Volvo's comments on the car plant were in response to a report published by The Wall Street Journal that the company is studying whether to build passenger cars and sport utility vehicles in North America and is talking with other automakers about a joint project.
``We are looking at different alternatives ... There have been rumors for quite some time'' about a U.S. plant, said spokesman Mats Edenborg. ``Nothing new has happened. We don't have any news to report.''
In November, Volvo chief executive Soeren Gyll confirmed that ideas for a U.S. operation were ``on the table,'' but emphasized a move probably would be made only in conjunction with the launch of a new vehicle.
Another ``reason is tariffs,'' Edenborg said. ``If it costs too much to bring them into the country completed, then you have to set up manufacturing in the country.''
The Wall Street Journal said that, among possible sites, Volvo was looking at the southeastern United States where German automakers BMW and Mercedes-Benz have built plants.
Edenborg declined to disclose possible sites.
In addition to the German expansion in the United States, Japanese automakers Toyota and Honda have announced plans to add production at their North American plants.
Volvo already has operations - either wholly owned assembly plants or joint ventures - in many foreign countries.
Besides the United States, it has been looking at China for future expansion, Edenborg said.
Volvo has held talks with Japan's Mitsubishi Motors Corp. about a possible North American venture, the newspaper report said, citing people close to the negotiations. The companies already build compact cars together in the Netherlands.
Volvo also makes cars in Halifax, Nova Scotia. It sold 7,814 cars in Canada in 1995.
Volvo's U.S. sales, all from imports, totaled 87,021 cars last year, up about 8 percent from 1994 measured by daily sales rate. Its share of the U.S. light vehicle market was 0.59 percent. Among European companies, it ranked third in sales behind Volkswagen/Audi and BMW.
Staff writer Elissa Milenky contributed to this story.
LENGTH: Medium: 68 linesby CNB