THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, October 23, 1994 TAG: 9410220225
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By STEPHEN FOSTER, LANDMARK NEWS SERVICE
LENGTH: Long : 145 lines
In his office at Volvo GM Heavy Truck's corporate headquarters in Greensboro, N.C., Roger Johansson sits and plops a folder full of papers on the table.
It contains statistics on commercial trucking - and Johansson's company's share of that industry.
The numbers are whoppers: 8.2 million people involved in America's trucking industry as drivers, fleet operators, mechanics, dealers and more. 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. A chunk of that is hauled by the 1.3 million Class 8 trucks - those weighing over 33,000 pounds and the type Volvo GM predominately manufactures.
Two more numbers, perhaps the most important of all to Volvo: 188,000 and 25,000 - projected heavy truck sales figures for the industry and Volvo GM's sales this year, respectively.
``That's through the roof,'' Johansson said. ``No one expected 1994 to be this strong.''
``What you should read out of this whole thing is, `We need trucks,' '' adds Johansson, vice president of marketing for Volvo GM.
Truck makers expected 1994 to be a good year but it has turned out better than projected.
The U.S. Department of Commerce projected that 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.
However, some expect a 19 percent increase in the sale of big trucks, which would be the best year the industry has ever seen.
Volvo GM seems geared up to cash in on the surge in truck demand. The Southwest Virginia manufacturer's decision last spring to invest $200 million to expand its Dublin plant was the most obvious sign of the company's good fortune and soaring sales.
Virginia has Gov. George Allen's administration to thank for the plant expansion - and for Volvo being in the commonwealth at all. Allen's team 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.
The incentives given Volvo GM are the largest in Virginia - considering the recent announcement by Walt Disney Co. that it would abandon plans to build its Disney's America theme park in Northern Virginia.
Volvo GM Heavy Truck used to have a freight company in Portsmouth, where the company imported and exported freight and completed trucks. But in April, Volvo GM sold that operation to Wilson UTC Inc., which now touts Volvo as its biggest customer.
Volvo, the parent company, also has administrative offices in Chesapeake for its Volvo Penta North America Inc. marine engine division. Volvo Penta's administrative offices employ about 150 workers. Volvo Penta's marine engine production plant is in Lexington, Tenn.
Politicians and economic development gurus praised the number of jobs the Volvo GM 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 has about 80 employees doing that work, 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 manufactures 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 White Motor Co., a manufacturer it bought 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 additional trucks - and it needs more capacity to do that.
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.
``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.''
Much of Volvo GM's success hinges on its competitiveness. Its 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, those familiar with the industry say.
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.''
Volvo GM is asking its dealers to stay open longer, work weekends, and the company is providing 24-hour call-in service. The industry in general is focusing more attention on service and maintenance to supply truckers 24 hours a day and keep their livelihoods running.
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.'' ILLUSTRATION: Color photo
GENE DALTON/Landmark News Service
Truck cabs move along the assembly line as workers attach door
fixtures at Volvo's New River Valley plant.
by CNB