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Volvo Trucks Will Lay Off 3,000 Workers Because Of UAW Strike At Mack Trucks

FreightWaves

The impact of a United Auto Workers' strike at Mack Trucks will nearly double next week when Volvo Trucks North America lays off about 3,000 employees because of a lack of engines and transmissions that come from a Maryland plant the companies share.

A Volvo Group spokesman on Thursday confirmed the ripple effect of the 4-day-old strike on its New River Plant in Dublin, Virginia.

"We communicated to our employees this morning that NRV will stop production Monday because of the effects of the strike at our Hagerstown powertrain operations," spokesman John Mies told FreightWaves. "This will unfortunately result in the temporary layoff of about 3,000 employees."

First Strike in 35 years

Mack Trucks employees went on strike Oct. 13 at six facilities in three states, led by the walkout of 1,900 workers at Mack's assembly plant in Lower Macungie, Pennsylvania. More than 3,500 workers are on strike for the first time in 35 years. 

Mack and Volvo Trucks are both part of the Volvo Group of Swedish truck maker Volvo AB. That means a labor disruption at one company impacts the other because of shared facilities like the powertrain operation that employs 1,300 in Hagerstown, Maryland.

Mack Truck strikes picket outside a joint Volvo Trucks North America-Mack parts distribution center in Jacksonville, Florida on Oct. 14. The facility is one of six in three states affected by the strike. (Photo: Jim Allen/FreightWaves)

The UAW lists a host of unresolved issues, including pay, benefits and the future of Mack production in the United States. 

Mack has invested $400 million in its U.S. operations over the last decade, Mack Trucks President Martin Weissburg said. Mack and Volvo are the only heavy-duty truck makers that produce all their trucks for North America in the U.S.

The three-year agreement at Mack expired Oct. 1. The union and company continued talks under the 2016 contract until Oct. 13. Negotiations are set to resume on Oct. 22, Mack spokesman Christopher Heffner said.

"Prior to the strike, we presented a substantial offer to the UAW, which included significant increases in both pay and total benefits for our employees and their families," Heffner said.

Supplier Layoffs Likely

The UAW reached a tentative settlement Oct. 16 that could end a month-long national strike affecting 49,000 workers at 30 General Motors Co. plants and facilities. The impact of the General Motors Company (NYSE: GM) strike caused the layoffs of thousands of employees at suppliers across North America.

"Second Tier suppliers could be hit pretty quick," depending on how long the strike lasts at Mack, said Art Schwartz, president of Labor and Economics Associates, who worked in labor relations at GM. He also teaches in the labor studies department at Wayne State University in Detroit.

Strike Timing

The Mack strike coincides with a falling backlog of trucks in production queues across the industry. Both Mack and Volvo plan two weeks of downtime this quarter to address 10 consecutive months of lower year-over-year orders.

"I tell my students ‘You don't go out on strike if no one notices you're gone,'" Schwartz told FreightWaves. "If they were going to go out on strike, they may have picked a bad time."

Contract expirations dictate the timing of labor actions. A year ago, the industry could not build enough new Class 8 trucks to meet demand.

"Given the industry has too much inventory and is on the cusp of rolling off the massive pace of the last six quarters, this would seem a not-too-fortuitous time to go on strike,"  Kenny Vieth, president of ACT Research, told FreightWaves.

GM-UAW Influence

While not linked to the GM strike, the Mack negotiations could feel the influence from the tentative UAW-GM agreement. UAW members at GM would each receive an $11,000 bonus upon ratification of the new four-year agreement. They would receive 3% raises in two of the four years and lump-sum bonuses in the other two years. 

As part of the settlement, GM can close plants in Lordstown, Ohio, and Baltimore, Maryland, that had no future products assigned to them.

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