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Sweden's Volvo sees bright future for once-struggling Maryland engine factory
Diplomatic Pouch / November 5, 2015

By Larry Luxner

HAGERSTOWN, Md. — Four miles south of the Mason-Dixon Line and down the street from a Waffle House, a CVS Pharmacy and the Colonial Sports Bar & Grill, Volvo AB — Sweden’s largest industrial conglomerate — manufactures diesel truck engines, transmissions and axles for a resurgent North American market.

Yet Volvo Powertrain’s prawling factory, tucked just off U.S. Highway 11 in Hagerstown, keeps a relatively low profile. Even some locals aren’t aware of its existence.

“A lot of people who have lived here their entire lives don’t know we’re here,” said Matt Saloom, director of the facility’s engine product line.

All the more surprising, considering the plant employs 1,700 people and that Volvo Group Trucks has invested $365 million here over the past 15 years. That includes a $30 million expansion announced in October 2013 by the Washington County Board of Commissioners and then-Maryland Gov. Martin O’Malley, now a 2016 Democratic candidate for president.

On Oct. 23, about 50 people including this reporter toured the squeaky clean factory on a field trip organized by the Baltimore-based World Trade Center Institute. It was the latest in a series of recent WTCI visits to major Maryland manufacturing operations that have included Domino Sugar, spice maker McCormick & Co., defense contractor Northrop-Grumman and motorcycle manufacturer Harley-Davidson.

“Manufacturing, which has constantly been pushed overseas, is now coming back to the States,” Saloom, a fourth-generation employee, told his guests in a pre-tour briefing. “Since 2010, we’ve created 600 jobs here. I don’t believe anyone else in Maryland has created that many jobs.”

Established in 1927, Volvo is one of the world’s largest manufacturers of trucks, buses and construction equipment. Its products are sold in 190 countries (Volvo Cars, the auto division, is a completely separate company since it was spun off in 1999 and later sold to Geely, a Chinese automotive conglomerate).

Mack Trucks inaugurated the Hagerstown factory in 1961; forty years later, Volvo acquired Mack Trucks and took over the plant. The 1.5 million-square-foot facility remains the only Volvo site in North America that produces heavy-duty power trains, or as Saloom claims, “the cleanest heavy-duty diesel engines in the world.”

Located only a few miles from the intersection of Interstates 71 and 80 — about an hour west of the Baltimore docks — the plant sources half of its raw material from overseas, “so it’s very important to have a port located close by,” he explained. “If there’s a delay, even something as simple as a tropical storm could have an impact.”

The plant assembles 11-liter and 13-liter engines, as well as a T300 manual transmission and the end drive. Its products are sent to truck and bus factories in Dublin, Va., and Plattsburgh, N.Y., and exported to facilities in Canada, Mexico and Venezuela.

The factory’s employees are relatively well paid. The average weekly salary here is $1,292, compared to $1,044 a week for the regional manufacturing sector and $799 a week for jobs of any type.

Lamar Sease, a retired tool designer, now takes visitors around the sprawling Volvo factory as a “tour ambassador.” At 73, he’s seen it all.

“When I came to work here in the late ‘70s as a tool designer, there were 4,000 people. But in the mid ‘80s, they eliminated a lot of parts,” Sease told us. “They began outsourcing flywheels and housings. About the only thing they retained were the five C’s: cylinder block, cylinder head, cam, crank and connecting rod.”

When the 2008 U.S. financial crisis hit, things got even worse. In 2009, the factory produced only 15,917 engines and 3,925 transmissions.

“We didn’t know what to do with the site, so we tried to find the most efficient ways of working,” said Saloom, noting that layoffs shrunk the workforce to 1,100 at its lowest point. “That was the only way we could stay competitive in the market.”

But by 2012, that market had picked back up, and last year, the Volvo factory turned out a record 54,752 engines and 37,535 transmissions — with Saloom predicting total 2015 production of roughly 63,000 engines and 46,000 transmissions. It takes an average eight hours to make a diesel engine from start to finish, three to four hours for a transmission, and six hours for an axle.

Volvo now ranks as the third-largest private employer in Washington County, after Meritus Health Inc. and credit-card processing firms Citicorp and First Data.

Making the factory feel less like a factory — with the grime usually associated with factories — has been part of Volvo’s reset effort. These days, walking around the plant is somewhat akin to visiting another icon of Swedish ingenuity: IKEA.

“If you were here back in 2001, there was a haze everywhere. It was dirty and grungy,” Saloom recalled. “Now it’s so bright and open and clean that people want to come here and work.”

One former employee enthusiastically agrees.

Allen Brown, posting an online review of the Volvo plant, said he worked there from November 1974 to February 1976, when it was still a Mack Truck factory.

“As a skilled trade electrician, I was paid very well, but it was a dirty place to work. There was a lot of milling, drilling and grinding of engine blocks and crankshafts. Iron filings were everywhere, and dust filled the air,” Brown wrote. “I took a tour of the plant over 35 years later and was amazed at the difference. Volvo has done a wonderful job of cleaning up the factory. The floors are almost clean enough to eat from.”

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