Speaking at a media briefing for Americas-based trade press journalists, Volvo Construction Equipment's (Volvo CE's) President and CEO, Pat Olney, outlined the progress on the company's investment plans for North America. He also stated that Volvo has taken the lead in introducing environmentally friendly Tier 4 interim/ Stage IIIB compliant products in North America, with the successful launch of new generations of machines affected by the legislation.
The briefing was held on Thursday, September 22, at Volvo CE's Shippensburg, PA, production facility, which will also become the headquarters of the company's newly formed Americas sales and marketing region.
"North America is far from being at full strength, but from a low level we are cautiously optimistic and believe our previous forecast for growth of between 25-35% in 2011 to be accurate," said Mr. Olney. "The recovery in South America is more robust, with strong growth occurring across the whole of the continent – increasing by up to 20% this year.
"To meet this heightened demand across the two continents, we are investing in our production and supplier capability in North and South America, allowing us to make more machines locally, design them to better meet local needs and supply them more quickly to customers. We are confident that the visible investment commitments we are making will afford us a more significant share of these markets."
Strategic focus area
As previously announced, Volvo CE is spending $100 million in a product and manufacturing expansion program at its North American facilities. This comes on top of a previous $30 million investment to expand the current facility.
The additional investment will see the facility in Shippensburg expanded to accommodate production of Volvo wheel loaders, excavators and articulated haulers – adding 16 new machines to the 50 road machinery products already produced at the plant. A world-class customer and demonstration center will also be built in Shippensburg to provide customer, dealer and sales training programs and demonstrations. "This development will create a major global hub for the company," continued Mr. Olney.
Underlining Volvo CE's confidence in the long-term strength of the U.S., Mr. Olney used his presentation to highlight the efforts being made to expand and strengthen its distribution network in North America, which currently consists of 252 branches operated by 49 dealerships. "The company has also led the industry in its introduction of complete new ranges of Tier 4i compliant machines," he said, "and these low-emission machines are predominantly more productive and fuel efficient than the models they replaced.
"Volvo Construction Equipment is in a good position to capitalize on improving market conditions, both in North and South America," concluded Mr. Olney. "We are outperforming the market conditions by offering a young fleet of innovative products tailored to meet the needs of specific customer groups, combined with a strong and loyal distribution network and a substantial investment program. We have made a strong commitment to North America and regard it as a core market for the company."
Work is ongoing on the 200,000 square foot (18,580 m²) expansion of Volvo Construction Equipment’s (Volvo CE) facility in Shippensburg, PA, which began in June 2009. Now that construction is complete on the materials service center and assembly hall – which were designed to improve manufacturing flow and increase space to incorporate the production of Volvo motor graders – and assembly lines are up and running for all road machinery products, the focus shifts to revitalizing the existing factory. This includes boosting energy efficiency and safety levels, upgrading lighting and flooring, and improving ergonomics.
In order to meet customer demand and shorten lead times, Volvo is investing $100 million to expand its current facility in preparation for production of Volvo wheel loaders, excavators and articulated haulers in Shippensburg. Wheel loader manufacturing is scheduled to begin first, with excavator and articulated hauler production starting thereafter. The start of production for these products is aligned with the introduction of Tier IV Final-compliant machines. Manufacturing these machines in Shippensburg will have no significant impact on production in other Volvo locations.
“When the $100 million expansion is complete, Shippensburg will have a world-class manufacturing facility. And with a sales force on site, along with the construction of an interactive, state-of-the-art customer and demonstration center, we’ll have all the makings of a unique and accessible customer experience,” says Karsten Carroll, vice president of change management, Volvo CE Operations Americas. “The new site will facilitate greater teamwork and collaboration among employees, with designated meeting areas being created and workspace being formulated to increase information sharing across functions. That will increase the Company’s flexibility and agility, enabling us to meet our customer demands faster.”
In addition to the expansion, Volvo CE sales headquarters in North America and Volvo Rents operations are being moved to Shippensburg from Asheville, North Carolina. Volvo Rents is now based in temporary office space less than three miles from the main Shippensburg campus, and Asheville-based Volvo CE employees have had the option of relocating ahead of the September 2012 move, as well.
The Shippensburg plant has around 850 employees and manufactures over 50 different models of asphalt pavers, soil and asphalt compactors, milling machines and motor graders. This figure will rise to 74 machines by 2014, by which time a world class training and customer centre will also have been built. The factory was acquired in April 2007 as part of the road development division of Ingersoll Rand. Today it has become an important member of the worldwide Volvo Construction Equipment manufacturing footprint, spread across four continents.
