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From Site Selection magazine, January 2000

N E W S M A K E R O F T H E M O N T H

Volvo Trucks' Robert Whelen Banks
On Virginia for North American Future

b y T R A C Y H E A T H

E-commerce, package delivery and heavy-duty trucks are three very different industries ultimately tied to the others' success. Consumers' growing demand for fast-paced delivery and online shopping is creating rapidly increasing pressures on distribution operations and in turn the heavy-duty truck industry. As a result, some 270,000 trucks are expected to have been sold in North America in 1999, marking the fifth record-breaking year for North America's heavy-duty truck industry in the past 10 years. Perhaps that explains Volvo's decision to invest US$148 million in its North American truck operations.

Robert Whelen Volvo Trucks North America, located in Dublin, Va., saw its retail sales for Class 8 vehicles increase 36.9 percent in 1998 over its 1997 sales, and overall sales for 1998 totaled 29,762 units, a 35 percent increase. This growth was primarily driven by the 1996 introduction of the new Volvo VN series. Since its inception, the VN series has sold more than 40,000 units.

"Right now we're producing all the trucks we can produce," says Robert Whelen, director of Industrial Development, Environmental Affairs and Real Estate for Volvo Trucks North America. "And if we could produce more, we would be. We're limited in manufacturing, so our organic growth has dictated a need to expand."

Above right: Robert Whelen was a key player in Volvo Trucks' expansion decision.

Global Strategy
The groundbreaking in July 1999, was, in fact, the second expansion at the New River Valley assembly plant in three years. In 1996, Volvo invested another $160 million to add a paint facility, cab-assembly plant and a second vehicle-assembly line to produce its VN series.

The latest $148 million, multi-phase expansion will add space to its body, molding, paint and reconditioning operations and includes renovations to the existing facility. Once completed, Volvo's production of commercial trucks will increase by 66 percent to 50,000 units annually.

As sales continue to grow, Volvo plans to increase its reach and market share internationally. Whelen says that Volvo Trucks is in "an aggressive expansion mode," with North America being a key market for its growth. "Volvo is making a commitment to being strong in North America. That is something from the highest offices of AB Volvo in Gothenburg, Sweden; they want to be strong here," says Whelen. "They recognize North America as one of the primary markets for their products, and they are committed to making the investments necessary to succeed here."

Volvo's plan for North America is to grow organically, while in other parts of the world, it is growing through new startups, acquisitions and partnerships. Last year, Volvo finished a plant in India, and it has also formed a partnership with Mitsubishi. "The strategy for Volvo is to develop a strong market presence in every key market throughout the world," Whelen says.

Virginia: A Complete Package
So Volvo's decision to expand its North American operations was simple, but where to expand wasn't so cut and dried. Although all Volvo trucks made in North America are built at the New River Valley plant, that wasn't the only location considered for the expansion. The call of low-cost labor beckoning from Mexico was extremely tempting, as was the U.S. Southeast. "It was a very strong competition from the beginning," explains Whelen.

But, Virginia, he says, offered a complete package that Volvo couldn't seem to find anywhere else. "Virginia is marketing itself very aggressively, has a very pro-business environment, and it is equally interested in keeping manufacturers growing in the state as it is importing other manufacturers from outside the state," he explains.

Volvo was among the first companies to participate in Gov. Jim Gilmore's newly created Virginia Investment Partnership (VIP). The purpose of VIP is to provide grants and tax credits to manufacturers already in the state that are looking to expand or modernize their facilities. Through this program, Volvo anticipates approximately $60 million in performance-based incentives will be available over a 10-year period.

Whelen says that the state was also able to provide short turnaround times for permitting and zoning. Infrastructure and utility cooperation were also high on his list of things Virginia was able to offer. But one of the most important issues for Volvo was training. In its 1996 expansion, Volvo had already partnered with nearby Virginia Tech to create work-force development programs for engineering and supervisory personnel, but the latest expansion landed an even bigger commitment from the state: The Center of Excellence.

"Virginia is going to construct a community college facility right on our property, the Center of Excellence, which will open up courses to the general public," Whelen explains. "They will tailor a curriculum for Volvo Trucks North America and its employees from very specialized training to highly technical training in robotics. I think it's the first of its kind in Virginia, and it meant a lot to Volvo." SS

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