Volvo plant may anchor Virginia R&D corridor

Volvo Trucks' plan to pump $400 million into its commercial truck plant in Pulaski County, Va., will secure the manufacturing hub well into the next decade. But county leaders believe the infusion also will support their hopes of recruiting even more automotive and transportation investment for the region.

Officials from the surrounding Blue Ridge Mountains area hope to unite advanced vehicle technology activities at the Volvo New River Valley Plant, along with those of suppliers in the region, with research work at Virginia Tech 30 miles away in Blacksburg, Va., to create a vehicle r&d corridor, said Michael Solomon, Pulaski County's director of economic development.

New River Valley's importance in the state's southwestern area was made clear by the arrangements for the project.

Volvo has long wanted to obtain more land for the 1.6-million-square-foot, 40-year-old plant site, the sole source of Volvo Class 8 trucks in North America. To support the Volvo investment plan, the Pulaski County Economic Development Authority spent $2.7 million to acquire 221 acres of adjacent farmland to give to Volvo.

That award doubles Volvo's footprint for the site and will make it possible for the truckmaker to construct a 350,000-square-foot building for welding.

Volvo also obtained a $16.5 million incentive package from the state. That grant had to be approved by the Major Employment and Investment Project Approval Commission, an authority of the Virginia House of Delegates that reviews large incentive proposals.

The signoff was not a foregone conclusion. The commission's vice chairman, Delegate Nick Rush, is not a fan of incentives but defended the Volvo package in the local press when it was revealed.

"I'm actually philosophically opposed to incentives packages," Rush told The Roanoke Times. "But for me, it's like the old nuclear arms race. I'm not giving up my incentives until everybody else gives up theirs."

There are conditions to the package. The state's incentives will be awarded over 10 years as Volvo progresses with new tooling, products and plans. Volvo actually intends to spread its investment over the next six years.

The incentives are also tied to job creation. Volvo employed just over 3,200 workers when discussions began. Employment will have to reach 4,000 for the company to earn the full package, Solomon said.

New River Valley has a history of ups and downs, which is not unusual in the cyclical Class 8 truck segment. The plant laid off 800 workers in 2016 and in December of that year said it would lay off another 500 in 2017. But in January 2017, the company canceled the second round of layoffs.

Two years ago, the company also invested $38 million to build a fetching customer center at the plant, complete with a 1.1-mile Customer Experience Track to showcase its products.

But this summer's announcement of the $400 million investment and 777 additional jobs came just one day after the local press reported that Volvo was again preparing for more layoffs as the U.S. commercial truck market softened.

Class 8 sales are a barometer of the general economy, and the past two years have been robust. Last year brought record North American sales of 490,000 vehicles, according to ACT Research, which tracks the market. But sales have again plummeted in recent months amid U.S. economic worries. According to ACT, the four largest North American Class 8 producers, including Volvo, saw a nearly 70 percent collective drop in June and an 80 percent drop in July.

In addition to the envisioned manufacturing plan for New River Valley, Volvo has been upgrading its product offerings. The manufacturer is working on electrifying the powertrains for the big rigs as well as developing autonomous driving technologies. Both of those emerging interests could help spark the kind of transportation industry corridor that local Virginia officials hope to foster.