Mack Trucks, a popular manufacturer of heavy-duty haulers, announced layoffs at its Lower Macungie Township assembly plant Wednesday. 305 layoffs take effect at the end of the month.
The layoffs consist of about 13 percent of the Mack Trucks facility’s 2,400 employees.
A number of factors contribute to the slowdown in demand prompting the cuts. First, the wax and wane of the industry reached a peak back in early 2019.
Naturally, truck production follows demand from the trucking industry. A boon of increased freight during 2018 pumped funds into the hands of truckers and trucking companies. Truckers flush with cash invest in new or additional equipment. Therefore, truck manufacturers like Mack Trucks receive the benefits of a trucking boom.
Then, however, the flood of additional trucks and drivers outpaces available work. As a result, trucking companies go out of business, demand for new trucks falls, and production slows. Hence the layoffs.
However, another factor bears some responsibility for the waning demand.
Manufacturing Impacting Mack Trucks Production
One sector of the trucking industry remains strong. General freight, usually consisting of consumer goods and food, holds steady. The portion of the industry dipping comes from manufactured goods like cars and appliances.
The American manufacturing industry dipped last year as a direct result of the trade war between the U.S. and China. Because the two countries imposed tariffs increasing the cost of such goods, companies operating in manufacturing suffered increased costs to develop and ship their goods.
With fewer goods to ship, truckers see less freight to transport. Thus, the interrelated industries tied to one another by function all experience dips.
While economists project growth for the U.S. economy in 2020, they expect growth to slow.
As truck orders shrink, other companies like Volvo Trucks and Daimler Trucks North America follow behind Mack Trucks, laying off employees to offset the slowdown.