GREENSBORO, N.C. — Mack Trucks and Volvo Trucks North America are making a big move.

As part of a joint plan to increase efficiency of their North American operations, Mack’s head office will be relocated from Allentown, Pa. to Greensboro, N.C. A concentration of Mack’s truck production will also be moved to the plant in Macungie, Pa.

The restructuring plan is expected to cost the Volvo Group $60 million.

The impact on employees represented by the United Auto Workers (UAW) will be subject to negotiations with the union; however, the company intends to offer all affected employees positions in other locations. Mack and the UAW have agreed that negotiations on a new labor contract will resume on Sept. 2.

The overall aim of the plan is to increase the effectiveness and efficiency of the North American truck operations. The move of Mack’s headquarters will include all support functions, product planning, and product development and purchasing.

Mack’s highway vehicle production will be moved from Virginia to Pennsylvania, where the truck maker’s construction and refuse vehicles are already assembled. After the transfer, all production of Mack and Volvo trucks will be concentrated to a single factory for each brand.

The final part of the optimization plan will include a restructuring of the parts distribution network that currently serves all business areas in the North American market.

In conjunction with this restructuring, an investment of about $50 million is planned to install a new engine block machining line at the Hagerstown, Md. powertrain facility. This line is expected to complement the group’s global capacity in the engine field, and reduce logistics costs and exposure to currency fluctuations.

TIMELINE

The transfer of Mack’s vehicle production from New River Valley is planned for the fourth quarter of 2008.

The movement of the Mack headquarters and support functions is estimated to take place over the course of 2009, while the consolidation of product development and purchasing will take place in 2010.

Restructuring of the parts distribution network will begin in 2009 and is expected to be completed in full by the end of 2010.

The new Hagerstown block line is planned to be operational by the end of 2010.