The Volvo Group has announced that it will invest nearly $400 million to expand its Volvo Trucks North American New River Valley assembly operation in Pulaski County. The project is expected to create 777 new jobs within six years.
Plans call for a new 350,000-square-foot building that will house truck cab welding operations; expansion of the existing plant to upgrade plant operations and production flow; and equipment upgrades such as installation of state-of-the-art dynamometers for vehicle testing. Volvo, which manufactured 127,000 trucks worldwide last year, considered sites in multiple other states.
This is a huge win for Western Virginia, which has seen its manufacturing sector devastated by globalization and automation over the past three decades. The investment comes with a price for Virginia taxpayers, of course, but the subsidy seems modest compared to the magnitude of the project. Volvo will be eligible to receive $16.5 million over 10 years, contingent upon meeting investment and job-creation benefits. The subsidy amounts to only 4% of the capital investment, although, seen another way, it represents $21,200 per job.
The governor’s press release says nothing about the average pay scale of new jobs created, as it did with the Amazon deal, so that remains a mystery. Nor does the announcement, which alludes only to cab welding, painting, and dynamometers (devices for measuring torque) provide any hint of any higher value-added activities that will take place at the Pulaski County plant.
Last year Volvo unveiled a new concept electric truck called Vera, built from the ground up to be autonomous. The truck has literally no cab for a driver to sit in. Earlier this month, the vehicle manufacturer announced a test project to use Vera to transport goods between a logistics hub and a port in Sweden, as well as a partnership with American tech company INVIDIA to apply artificial intelligence to training, simulation and driving more broadly. Is there an opportunity for either Virginia Tech or the Pulaski operation to participate in this “future of trucking” initiative? No clue from the press release.
Bacon’s bottom line: I have been pessimistic about the prospects to build the economy of non-metropolitan Virginia on a manufacturing foundation, especially foot-loose light manufacturing operations. Volvo is a different case. It’s a massive facility, supporting more than 3,200 jobs even before the expansion. The company has an enormous investment here — Pulaski County is Volvo’s largest truck manufacturing facility in the world — which it would not lightly abandon. Indeed, Volvo has demonstrated a long-term commitment to the state. If the commonwealth is determined to support Virginia manufacturers, Volvo is one of the worthier candidates. A logical next step is to see if Virginia, which has identified autonomous vehicles as a strategic economic-development priority, can capture some of Volvo’s investment in AI and autonomous trucks.
Another interesting question: Was this investment a one-off, or does the project represent the fruit of Trumpian economic policy? Did lower U.S. corporate tax rates affect Volvo’s decision to expand in the U.S., and thus Virginia, or would market conditions, such as an increasing demand for trucks, have dictated a U.S. expansion in either case? Similarly, can Virginia claim this project as affirmation of a strong business climate — or would Pulaski County likely have beat competing U.S. locations regardless?
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