SHIPPENSBURG – The addition of new products at Volvo Construction Equipment’s North American headquarters in Franklin County has contributed greatly to the ongoing growth of the supply chain network there.
Mike Ross, President, Franklin County Area Development Corporation (FCADC), said Volvo’s growing presence has helped grow the local economy with the addition of local production by such vendors as India-based Wipro Infrastructure Engineering and British-owned Gate 7, LLC. (Team Pennsylvania Foundation provided assistance to the Governor’s Action Team during the Volvo discussions.)
Ross said Volvo has been proactively working with his organization in encouraging supply chain growth for several years. Volvo organized a limited supplier day in São Paulo during the Governor Corbett-led and Team PA-sponsored trade mission to Brazil and Chile in April 2013. As part of the 10-day mission to South America, Gov. Corbett announced a deal with Wipro, which led to the creation of 74 new jobs in Pennsylvania.
“The supplier meeting was to find ways for us to help Volvo better develop the supply chain both domestically and internationally,” Ross said. “There has been a concerted effort to increase the supply chain not only with Volvo but other manufacturers as well.”
Ross said Volvo Construction Equipment (Volvo CE) opened its new 36,000 square foot “Headquarters for the Americas” administrative building in 2013, just a few years after expanding its manufacturing operations in Shippensburg. Volvo CE builds over 50 different construction vehicles at the plant.
“The facility represents another milestone in Volvo CE’s $145 million capital investment program in Franklin County,” Ross said. “In addition to the new administrative building, Volvo CE also unveiled local production of motor graders and a growing line of wheel loaders.”
Ross said the move to Franklin County by hydraulic hose assembly manufacturer DeeTag Ltd. in 2010 was a catalyst for fostering supply chain relationships with manufacturing companies like Volvo, JLG Industries and Manitowoc Cranes, whose products have some similar components.
“At that point, we made the direct connection with Volvo and their supply chain relationship,” Ross said. “In February 2012, Volvo invited their top 30 domestic suppliers to Shippensburg and asked us to participate in their Supplier Days.”
That set of meetings led to additional meetings in Brazil a few months later with suppliers to build even more relationships and showcase business opportunities available to foreign companies in Pennsylvania, Ross added.
For Volvo, having suppliers close to their operations is integral to the success of their business, according to Andrew Knight, President, Volvo CE’s Operations Americas. VCE, Shippensburg, spends annually more than $36 million with 57 suppliers located in Pennsylvania, according to documents provided to Team PA.
“We need to be close to our customers,” Knight said. “We could, of course, build these machines at any of our plants around the world. But our customers need these machines quickly. If they have to wait two, three or four months, we might lose a sale. So, it makes perfect sense then to have our supply base local. It’s crucial to us to develop a local supply base.”
Ross noted that a number of supply chain deals have come to fruition thanks to Volvo and other original construction equipment manufacturers.
An industrial painting company, Sunset Industrial Applications, Inc. and Brazil-based Torcomp Machining & Components, a manufacturer of machined components, are two companies to locate to Franklin County during 2013.
Developing a localized supply chain for equipment manufacturers has led to the creation of between 250 and 300 well-paying jobs, Ross added.
With more supply chain negotiations in the works, Franklin County’s economic future is looking bright.