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January 10, 2020

Mack Trucks reportedly laying off 305 employees at Pennsylvania plant

The truck manufacturer cites 'reduced market demand'

Mack Trucks is going to lay off 305 employees at its Lehigh Valley plant due to decreases in manufacturing demand. 

The layoffs will take effect on Feb. 28, the AP reported on Thursday. The employees being let go account for 13% of the plant's payroll and 21% of its employees

Mack warned its employees last month about cut-backs, so the layoffs did not entirely come as a surprise. The North American truck market is expected to decrease by 30% in 2020, a prediction widely reported last year. 

The Mack plant layoffs follow a year in which truck manufacturing orders fell to their lowest point in a decade. The past year's downturn followed a truck-ordering frenzy in 2018 attributed to President Donald Trump's Tax Cuts and Jobs Act of 2017.

The act effectively doubled the number of companies that paid zero taxes while significantly lowering the corporate tax rate for others. Some companies used their savings to purchase more delivery trucks, but truck orders since have dropped to the levels seen before the tax cut. 

Mack spokesman Christopher Heffner explained to the AP the rationale behind the company's decision.

"We regret having to take this action, but we operate in a cyclical market, and after two years of extremely high volumes, we have to adapt to reduced market demand,” Heffner said.

However, this is not the only round of massive vehicle manufacturing layoffs to follow Trump's tax cuts. General Motors, which saw increases in capital following the corporate tax cuts, laid off 4,000 workers early last year. Volvo also laid off employees.

Changes emanating from outside the trucking industry, such as self-driving cars and other kinds of autonomous delivery, also could be slowing the truck market. That influence may increase as technology develops.