AM General’s Indiana commercial vehicle plant sold to Chinese electric vehicle maker

[kscarbel2]

South Bend Tribune  /  June 23, 2017

Military truck producer AM General has agreed to sell its commercial assembly plant to SF Motors, a Chinese-owned electric vehicle company, in a move that will preserve more than 400 auto jobs in Mishawaka, the company announced Thursday.

The sale, including the land, plant and certain manufacturing equipment, doesn’t include AM General’s military assembly plant, where it produces the High Mobility Multipurpose Wheeled Vehicle, or “Humvee,” for military-related business.

SF Global will pay $110 million for the 700,000-square-foot plant, according to publicly available filings, and make $30 million in “key upgrades” to the facility, which sits between McKinley Highway and Jefferson Boulevard, west of Bittersweet Road.

The sale, which is subject to U.S. and Chinese regulatory approvals, is expected to close later this year, preserving about 430 jobs in Mishawaka, including 368 union jobs.

“We are confident that SF Motors is the right long-term owner to support the (plant), as well as the South Bend community and the State of Indiana,” Andy Hove, president and CEO of AM General, said in a statement Thursday.

“This transaction puts the (plant) on solid ground to keep the assembly lines running,” Hove said, “providing our tremendously talented and dedicated employees new opportunities as part of SF Motors and its plans to produce next generation electric vehicles.”

SF Motors is a subsidiary of Sokon Industry Group, a publicly-traded company listed on the Shanghai Stock Exchange that is principally engaged in the research, development, manufacture and sales of automobiles, engines and accessories.

The company, based in Silicon Valley, Calif., will use the commercial assembly plant to produce “intelligent” electric vehicles, with materials sourced primarily from U.S. sources, after a one- to two-year period of retooling.

AM General announced the sale to employees Thursday morning.

“We didn’t expect it, but we knew the company was having a hard time locking in long-term work here,” said Don Brody, chair of UAW Local 5. “I think it will be a good thing in the long run.”

“Off-hand, it’s good news,” said Joe Taylor, a state representative and president of the local union. “It’s retaining 400-plus jobs in this community.”

AM General had planned mass layoffs at the plant beginning in October, when its sole remaining customer contract, with Mercedes-Benz for the R-Class, a luxury vehicle for the Chinese market, expires.

It ceased production of the MV-1, a purpose-built wheelchair accessible vehicle sold by Mobility Ventures, a wholly owned subsidiary of AM General, at the plant last year.

The future of that vehicle is not clear.

In a statement, SF Motors said its position as a “US-based and American operated company headquartered in Silicon Valley, which respects and honors American rules and tradition.

“The company, which will launch an American-made electric vehicle in the near future and will acquire an AM General facility, plans to keep the factory's existing 430 autoworker jobs with the goal of expanding operations in the future and creating even more positions,” the company said.

It said it “hopes to become a leader in the new energy automotive space, and this acquisition and the surplus of talent that comes with it, will allow SF Motors to upgrade the commercial facility, enhance the local economy, and create a clean American-made electric vehicle.”

As part of the deal, SF Motors has agreed to assume the current three-year contract with the union, Brody said, though it could be two years or more before the plant is ready for production.

Until then, Brody said, “We’ll help employees the best we can to relocate and find different jobs.”

Asked about working for a foreign boss, he said, “Basically, being a UAW member, we would like to have a U.S. manufacturer here, but they have accepted us as a union, and we are going to accept them as well.”

He added, “I think it’s going to be a good thing in the end.”

Fellow employee Kevin McClintock was more cautious in his assessment.

"There's a lot of talk, a lot of talk, and it's all conjecture, all rumor,” McClintock said. "I don't know anything. I don't think anybody knows anything right now.”

Asked about the prospect of assembling electric vehicles, McClintock said, “I don’t care what kind of car I’m making. I want steady work, and if this does that it will be great.”

The sale brings to an unceremonious end to AM General’s 15-year foray into commercial vehicle production.

The South Bend-based company originally built the $200 million plant for the H2, a civilian version of the Humvee sold by General Motors Corp, in 2002.

The H3, produced in Louisiana, followed, but GM declared bankruptcy in 2009 and production of both models ended.

Subsequent attempts to sell the brand, including to China-based Sichuan Tengzhong Heavy Industrial Machinery Co. and U.S.-based Raser Technologies, were not successful.

This is not the first effort by a foreign company to build an electric vehicle here.

Bright Automotive announced a deal to produce a plug-in hybrid van at the former H2 plant in 2011, but the Anderson, Ind.-based company could not secure funding for the project and closed.

Think North America, meanwhile, briefly operated an assembly plant in Elkhart County, where it employed a few dozen people and produced several hundred two-seat electric vehicles before closing in 2012.

The Norwegian-owned company had originally planned to hire 400 people and produce 2,500 vehicles at the plant annually.

There was also a much ballyhooed, but ultimately short-lived, effort by Navistar Inc. in Wakarusa to manufacture electric delivery trucks. Then President Obama even visited the Navistar plant in August 2009 to help launch the project, which fizzled in 2013. That effort was spurred by a $39.2 million federal stimulus grant. 

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[kscarbel2]

FYI - The American Motors Corporation (AMC) - AM General connection

https://en.wikipedia.org/wiki/AM_General

AM General traces its roots to the Standard Wheel Company of Terre Haute, Indiana, which expanded in 1903 to include the Overland Automotive Division. In 1908, John North Willys purchased the Overland company, then based in Indianapolis, Indiana, and renamed it Willys-Overland Motors, Inc. In the 1940s, Willys-Overland developed a vehicle to U.S. Army's requirements and later mass-produced "America's first four-wheel drive one-fourth-ton tactical utility truck"—the Jeep of World War II fame.

^In 1953, Kaiser Motors purchased Willys-Overland, and changed the name to Kaiser-Willys Motor Company. In 1963 the company's name changed again to Kaiser-Jeep Corporation. In 1964, Kaiser-Jeep purchased the Studebaker facilities in South Bend, Indiana, and formed the Defense and Government Products Division in 1967, which after American Motors purchased Kaiser-Jeep became what is now AM General.

AM General's roots (and its location in South Bend) also lie with the "General Products Division" of Studebaker, which, along with its substantial defense contracts, was acquired by Kaiser Industries in early 1964 after Studebaker closed its U.S. auto manufacturing operations. At the time, Kaiser had been awarded a US$87 million Army truck contract, and under government pressure agreed to perform the work at the South Bend plant it had recently acquired from Studebaker. Subsequently, American Motors Corporation (AMC) purchased the Jeep Corporation from Kaiser in 1970 when Kaiser itself decided to leave the auto business. In 1971, AMC made the General Products Division of Jeep (producing military trucks, as well as contract and non-commercial vehicles) a wholly owned subsidiary and renamed it AM General Corporation.

AM General produced buses, large trucks, and Jeeps for industrial, military, and government use. In the late 1970s, it developed the High Mobility Multipurpose Wheeled Vehicle (HMMWV, nicknamed "Humvee") for military use as a heavy-duty replacement for the jeep. The vehicle later became available in a civilian version sold under the Hummer brand name. Another familiar product from the AM General line was the Jeep DJ-5 series—a purpose built "Dispatch Jeep" 2-wheel drive (RWD) version of the Jeep CJ-5—used in huge numbers as a right-hand drive mail delivery vehicle by the United States Postal Service. Production of buses lasted only from 1974 until 1979.

American Motors ended its history as an independent automaker in 1982 when controlling interest in the company was purchased by France's Renault. U.S. government regulations at that time forbade ownership of defense contractors by foreign governments, and Renault was partially owned by the French government. Therefore, in 1983, AM General was sold by AMC to the LTV Corporation and it became a wholly owned subsidiary of the LTV Aerospace and Defense Company. (As a result, AM General remained an independent company after AMC was purchased by Chrysler Corporation.)