Effects of GM Hummer sale on U.S. facility unknown

The future of the civilian Hummer may be in the hands of GM and a Chinese company, but unknown is how that will affect the manufacturing facility in Indiana where the Hummers got their start.

The Hummer was originally created by AM General of Mishawaka, Ind. as a military vehicle, the High Mobility Multipurpose Wheeled Vehicle, or “Hum-vee”.  The company began making a civilian version in 1992.

In 1998, AM General sold the civilian Hummer brand to GM but under contract continued to manufacture the HM2 at their Mishawaka facility. The facility was closed in January due to slumping sales, effecting 200 workers at the Indiana factory.

American General still owns all rights to the military Humvee and continues to manufacture and sell them.

The potential sale of the civilian Hummer by GM was announced on Tuesday. Confirmed at that time were talks between GM and the Chinese company, Tengzhong, a major industrial machinery group. According to a news release, the sale will include the rights to the premium off-road Hummer brand, along with a senior management and operational team. It will also assume existing dealer agreements relating to Hummer’s dealership network.

It is contemplated that Tengzhong will, as part of the transaction, enter into a long-term contract assembly and key component and material supply agreement with GM.

In an earlier statement, GM said it expects the deal, if successful, to secure more than 3,000 U.S. jobs. The final terms of the deal are subject to final negotiations.

Based in the Chinese province of Sichuan, Tengzhong is a privately-owned company and a leading domestic manufacturer of road, construction and energy industry equipment.

Hummer is expected to continue to maintain its headquarters and operations in the U.S., and continue to be managed by its existing leadership team. The team intends to expand Hummer’s dealer network worldwide, particularly into new and underserved markets such as China.

The transaction is expected to close in the third quarter of this year and is subject to customary closing conditions and regulatory approvals. Financial terms of the agreement will not be disclosed at this time.

Credit Suisse is acting as exclusive financial advisor and Shearman & Sterling is acting as international legal counsel to Tengzhong on this transaction. Citi is acting as financial advisor to GM.

About GM
General Motors Corp. (GM), one of the world’s largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 235,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM’s largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM’s OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

About Tengzhong
Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. ("Tengzhong") is one of China’s major privately owned engineering companies. Tengzhong is a manufacturer of heavy machinery equipment with a presence in special-use vehicles, road and bridge construction equipment and construction and energy industry equipment.

Since its establishment, Tengzhong has quickly become a major manufacturer of machinery and construction components through a series of successful acquisitions. Tengzhong prides itself on its automated manufacturing equipment, its processing systems, significant research and development initiatives and commitment to innovation.

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