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June 30, 2009
Hummer: Mark your calendars
Recent reports suggest that Tengzhong Heavy Industrial Machinery is in discussions with the Chinese government over its proposed acquisition of the Hummer brand, dealership contracts and AM General production contract (for the H1/H2 model). Since GM recently announced it will be closing the Shreveport plant that produces the H3 model, I'm assuming those facilities aren't going to be part of the package.
-bjmq
June 30, 2009 in Asset Transactions | Permalink
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Comments
Not convinced on the Shreveport plant conclusion. The H3 is probably the biggest selling model of Hummer, and I don't recall that they sell the H1 any longer. One has to give advance notice of mass layoffs pursuant to federal law, but I don't recall anything that prevents GM from "unlaying off" people and keeping a plant open if a deal goes through.
Posted by: ohwilleke | Jul 1, 2009 3:12:06 PM
True enough. All good points. It may just be that GM is providing the statutory notice to workers in the Shreveport plant and that this might just be a strategy to create a real option for themselves. There are really three possibilities if this deal were to go forward: 1) GM actually keeps the plant and all three lines open, building the H3 on contract for Tengzhong and the Chevy Canyon and GMC Colorado for New GM out of the plant. 2) It closes down the Canyon/Colorado lines or some combination thereof, and operates the Shreveport facility on contract to produce H3's for Tengzhong. 3) It sells the entire facility and the H3 line to Tengzhong and lets them produce it on their own.
Of course, there's a fourth option: GM closes the facility and Tengzhong goes without really means that the deal doesn't happen.
On the H1/H2 production contract. GM doesn't produce either of these vehicles. That's done by AM General under a production contract with GM. AM General builds the Hummer for the US military. While AM General is not presently producing any H1's under the contract, it's entirely likely that the contract gives GM (or its successors) the right to order them in the future. I'm happy to stand corrected if someone wants to send me a copy of the contract.
Posted by: Brian | Jul 3, 2009 2:52:04 PM
