GM To Sell Hummer To Chinese Company

Tentative Could Save 3,000 Jobs; Bankrupt Automaker Also Cites Potential Buyers For Saturn, Saab

(CBS/ AP)  General Motors Corp. took a key step toward its downsizing on Tuesday, striking a tentative deal to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.

China's Sichuan Tengzhong Heavy Industrial Machinery Co. said Tuesday afternoon that it reached an agreement to acquire the brand from GM for an undisclosed amount. The Detroit automaker had announced Tuesday morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but it didn't identify the buyer.

Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.

GM said the sale will likely save more than 3,000 U.S. jobs in manufacturing, engineering and at various Hummer dealerships. Tengzhong said it will assume GM's existing agreements with Hummer dealers.

"We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S," Chief Executive Yang Yi said in a statement.

As part of the proposed transaction, Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period. For example, GM's Shreveport, Louisiana, assembly plant would continue to contract to assemble the H3 and H3T through at least 2010, GM said. AM General LLC in Mishawaka, Ind., makes the larger H2 under contract for GM.

Hummer will keep its existing management team and remain based in the United States, the companies said. Tengzhong said it expects to expand the brand's dealer network worldwide, including to China.

"GM is close to a sale of its Hummer brand, which is good news for the 3,000 Americans who will be able to keep their jobs, the two American plants that will remain open and the more than 100 Hummer dealers that should be able to stay in business all around the country," White House spokesman Bill Burton said earlier in the day.

On Monday, the Shreveport plant, which has about 800 workers, escaped being among 12 plants that GM said would be shut down by next year. The plant, which employed 3,000 several years ago, also produces Chevrolet and GMC pickups.

Johnny Bell, 59, who has worked at GM for 28 years, said many workers are still concerned about the plant's long-term future.

"Good news is good news, but we want all the news," he said. "We're concerned about what happens after 2010."

GM also said Tuesday that it has 16 buyers interested in purchasing its Saturn brand, while three parties are interested in the Swedish Saab brand.

Chief Financial Officer Ray Young told reporters and industry analysts on a conference call that GM is continuing to pursue manufacturing agreements with a new Saturn buyer.

GM would like to sell the money-losing Saturn brand's dealership network, contracting with the new buyer to make some of its cars while the buyer gets other vehicles from different manufacturers.

At the same time, bridge loan discussions with the Swedish government are progressing, Young said.

GM, which filed for bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner automaker. In addition to its plan to sell the Hummer, Saab and Saturn brands, GM will also phase out its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and GMC nameplates.

The company hopes to follow the lead of fellow U.S. automaker Chrysler LLC by transforming its most profitable assets into a new company in just 30 days and emerging from bankruptcy protection soon after.

But GM is much larger and complex than its Auburn Hills-based rival and isn't up against Chrysler's tight June 15 deadline to close its deal with Fiat Group SpA.

Sharon Lindstrom, managing director at business consulting firm Protiviti, said the companies pose different challenges. But as with Chrysler, she notes that the Treasury Department made sure many of GM's moving parts were in order ahead of time so a quick bankruptcy reorganization might be possible.

"They had a lot of their ducks in a row because the terms of the government financing forced them to get all the parties to the table in a very, very short period of time," Lindstrom said.

Separately, the German government said Tuesday it paid out the first euro300 million ($425 million) in bridge loans to GM's Adam Opel GmbH division. The loans are part of a deal to shrink GM's stake in Opel and shield it from GM's bankruptcy protection filing in the U.S.

Canadian auto supplier Magna International Inc. and Russian-owned Sberbank will acquire 55 percent of Opel.

A sale of the Hummer brand had been expected. Chief Executive Fritz Henderson had said in April that the automaker was expecting final bids from three potential buyers within the month.

Appearing on CBS' The Early Show Tuesday, Henderson said the Hummer's buyer "is quite capable."

Eric Lane, vice president of Baton Rouge, Louisiana-based Gerry Lane Enterprises, which has four dealerships - including one offering Hummers - welcomed the sale.

Lane said a lack of new products and the recession figured into the Hummer equation much more than last year's runup in gasoline prices. "I haven't had a single owner complain about mileage. Nobody buys a Hummer because of the gas. You don't buy a vehicle for $60,000 and worry about the price of gas."

Critics had seized on the rugged but fuel-inefficient Hummer as a symbol of excess as GM's financial troubles grew and gas prices rose. Sales at Hummer, which is known for models with military-vehicle roots, have been in a steep slide since gasoline prices rose to record heights last summer. For the first five months of this year, Hummer sales are down 64 percent.

GM nailed down deals with its union and a majority of its bondholders and arranged the Opel deal in order to appear in court Monday with a near-complete plan to quickly emerge with a chance to become profitable.

The government has said it expects GM to come out of bankruptcy protection within 60 to 90 days. By comparison, the judge overseeing Chrysler's case approved the sale of its assets to a group led by Italy's Fiat in just over a month. Some industry observers think Chrysler could emerge as early as this week.

During Monday's hearing, GM attorney Harvey Miller stressed the magnitude of the case and the importance of moving GM through court oversight as fast as possible. He noted that the automaker only has about $2 billion in cash left.

"If there's going to be a recovery of value, it's absolutely crucial that a sale take place as soon as possible," Miller said in his opening statement.

The automaker wants to sell the bulk of its assets to a new company in which the U.S. government will take a 60 percent ownership stake. The Canadian government would take 12.5 percent of the "New GM," with the United Auto Workers union getting 17.5 percent and unsecured bondholders receiving 10 percent. Existing shareholders are expected to be wiped out.

U.S. Judge Robert Gerber moved swiftly through more than 25 mostly procedural motions during the automaker's first-day Chapter 11 hearing.

Gerber set GM's sale hearing for June 30, putting it on a path similar to that of Chrysler. Objections are due on June 19, with any competing bids required to be submitted by June 22.

Gerber also gave GM immediate access to $15 billion in government financing to get it through the next few weeks, and interim approval for use of a total $33.3 billion in financing, with final approval slated to be ruled on June 25. The funds are contingent on GM's sale being approved by July 10. Gerber also approved motions allowing the company to pay certain prebankruptcy wages, along with supplier and shipping costs.

The sheer size of GM makes it a more complicated case than Chrysler.

GM made twice as many vehicles as Chrysler's 1.5 million last year and employs 235,000 people compared with Chrysler's 54,000. GM also has plants and operations in many more countries, meaning it will likely have to strike separate deals to navigate the bankruptcy laws of those places.

Henderson said GM has learned a few things by watching Chrysler's case.

"Certainly the court showed that it can address 363 (sale) transactions in an expeditious fashion," Henderson said at a news conference Monday. "Particularly in our case with what will be a very large 363 transaction."

GM's filing for bankruptcy protection is the largest ever for an industrial company. GM, which said it has $172.81 billion in debt and $82.29 billion in assets, had received about $20 billion in low-interest loans before entering bankruptcy protection.

[TSearcy]

I hear people complaining I don't want cheap Chinese aftermarket glass put in my Hummer. Wait for it..."Well ma'am the entire vehicle was made in China."

[buy4rd]

just wait this is just the beginning they will soon own all of GM they will get it for the dept we owe them and as an example the Chinese are already helping design GM cars mainly Buick's for now and they already are building some of these Buick s in China and GM did say they were going to move some of if not most of their production to China so support China buy GM

[neller04]

glad to see someone is buying hummer since we cant seem to keep it running. i never did figure out why people hate hummers so bad. they get as bad gas mileage as most suv or trucks do. if people want to buy gas guzzlers, more power to em!

[venkata4--2008]

China is sitting on another 1.5 trillions and we need them buy US treasury notes for foreseeable future to finance our barrow and spend policy.

Two wars are on this policy for last 8 years after giving 1.3 trillions tax break to very rich almost. Of course executive bonuses from bail out money.

But if those tax cuts to rich are rolled back (no body even can say that) all H3LL will break loose. So barrow from China.

[incog-nito]

So, when cattiej criticizes Obama, you say don't blame just one side.

But when Ordflyer criticizes Bush, you agree.

Posted by bothR2blame31 at 9:45 PM : Jun 2, 2009

I said I don't disagree, which is a little different than blaming only one side, and immediately pointed out that both sides are responsible. Hope that helps.

[incog-nito]

Nice. Very nice. Nothing like playing both sides of the street.
Posted by bothR2blame31 at 9:45 PM : Jun 2, 2009

Blaming is not only useless, it detracts from finding the root cause of the problem (which I have pointed out, thank you very much). As I mentioned, I expect more good paying jobs to continue to be lost, replaced by lower paying jobs with fewer benefits. I also expect people to continue to blame each other's party for the decline of America, while it continues to decline.

[incog-nito]

Posted by bothR2blame31 at 9:04 PM : Jun 2, 2009

No, I don't disagree. Both parties get the bulk of their campaign contributions from wealthy corporate donors. They may have different social agendas, but their economic agendas are not all that different. They both wanted the bailouts. In spite of ridiculous executive bonuses, there is no plan to change corporation compensation. Unions are still on their way out: there's no way to "compete" against workers getting paid 1/10th your salary. They both say they want to "simplify" the tax code, but the opposite happens. Etc. etc.

[incog-nito]

There are enough people worldwide to put every single person living in the United States out of a job; I just really don't understand the logic of the globalization with India and China and if we love China so much, then why not Russia.

Posted by spaceatoms at 8:44 PM : Jun 2, 2009

Globalizaton is great if you're a multinational company pretending to be an American company. Who cares if a particular nation gets the shaft. It's about self-interest, not national interest.

[incog-nito]

Posted by cattiej at 8:31 PM : Jun 2, 2009

Pssst... This has been going on for a while now, in case you haven't noticed. Americans work the longest hours of any Western country, have the fewest holiday and vacation days, the least unemployment benefits and no health insurance if they get laid off, and now no more 401K matching. Thank you Corporate America.

But yeah, keep blaming one party or the other. That really helps.

[spaceatoms]

There are enough people worldwide to put every single person living in the United States out of a job; I just really don't understand the logic of the globalization with India and China and if we love China so much, then why not Russia.

[cattiej]

This is just it tip of what China is going to own and does own here in our country. Soon we will be know as East China....keep on buying Chinese junk, soon you will have to bow down to the Chinese just like Obama has been doing...Our country is dying, many of you have bought Chinese junk and now you have no job, soon no house, no health insurance. You will be like Chinese cooley's, you work, work, work for slave wages. No work, no eat...

[incog-nito]

I hope you liked your old contract. Now you are going to be working 12 hour days with no bathroom breaks. The Chinese are not going to play your inefficient union games.

Posted by jonesjep at 8:00 PM : Jun 2, 2009

Trust me, Corporate America would love to get back to the good old pre-union days when this is the norm.

[incog-nito]

It's funny. When Republicans are in power they're blamed for the outsourcing of American jobs. When Democrats are in power they're blamed for the same thing. Only one thing is consistent: the outsourcing is still going on.

Yeah, keep on blaming. It really works.

[formrusmcsgt]

The Chinese now will be making our military vehicles how great of an accomplishment for the Obama administration. The auto company our government owns majority of which was Obama's doing has just sold the manufacturing of our military transport vehicles to communist china.

Posted by mccain08nc at 7:17 PM : Jun 2, 2009

You're a moron.

GM doesn't build our military HumVee's.

[Ordflyer]

The American Century is over....

Thanks George for driving the nails into the coffin....

[incog-nito]

The Chinese got themselves a sweet deal: Immediate access to the U.S. automotive market, something they've been trying to do for years (and this is just the beginning), and something they can use for their armed forces, all for pennies on the dollar.

It's amazing what you can do when America owes you trillions of dollars.

[searingtruth]

"Ahhh, my poor America lost.

Once the land of the free and home of the brave, we are now the land of secret prisons, illegal abduction, indefinite incarceration without charge or representation, torture, murder, universal surveillance, and preemptive war of conquest.

But that didn't seem to be enough to wake us up.

Perhaps waking up to the fact that our economy has been destroyed, and that we are now literally owned by the Chinese and other foreign enemies, might finally cause us to think, and act.

Perhaps the founding fathers were right after all, and Bush and all of his accomplices should be impeached and tried for betraying them, and our beloved Constitution.

Or perhaps we will simply continue to head full speed down the path to our own destruction.

It's up to us fellow Americans. Do we value our freedom and humanity so little that we no longer deserve them? Or will we once again stand to defend and uphold American liberty?"
SearingTruth, 2008

A Future of the Brave

[erasmus111]

I want one of GM's HHRs.

[ubrew12]

Wow. Hummer may become a brand I want to buy.

Nothing wrong with American engineering. Its just that American management ordered American engineering to design obsolescence into each and every vehicle they produced, so stuff would break down faster and the 'chump' consumer would be forced to get another American car after just a few years. Thats 'American car' because the management figured Americans were too patriotic to switch to foreign brands. Guess what? Americans switched to foreign brands.

Maybe now, under foreign management and American engineers, Hummer will become the high reliability vehicle it could be.

[buy4rd]

GM coined the Fraze design obsolescence now they are obsolete

[erasmus111]

Posted by bothR2blame31 at 6:11 PM : Jun 2, 2009

"Aren't you one of the Bangles?"

Now see, look how long it took YOU to figure that one out.


"And you missed me entirely on more than one of my other names. Don't pretend you were ignoring me."

So while I was missing you, you were ignoring me?

I couldn't have missed you, because I haven't even been on here! : )