New Insight on Hummer Deal

That the US government is dictating what goes on at GM is no big secret, especially after their directing the ouster of GM CEO Rick Wagoner. While The Phantom does not sit on the board of directors of GM he's been in those ivory towers longer than most. He told me last night that whenever I see a press release and it says "GM decided today blah blah blah" to substitute "the government decided today blah blah blah."

The announcement was made that the Saturn deal was turned down because GM (the government) and Penske were not able to find a manufacturer to take on Saturn . Penske says the board of directors of the manufacturer they wanted to produce Saturn rejected the deal. That is obviously true, but what's the government's role behind all of this?

The Hummer deal has slowed to a stop because GM (the government) is concerned about the Chinese inroads into US companies and their in ability to agree on labor contracts. The big concern for GM (the government) is the eventual movement of manufacturing and jobs outside the US to China. They say they have no intention of doing this but once they own the company they can do whatever they want (for the most part). They've even attempted to ease fears by saying the new headquarters will be in Michigan. Tengzhong makes heavy machinery and they do it very well. I think anyone would be hard pressed to say they don't have the required manufacturing experience and know how.

Enter our other player quietly sitting on the sidelines, AM General. They are in the process of manufacturing Humvees in a huge Humvee contract for the government. They already have the H2 factory and labor agreements in place. They have one of the most modern state of the art plants for manufacturing the H2 and one of the highest skilled labor forces in the world. They have years of pride, innovation, and a reputation riding on the Hummer brand. Those inside GM (the government) would love to see the jobs and manufacturing stay here with AM General (known to be high up in the original Hummer brand bidding) , is it any doubt why GM (the governemnt) is obviously dragging their feet with Tengzhong?

With the H3s being manufactured in Shreveport being shipped to Canada and Mexico and the loss of Hummer dealerships in the US because they can't get the new H3, the sale of Hummer becomes less and less attractive to Tengzhong and Chinese regulators, and more and more attractive to keeping the brand here with a US owner (AM General). If the dealers collapse will the new owners start a new dealer network? Tengzhong has said all along they have been "very impressed with the (US Hummer) dealer network." I think there's much more going on behind the scenes here than meets the eye The Phantom told me.

One thing we all know is that Hummers are getting to be a rarer sight on the road here every day as more and more are shipped overseas and to Canada and Mexico! Who wants to buy a car when there's no dealer to service it or honor warranty work - NO ONE! After all, what's more American and apple pie than Hummer!