Hummer to Stop Production Until Sale is Complete

General Motors Co. will halt Hummer production next week at its Louisiana plant until sale of the brand to a Chinese company is completed.

Kevin Wale, president of GM's China Group, said, meanwhile, he's optimistic, but uncertain, the Hummer deal will be approved by Chinese government regulators.

GM agreed last year to sell Hummer, once synonymous with America's love for big off-road vehicles, to Sichuan Tengzhong Heavy Industrial Machinery Corp. It had expected the deal to close early in 2010 after approval by U.S. and Chinese regulators.

Assembly of Hummers at GM's Shreveport, La., plant will be suspended Jan. 19 because there's "sufficient inventory in the field" to sustain dealers while the sale makes its way through the regulatory process, Hummer spokesman Nick Richards said Wednesday.

The approval delay is because Tengzhong is not an established manufacturer, something normally required by Chinese governments, Wale said after a speech Wednesday at the Automotive News World Congress in Detroit.

"It's not a recognized car manufacturer, and they have rules that require that people can't just randomly go into key businesses," Wale said. "They have to get approval so that they don't end up with too many suppliers, too many people trying to compete in each industry. It's not a specific issue associated with Tengzhong or Hummer. It's just a structural management of their economy."

It was unclear how jobs would be affected at the plant in Shreveport, which also builds Chevrolet Colorado and GMC Canyon pickup trucks, Richards said.

"It hasn't been determined what the impact will be right now, but Hummer production is under a quarter of production" at the plant, Richards said.

The Louisiana plant once employed about 3,000 people, but layoffs and buyouts have reduced that to about 1,120.

Louisiana Gov. Bobby Jindal said the state will "aggressively pursue a variety of options to retain and grow jobs at the plant."

"For the long-term, we know our best opportunity to preserve jobs at the facility is supporting the sale of the Hummer brand, a transaction that appears to be on track according to GM officials, as well as to attract additional automotive tenants to fully utilize the facility," he said in a statement.

Doug Ebey, president of the UAW Local 2166, said he doesn't "expect job cuts in the immediate future, but if (the sale) drags on and on anything is possible."

"This is a temporary suspension of production and we expect the sale is going to go through," Ebey said.

Gerald Thomas, 60, who has worked at the plant for 26 years, said he was disappointed by the news, but he doesn't expect job cuts right now either.

"I figured they'd go up to the maximum production if we sold to the Chinese, but that's the thing, it seems like it keeps getting put off, like it's one thing after another," Thomas said.

Hummer sales have been struggling since the sale announcement. High gasoline prices and the national economic slump get some of the blame.

Sales peaked at 71,524 in 2006. But in December 2009 only 325 Hummers were sold, down 85 percent from the previous year, according to Autodata Corp.

Sticker prices start at more than $42,500 and rise to about $63,000, according to data posted at the Web site.

Aaron Bragman, an auto industry analyst with IHS Global Insight in Troy, Mich., said the suspension of production could be more about concerns the sale won't go through than surplus vehicles in the market.

Hummer is a damaged brand that some in the Chinese government aren't keen on, he said.

"The volatility of the gas prices really killed it and there's also a matter of changing taste," he said. "The Hummer H2 basically epitomized what he rest of he world hated about the American auto industry. It basically became the whipping boy for the green movement."

Under the sales agreement, the Shreveport plant would continue producing the H3 model and H3T pickup truck on a contract basis until June 2011, with a one-year option until June 2012.

The larger H2 was made under contract with South Bend, Ind.-based AM General LLC, which also makes military versions of the vehicles. The workhorse military vehicles used in Iraq and Afghanistan are not a part of the Chinese deal.