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AM General To Lay Off 350

Fri, 09/30/2011 - 5:18am
Tom Coyne, Associated Press

SOUTH BEND, Ind. (AP) — The northern Indiana-based company that makes Humvees for the military plans to lay off about 350 workers nationwide next month because of defense budget cuts and the drawdown of U.S. troops in Iraq and Afghanistan, company officials said Thursday.

AM General's new production of Humvees for the U.S. Army ended in December 2010, but the company is still doing other work for the Army and making the vehicles for other customers, including foreign countries and for Afghan troops under contracts with the U.S. Department of Defense.

But the workload isn't enough to maintain current staffing levels, company officials said, noting that the drawdown of U.S. troops in the Middle East means the fewer Humvees would be needed.

"Reducing our production rate was a difficult but necessary choice that will allow us to better respond to the needs to our customers and adjust our business accordingly," Charles Hall, AM General's president and CEO, said in a written statement.

AM General has about 2,000 employees nationwide, including at its side-by-side military and commercial plants in Mishawaka and its South Bend headquarters. The company also has facilities in Livonia, Mich. and Franklin, Ohio, and offices in Arlington, Va.

Messages seeking comment were left Thursday by The Associated Press for the United Auto Workers Local 5, which represents workers at the Mishawaka plant.

A report released in July by the DOD's inspector general said that AM General was initially awarded a contract in 2010 to produce 2,526 Humvees and troop enclosures for Afghanistan national security forces for $280 million. That number had increased to 7,161 Humvees and 4,002 troop enclosures for $1.1 billion as of June, the report found. The troop enclosures are built by a subcontractor.

The inspector general's report said AM General had been producing 35 Humvees a day.

Hall's statement on Thursday did not specify what the new production rate would be after the layoffs. AM General spokeswoman Celeste Ross said company officials declined further comment.

The layoffs announcement comes just eight days after AM General held a news conference to announce it had begun making wheelchair-accessible cars in the plant where it formerly made H2 Hummers, which AM General stopped making for General Motors Corp. in January 2009. It stopped making the Hummer H1 in 2006.

The military Humvees are officially known as High Mobility Multipurpose Wheeled Vehicles.

Rick Smith, president of AM General's commercial business segment, said during an interview last week that there are cycles in both the defense and automotive industries.

"What we try to do is position ourselves so that when one is in a down cycle then one is in an up cycle. So we're hopeful we've done that again," he said at the time.

AM General is making the wheelchair-accessible vehicles, known as the MV-1, under a contract for The Vehicle Production Group, based in Miami. Smith said AM General was also discussing making vehicles for other companies.

The commercial side of the plant in Mishawaka has a capacity of 70,000 vehicles a year, running two shifts. VPG Chairman Fred Drasner said the company plans to make about 1,000 MV-1s this year, about 10,000 next year and 25,000 to 30,000 a year after that.

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