AM General announcement

[John Q Public]

A birdie told me that AM General is finalizing an agreement to be purchased by General Dynamics.

Big announcement tomorrow that includes up to 2,400 new jobs to Mishawaka & South Bend.

[Thumper]

Says it right on the front page of their website!

STERLING HEIGHTS, Mich. — AM General and General Dynamics Land Systems today announced they will form a joint venture to compete for the U.S. Army and Marine Corps Joint Light Tactical Vehicle (JLTV) program.

http://www.amgeneral.com/corporate/news ... re-company

[backstagedee]

That would be fantastic.

[Ideal Baloney]

The deal is contingent on Indiana becoming a Right To Work state, right?

[Kent Hizer]

General Dynamics and AM General teamed up a long time ago on this project. They are competing against several other "teams" on this one. If you do a little digging on the JLTV, you will see that it is getting less and less support from lawmakers and military alike. It has become too expensive versus the current HUMVEE.

This JLTV project has been moved back so many times the last 3 years it will probably not ever happen with the defense cuts that are sure to come now.

There is probably more potential in what is called the Re-set and Re-Cap project where old HUMVEES are rebuilt and reused. The military does that with all types of equipment to include aircraft. The problem again is that every defense contractor is bidding on that to include the military itself through the Army Depots. Just because AM General built them does not mean they will re-set them. Very competitive industry in a shrinking market.

Since AM General is one of my biggest customers, I would like to see them know one out of the ball park, but since their production has gone from 84 units per day to 20 in the last couple of years, I am pretty pragmatic when it comes to these types of announcements.

[Betsy Wallace]

General Dynamics has been pretty smart in years past in the area of Defense Contracting and working with rival contractors to the benefit of all.

Several years ago two rival shipyards (one owned by General Dynamics and one owned by Huntington Ingalls) were competing on the DD21 project (now DDG1000) to see who would be the lead designer. They had done this previously on the Arleigh Burke class Destroyers. General Dynamics and Ingalls found that it saved money and helped their respective yards (and the communities who depend on them for a majority of their employment) to work together and share design specs.

Finally after the project hit some political snafus, it was greenlit a couple years ago and the first keel on DDG1000 project was laid at the General Dynamics yard last year. However, because the yards had worked together they now each are contracted to build three ships in this class.

Sorry for the history lesson. I am kind of a Military Channel junkie.

[Kent Hizer]

If you go this link you get some detail about the latest bid.

https://www.fbo.gov/index?s=opportunity&mode=form&id=c836b09bfcd2f60e3c24420bd84753e6&tab=core&_cview=0

Now on Wikepedia: http://en.wikipedia.org/wiki/JLTV

"The following companies and partnerships bid for the JLTV contract:

Boeing, Textron and Millenworks[6][7]
General Dynamics and AM General (as 'General Tactical Vehicles')[8]
Force Protection Inc and DRS Technologies[9][10] (officially rejected on August 14, 2008).[11]
BAE Systems and Navistar[12]
Northrop Grumman, Oshkosh Truck and Plasan[12][13]
Lockheed Martin, BAE Systems Land & Armaments Global Tactical Systems, Alcoa Defense and JWF Industries.[14][15]
Blackwater and Raytheon[16]
On 29 October 2008 the Pentagon narrowed the field of vendors to the Lockheed Martin, General Tactical Vehicles and BAE Systems/Navistar teams to compete for the final version and contract for the JLTV. Each team received contracts worth between $35.9 million and $45 million to begin the second phase of the program, which could ultimately be worth $20 billion or more.[17] The contracts were put on hold following protests by the losing teams, Northrop Grumman-Oshkosh and Textron-Boeing-SAIC. On 17 February 2009, the Government Accounting Office denied the protests.[18]

Australia signed an agreement in February 2009 to fund nine of the first 30 JLTV prototypes.[19] India has become interested in the program in 2009.[20]

As part of a cost-cutting measure, the National Commission on Fiscal Responsibility and Reform suggests canceling the JLTV.[21]

As of 2 December 2011, the program was stripped of funding in the Senate's Department of Defense Appropriations Act, 2012 because of "excessive cost growth, unstable requirements, and new alternatives."[22]"

So as you can see, a grand announcement of a joint venture, not a purchase of one by the other (a partnership that had already been in place for years) for a bid renewed on Jan 5th of this year, which was defunded in the Senate's Department of Defense Aprropriations Act 2012.

The US Army has little interest at this point and will probably mean they will go with a recapitalization (rebuild) of current HUMVEES. Even so, there are many companies vying for that work.

The only real interest at this point appears to be the vast armies of Australia and India.

I do know that the good folks at AM General are working very hard at keeping what work they do have and staying in the race for new contract.

War is hell, but it was good for business. An unfortunate and ugly truth.

[SouthBendInvestor]

Hey folks, any update on this possible announcement? Are they still working out a game plan?

[Kent Hizer]

There is no game plan. Defense spending is being cut in every facet. There will be no JLTV (at least in the forseeable future). The best they can hope for is some reset-recap work. The 20/day production currently produced is only slated to hold on through next year. As they are (were) one of our bigger customers, I am hoping for better news, but it looks bleak so far.