AM General starts building Mercedes SUV at Indiana plant, hopes other automakers will follow

IndustrialsAssociated Press

Black Mercedes-Benz R-Class SUVs rolled down the AM General assembly line Tuesday interspersed with white MV-1 wheelchair-accessible vans as workers began producing vehicles for the German automaker, a scene company officials believe is a sign of hope for the northern Indiana auto plant where Hummer H2s once were made.

The military and commercial vehicle maker announced in January it had signed a multi-year contract to make Mercedes-Benz R-Class SUVs. The seven-seat vehicle was briefly sold in the U.S. but since 2013 has been sold exclusively in China.

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"It's an amazing thing. You couldn't have made this up a few years ago if you told people you're going to make German-engineered cars in Indiana exclusively for export to China," said Howard Glaser, president of AM General's commercial business. "That's a great step forward for this company."

Mike Jackson, director of vehicle production forecasting for the IHS automotive group, said the contract is good for both companies because it allows Mercedes plant in Tuscaloosa, Alabama, to focus on higher-volume vehicles like the new SUV, the GLE Coupe, while providing work for the plant in Mishawaka.

"I think given the fact that utilization rates in North America remain very high, around the low to mid-90 percent utilization rate, manufacturers are certainly going to be looking at and evaluating additional opportunities where production work could make sense," he said.

Glaser said AM General hopes other companies will follow.

"Mercedes is the gold standard. If you can build a Mercedes in Indiana you can build anything in this plant," Glaser said.

Jason Hoff, president and CEO of Mercedes manufacturing in the U.S., said while the contract with AM General was Mercedes' first in the U.S., it has contracts with companies in Finland and Austria to make cars. He said outside companies can begin contract work faster.

Bruce Schweizer, the United Auto Workers Local 5 bargaining chairman, said the contract had allowed the plant to expand its work force from 160 workers making the MV-1 to 360 people.

Gov. Mike Pence, Sen. Joe Donnelly and Rep. Jackie Walorski were on hand Tuesday for a ribbon cutting ceremony. Donnelly talked about the concern about the commercial plant being idled after General Motors announced in 2009 that it was selling the Hummer plant to a Chinese company.

"We came through some pretty tough times together when we didn't know from day to day, from month to month, from year to year, what we would be able to be producing," he said. )"This is just the beginning."