Hummer buyer says it likely will locate headquarters in southeast Michigan near Detroit

By: TOM KRISHER
Associated Press

09/22/09 5:00 PM EDT DETROIT — The Chinese company that's in the running to buy Hummer from General Motors Co. likely will locate the brand's corporate headquarters near Detroit, a spokesman said Tuesday.

Spokesman Nick Richards says Sichuan Tengzhong Heavy Industrial Machinery Corp., which is still negotiating to buy the brand, initially will employ about 100 people at the headquarters with plans to grow that to 300.

The headquarters would house global design, engineering, product planning, purchasing, sales, service, marketing and financing, Richards said. The company plans to invest $9.4 million over five years, he said.

The Michigan Economic Development Authority on Monday approved a $20.6 million state tax credit over 10 years to lure the company to Michigan. According to a memo filed with the authority, Hummer is considering sites in Detroit and suburban Auburn Hills, both of which have indicated they would grant tax abatements. Hummer also considered sites in South Carolina, Louisiana and Tennessee.

The tax credit is contingent on Sichuan Tengzhong closing the deal for Hummer with GM, although the memo says all definitive documents for the sale have been signed by GM and Sichuan Tengzhong.

The memo says the Hummer headquarters also would create another 641 jobs with other companies and generate $36.6 million in additional revenue for the state, excluding the tax break costs.

The company will decide on the headquarters' location by Oct. 31, the memo says.

The Hummer brand features large off-road vehicles that initially were developed for military use. GM wants to sell the brand because it loses money, but Hummer has a highly rated dealership network that Sichuan Tengzhong may be after.

Sichuan Tengzhong is a little-known Chinese truck and industrial equipment maker. The sale could still be blocked by Chinese regulators who are questioning its wisdom.

Tengzhong's CEO, Yang Yi, has said the company will maintain Hummer's headquarters and operations in the U.S., while investing in research and development of more fuel-efficient vehicles.

Tengzhong is likely benefiting from heavy stimulus spending on construction projects in China and from rebuilding after last year's earthquake in Sichuan, given the company's specialization in construction equipment and heavy trucks.

Tengzhong earlier said it broke ground on a 3.5 billion yuan ($500 million) factory to make oil field equipment.

Sichuan Tengzhong spokesman Tim Payne said negotiations are still under way to close the deal with GM.

"We're confident we'll get there one day. These things take some time," Payne said from Beijing. "It's a deal in a complicated environment."