GM agrees to sell five parts plants to investor group Company to focus on more profitable units

September 18, 1993|By Bloomberg Business News

DETROIT -- General Motors Corp. said yesterday that it had agreed to sell five parts plants to American Axle & Manufacturing, an investor group headed by Richard Dauch, a former executive at Chrysler Corp.

The deal, which includes Saginaw division plants in Michigan and New York, removes GM from the business of making rear axles, forgings and drive shafts. The division will continue to operate its steering systems, steering column and front-drive axle businesses.

Terms of the agreement were not disclosed. Gerry Holmes, a spokesman for GM, said that any gain from the sale would probably be reflected in GM's first-quarter 1994 financial statement. "We expect to complete this agreement by the end of this year," he said.

GM said in December that the plants were for sale as part of a plan by its Automotive Components Group to increase its worldwide business and to concentrate resources on more profitable auto parts.

The deal covers an axle factory and forge factory in Detroit; a drive-shaft plant in Three Rivers, Mich.; a forge plant in Tonawanda, N.Y.; and an axle plant in Buffalo, N.Y. About 6,800 employees work at those factories.

Machinery at GM's axle plant in St. Catharines, Ontario, is also included in the tentative sale, although that facility may remain with GM's Canadian operations, Mr. Holmes said.

American Axle could boost investment and add jobs at the Saginaw plants, Mr. Holmes said. Because of news of the sale, he said, GM has had trouble attracting workers to replace retirees at those factories. "Plus, the biggest customers for those parts is GM's North American truck platforms, and the truck business had grown dramatically," he said.

American Axle includes Mr. Dauch and James McLernon, a former Chevrolet and Volkswagen executive who is now running Checker Motors Co. in Kalamazoo, Mich. The company was formed expressly to buy the GM plants. Mr. Dauch, who declined comment further on the pending purchase, said in a statement that American Axle has "an aggressive program of investment in our [workers], equipment and facilities."

Mr. Dauch resigned as Chrysler's executive vice president of worldwide manufacturing in April 1991, after 12 years with the automaker and 11 years with Volkswagen in the United States. He said at the time that he had been frustrated in his attempts at being promoted.

GM said earlier this week that it may soon announce the sale of its Inland Fisher Guide factory near Trenton, N.J.

The automaker previously said the plant would be closed by the end of this year.

But a company spokeswoman confirmed that sale negotiations have been held with Independent Component Systems, of Farmingdale, N.J.

That plant employs 1,400 workers who make door handles, seat adjusters, body moldings and glass parts for automobiles.

Also this week, GM agreed to sell its Allison Gas Turbine division to Clayton, Dubilier & Rice, a private New York investment firm, for about $300 million.

When the transaction is completed, within about 60 days, the Indianapolis-based division will be renamed the Allison Engine Co. The division, which produces turbine engines for aerospace, industrial and marine, had sales of about $700 million in 1992.

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