General Motors sells defence vehicle division
LONDON, Ont. — General Motors is refocusing on its main auto and truck production business and has sold its GM Defense division to General Dynamics Corp for US$1.1 billion.
GM Defense makes light armoured vehicles (LAVs) for the U.S. Army. The division is headquartered and has a major factory here, employing 1,500 workers. The sale of GM Defense to General Dynamics is not expected to have an immediate impact on the London employees.
GM Canada spokes person Stew Low says that although GM Defense is a profitable division, producing military vehicles is simply not GM’s core business. GM wants to focus on manufacturing and selling cars and trucks for consumers, he says.
GM Defense has annual sales of about US$965 million. The profitable operation has operating earnings of $150 million, and they are increasing.
But GM can’t take advantage of increased U.S. military spending. LAVs are huge, eight-wheel vehicles made with ballistic steel and equipped with gun turrets and high-tech surveillance gear, and GM Defense can produce about only one LAV per day.
The division began delivering the first of 2,100 LAVs to the U.S. Army last February in a $6-billion deal that will continue over the next six years. The contract with the U.S. Army – the largest peacetime military contract ever in Canada — was signed a year before the World Trade Center attacks of Sept. 11, 2001.
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