Howes: Mahindra eyes assembly plant, 2,000 jobs at Flint's Buick City
Auburn Hills — An Indian automaker is poised to breathe new automotive life — and at least 2,000 jobs — into Flint’s iconic Buick City site.
Mahindra Automotive North America Inc., maker of the Roxor off-road vehicle and a finalist to build the U.S. Postal Service’s next-generation delivery truck, has signed a non-binding letter of intent to acquire the 364-acre site from the trust charged with cleaning up and redeveloping former General Motors Corp. facilities discarded a decade ago in the automaker’s epic bankruptcy.
“We like the fact that it’s a historic site,” Rick Haas, CEO of the Auburn Hills-based Mahindra Automotive North America, told The Detroit News. “We like that it’s in an area that needs a lot of TLC. The city’s … pretty grim in parts of it, and we’d like to help. And it’s a great story to tell.”
Yes, it is, and the symbolism is powerful. Twenty years after the last car rolled off the GM assembly line there, the Indian automaker is looking to enter the U.S. commercial vehicle market. Its preferred path envisions a new plant where GM once employed as many as 27,000 workers before foreign competition, corporate mismanagement and union overreach hastened once-mighty General Motors’ slide into federally induced bankruptcy.
The investment would be a huge win for Flint, struggling with the double whammy of its lead-tainted water crisis and the economic aftermath of GM's long-time downsizing in the region. It would also mark the third time that a would-be entrant in the rich U.S. auto market proposes to make it happen by reviving an assembly plant abandoned by an established automaker.
Lordstown Motors Corp., a would-be partner with electric-truck maker Workhorse Group Inc. vying for a piece of the postal service contract, is negotiating to acquire GM's idled assembly plant in northeast Ohio's Mahoning Valley. Plymouth-based Rivian Automotive Inc., a maker of electric trucks, owns the former Mitsubishi Motors Corp. plant in Normal, Illinois. And now comes Mahindra, a unit of the Mumbai-based Mahindra Group with interests in autos, mobility, farm equipment, information technology, and financial services.
Still, hurdles remain for the company backed by its parent's $21 billion in annual revenue. They include continuing environmental testing and cleanup on the site, extensive talks with state and local officials on an incentive package for Mahindra, and whether the automaker later this year will win the $6.3 billion contract to build 180,000 mail trucks over six years and the right to supply parts for two decades.
"Having a large revenue stream that's guaranteed for six to 20 years is a great enabler to fast-track the rest of your business in the United States," Haas said. "If I didn't have that mule to ride, with that contract attached to it, now I gotta figure out how to do it without the mule."
Translation: Even if Mahindra fails to beat its four rivals for the contract to build the postal truck — VT Hackney Inc. and its partner Workhorse, AM General, Oshkosh Corp. and Ford Motor Co., Turkish truck maker Karsan Otomotive and Morgan Olson of Sturgis — the automaker's leadership figures it still could move ahead with developing an assembly complex on the Buick City site.
That's because Mahindra is shaping plans to enter the U.S. commercial vehicle market with derivatives of its postal truck, if not the truck itself; to move production of its Roxor off-roader to Flint from Auburn Hills; and to possibly introduce its front-wheel drive, body-on-frame Marazzo MPV — engineered in nearby Troy for the rugged Indian market — to North American customers and businesses.
"It does have a really good chance of becoming real," Haas said of the Flint site, noting that Mahindra still is in talks with other states even as it prefers Buick City and its proximity to headquarters that would remain in Oakland County. "We're quite excited about it. It's a great site for us. We looked at sites in Detroit as well, and unfortunately we just couldn't piece together a big enough piece with a site on rail that we could make work."
He added: "If all things are equal, I think you stay in Michigan. If all things aren't equal, you have to think a lot harder about it. There's been a groundswell of support for us here" and for a potential move to Flint. That would be another big economic win for Gov. Gretchen Whitmer and Michigan's largest minority-majority cities, following Fiat Chrysler Automobiles NV's decision to build a new Jeep plant in Detroit.
The Michigan Strategic Fund granted FCA an incentive package totaling $223 million to offset the cost of its $1.6 billion project to convert Mack Avenue Engine into an assembly plant. And the state provided the city of Detroit another $93 million to offset costs associated with site preparation and environmental, markers of the kinds of incentives Mahindra is likely to seek in the coming months.
Haas talks like a CEO who wants to make the Buick City deal happen. A Detroit car guy to his core, with stops at Ford, Tesla Inc. and now Mahindra, he gets what it would say about his employer, what 2,000 jobs over the first five years would mean to Flint and its battered fortunes, how it could begin to reshape the narrative of inexorable decline into one touting new beginnings.
A Mahindra plant of 800,000 to 1.2 million square feet on the Buick City site would be the automaker's first major manufacturing facility in the United States, making Flint a hub for a new player aiming to capitalize on the predicted transition from personally owned cars, trucks and SUVs to growing fleets of commercial vehicles providing delivery and mobility services.
That's the niche Mahindra wants to occupy, Haas said, amid "a bunch of fallout" in the industry's transition that a lot of "people won't survive." Their strategy: play to the group's strength by minting vehicles engineered to take abuse in shared-use applications for delivery services, small businesses, contractors, farmers and ranchers.
"With the industry in chaos like it is now, with people shifting from personal ownership to shared mobility ... the whole industry is going to start to look real odd for the next couple of decades as people push and pull to try and figure out where they fit in."
Mahindra is betting its best fit is in Flint, a great American auto town that could get another chance to show what it can do.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.