Army awards Indiana's AM General a multi-year, $428M contract to build military ambulances

SOUTH BEND, Ind. – AM General, which two weeks ago lost out on a major Department of Defence contract, has been awarded a $428 million contract by the Army to build Humvee ambulances for domestic disaster relief efforts by the Army, Army Reserve and Army National Guard.

The company announced Tuesday it will receive $89.5 million to build 654 vehicles for the National Guard under the initial phase of the multi-year contract.

The vehicles will be produced at AM General’s plant in Mishawaka, about 10 miles east of its headquarters in South Bend, Indiana. The company didn’t say if the contract would lead to an expansion of its workforce.

The contract follows an announcement by the Defence Department that AM General had not been awarded a contract to build a combat vehicle to replace a large share of the U.S. military’s Humvee troop carriers. That $6.7 billion contract went to Wisconsin-based Oshkosh Corp.

AM General said Tuesday it will not protest that contract.

The loss of the combat vehicle contract was a big blow for AM General, which two years ago announced it was laying off 400 workers at its plant in Mishawaka because of unexpected delays in foreign military spending. The civilian side of the plant stopped making the Hummer H2 in 2009. AM General stopped making the gas-guzzling Hummer H1 in 2006.

But the company announced in January that its civilian division would begin making Mercedes-Benz R-Class SUVs to be sold in China, saying it had signed a multi-year contract with the German automaker. The SUVs began rolling off the assembly line last month.

The company continues to sell Humvees to foreign militaries. It announced in July it was awarded a $373 million multi-year contract to provide Humvees and spare part for Afghanistan, Iraq, Kenya, Lebanon, Ukraine and Tunisia.