Mahindra eyeing $6.3 billion US Postal truck-supply contract, signs LoI for plant in Michigan

Mahindra Automotive North America (MANA), a subsidiary of Mahindra & Mahindra, is looking to set up a plant in Michigan in the US and has signed a letter of intent with the RACER Trust, the Indian automaker has said.

The facility, likely to come up in Flint, will manufacture small delivery trucks, 180,000 units, for the United States Postal Service (USPS), if the contract comes through.

The cost of one such truck is estimated between $25,000 and $35,000 (Rs 17.6 lakh and Rs 24.6 lakh) and the job is worth $6.3 billion (Rs 44,400 crore). The truck-supply contract will be spread over five years.

“The plant would also house production for a number of future products that have not been announced publicly. It is projected the plant will create up to 2,000 jobs over the first five years with additional jobs to follow,” Mahindra said in a statement on August 8.

The RACER Trust was created in March 2011 by the US bankruptcy court to clean up and offer for redevelopment properties and other facilities owned by the General Motors Corp before its 2009 bankruptcy.

The plant is proposed come up in the former Buick City, a large land parcel that used to have a mega complex producing vehicles under the Buick brand, a division of General Motors.

"We have a long-term product plan and we believe the former Buick City site in Flint is a strong contender for what would essentially be Mahindra's first large-scale manufacturing operation in the United States," said Rick Haas, president and CEO of Mahindra Automotive North America.

The Indian automaker is one of the five companies short-listed for the contract expected to be awarded later this year.

AM General, the maker of civilian Humvee, truck body maker VT Hackney Inc, Ford Motor Company and Turkey’s busmaker Karsan are the other four in the race.

Mahindra was also in talks with several other states and the decision would in part be driven by the financial incentives offered by Michigan, the company said.

"Winning the USPS contract is a key element of our growth strategy but it's only a piece of what we have planned," said Haas.

Indian auto giant already has a plant in Michigan’s Auburn Hills and it will see a “significant facility expansion” to support new products for the US market.

Last year, MANA launched the ROXOR off-road work and recreational vehicle at Auburn Hills facility, which also serves as its North American corporate headquarters.