Transmission of the USA, a division of General Motors Corp, launched its biggest
foreign venture today with a $31.4m factory in Hungary to make nearly 40,000 transmissions
a year for buses, special vehicles and trucks outside North America.

“This plant gives us
a strong strategic manufacturing presence overseas,” Michael G Headly,
Allison’s director of international operations, said at the factory opening
in Szentgotthard, western Hungary. “It allows us to be more flexible and
responsive to customers beyond our home market, especially in Europe and Asia.”

The 5,300-square-metre site,
which plans to make 11,000 transmissions in 2001, is in part of a factory of
Opel Hungary Manufacturing Ltd (OHM), a subsidiary of GM’s German unit Adam
Opel AG.

Initially, customers will
be European producers that Allison has served from its headquarters in Indianapolis,
Indiana – including DaimlerChrysler AG, Fiat SpA’s Iveco NV, Mayflower Corp
PLC’s Dennis Bus and Coach, Scania AB and AB Volvo.

An important market outside
Europe could be China, and Hungary’s government may offer incentives for exports
there. (OHM, a producer of Opel cars from 1992 to 1999, sold several thousand vehicles to China under favoured terms.)

The automatic transmissions,
built by Allison since 1991, work with diesel engines with maximum power of
300hp and peak input speeds of 2,000rpm-2,800rpm. The MD3060P and MD3066P are
six-speed, close-ratio transmissions for vehicles running mainly on highways
and paved streets. The MD3560P is a six-speed, wide-ratio version of the 3060P,
designed for vehicles generally requiring higher traction on roads paved and
unpaved, including dump trucks and refuse collectors.

Allison already sources
20% of the value of its Hungarian transmissions from Europe, and its target
for continental localisation is 60%. Key suppliers include Demm Officine Meccaniche
SpA of Italy (gears and shafts) and Groupe Valfond of France (machining of main
case). Parts also are bought from Austria, Hungary and Poland.

The other 80% of components
now come from the USA, shipped by sea once a week in a single 40-foot container.

Allison employs 64 people
in Szentgotthard. The manufacturing director, J David Smith Jr, is American.
All others are Hungarian, hired mainly from OHM’s car operations, which ended
last November. (Allison uses space of the former car factory’s paint shop.)

The current workforce comprises
one shift able to make 18,800 transmissions a year, but output can be doubled
with the addition of 40-50 people without extra investment.

“The installed capacity
of almost 40,000 in two shifts here means this is largest plant for medium-duty and
heavy-duty automatic transmissions in the world outside North America,”
said Rick Luke, Allison’s general director of operations said.

OHM, whose core products
have been engines and engine cylinder heads, is converting the rest of the car-assembly
area into a DM285m venture to make continuously-variable transmissions (CVTs)
for GM cars in Europe and North America. This renovated site of 16,800-square-metres,
GM’s first location to build the high-tech gearboxes, is to launch output in
mid-2001 with annual capacity of 250,000 in three shifts.

The CVT venture will boost
GM’s cumulative investment in Hungary above DM1bn.

OHM has built 2.13m engines,
754,000 cylinder heads and 85,239 cars from 1992 through 1999. Its products
have been exported to Argentina, Australia, Belgium, Brazil, China, Germany,
Mexico, Poland, Spain and the UK.

Allison’s only other plant
outside the USA is in Brazil, mainly to serve demand in Latin America.

Ryan James Tutak, associate editor of for Eastern Europe:

F +36-1 / 317-7257
T +36-1 / 266-2693