Mercedes-Benz is shifting R-Class production to AM General's plant in northern Indiana.

Mercedes-Benz U.S. International’s problem is AM General LLC’s gain. The German automaker is out of manufacturing space at its Tuscaloosa, Alabama, plant so it’s tapping AM General to build the R-Class Grand Tourer at its plant in northern Indiana not far from Chicago.

Mercedes-Benz said booming sales have forced it to reorganize production of its sport utility vehicles and it plans to expand production capacity in the U.S. by utilizing the AM General plant in Mishawaka, Indiana, just outside of South Bend.

The Mishawaka plant will join the production network of Mercedes-Benz Cars, freeing up capacities at the Mercedes-Benz plant in Tuscaloosa, Alabama, which will then be used for the M-Class, the GL-Class and the new GLE Coupe due this summer.

“Within our growth strategy, we are expanding our global production network and will additionally use the capacities of a contract manufacturer. We are thus increasing flexibility and continue to improve our competitiveness,” said Markus Schaefer, member of the Divisional Board Mercedes-Benz Cars, Manufacturing and Supply Chain Management.

Jason Hoff, president and CEO of MBUSI, noted with the introduction of the new GLE Coupe and the strong demand for SUVs, Tuscaloosa needs all available production capacity for this segment.

Production in Tuscaloosa plant is planned to reach more than 300,000 units this year.

The R-Class capacity will be used for the other SUV model lines, Hoff said.

In addition to the SUV models, the plant has been producing the new C-Class sedan since June 2014. It is one of four global locations in a production network as well as the lead plant in Bremen, Germany, the South African plant in East London, and the Chinese production location Beijing Benz Automotive Co. Ltd.

Schaefer said 2015 will be the year of the SUV for Mercedes-Benz.

Almost the entire SUV portfolio will be renewed: the M-Class and the GL-Class will receive a facelift – in line with the new Mercedes-Benz nomenclature the previous model designations will then be replaced by GLE and GLS, respectively. In addition, the GLE Coupe will hit the market in summer as an entirely new model. Mercedes-Benz expects additional sales momentum in 2015 from this product offensive, Schaefer said.

Under the multi-year agreement, AM General becomes Mercedes-Benz’s first and only contract manufacturing operator in the U.S. AM General anticipates R-Class vehicles will start rolling off its production lines this summer and will hire and train hundreds of new workers in order to prepare for R-class production.

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“AM General is pleased to have been selected by Mercedes-Benz to build this vehicle at our world-class commercial vehicle facility in Mishawaka. We look forward to a long-term relationship with Mercedes and expanding our services to the U.S. and global auto industry,” said Charlie Hall, president and CEO of AM General.

AM General’s Commercial Assembly Plant is a full service manufacturing and support facility that utilizes state-of-the-art robotic welding, painting and assembly techniques coupled with a lean manufacturing culture and highly skilled workforce to meet the requirements of its customers, Hall noted.

The Mishawaka plant has a storied past having built more than 288,000 Humvee or High Mobility Multipurpose Wheeled Vehicle for the U.S. Department of Defense as well as more than 60 foreign countries.

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The Humvee was introduced in 1985 as a replacement for the legendary M80 utility vehicle, which was built by Jeep. Production of the M80 ended in 1982. It also built Hummer H1 for General Motors before GM was forced to kill the Hummer brand as it slid towards bankruptcy.

Hall added AM General has extensive experience as an automotive contract assembler. Its Mobility Ventures subsidiary has also developed a factory-built van that is wheelchair accessible.

The AM General plant is a unionized factory and the United Auto Workers praised the announcement.

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“We commend Mercedes-Benz for investing in a proven facility with a highly skilled workforce represented by UAW Local 5,” said Gary Casteel, secretary-treasurer of the UAW and vice chairman of the Daimler World Employee Committee.

“Mercedes-Benz’s decision highlights the continued growth and expansion of the U.S. automotive industry and it is an affirmation of the skills and work ethic of our UAW Local 5 members. We congratulate the company and employees on this positive new development.”