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General Motors to invest $2 billion in factories to boost auto production

May 10, 2011|Bloomberg News

General Motors Co. will invest $2 billion in plants in eight states as it works to boost auto production and market share.

The plans were announced Tuesday at a transmission factory in Toledo, Ohio, where GM will spend $205 million and retain or add 250 jobs. GM said the rest of the investment, which would create or save 4,000 jobs at 17 facilities, depends on completing local tax deals and will be announced in the coming months.

GM is growing less than two years after filing for bankruptcy protection in June 2009. The Detroit automaker's U.S. market share increased to 19.6% through April from 18.7% in the same period last year, according to Autodata Corp.

"It's not only good for GM, it's good for the United States of America," Chief Executive Dan Akerson told workers in Toledo. "We're committed to investing in the manufacturing infrastructure of this country."

GM has been spending on factories since its $50-billion government-backed bankruptcy. GM announced a $131-million investment last week in its Corvette sports-car plant in Bowling Green, Ky. Including that project, GM said it had committed $3.4 billion to U.S. factories since emerging from court protection, creating or preserving 9,000 jobs.

The automaker's spending on new plants and production make sense because GM is adding new models and technologies and preparing for an improvement in auto sales, said Peter Nesvold, an analyst with Jefferies & Co. in New York.

"At a certain point you have to start spending again," Nesvold said. "Auto sales will get back to 14 million or 15 million units eventually."

The upgrades in Toledo will make the plant capable of building eight-speed automatic transmissions that will improve fuel economy and performance, GM said.

GM's investment during the next year will support more than 28,000 U.S. jobs when including indirect employment at suppliers and work created from those employees spending their earnings, according to the Center for Automotive Research.

The United Auto Workers union has 1,357 members on layoff waiting for jobs at GM, UAW Vice President Joe Ashton said. Akerson said that once those workers are recalled, GM will start hiring people to fill the remainder of the 4,000 jobs.

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