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GM to invest $890 million, keep 1,600 jobs

By: The Associated Press//April 27, 2010

GM to invest $890 million, keep 1,600 jobs

By: The Associated Press//April 27, 2010//

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DETROIT — General Motors Co. will invest $890 million at five factories to make its V-8 engines more fuel efficient, preserving or creating roughly 1,600 jobs.

The automaker planned to announce the investments Tuesday at factories in Tonawanda, N.Y.; St. Catherines, Ontario; Bay City, Mich.; Bedford, Ind.; and Defiance, Ohio.

The spending, which has been in the works for a long time, will help GM meet government fuel economy standards that become fully effective in 2016.

Spokesman Tom Wilkinson said the investments will help the company boost the fuel efficiency of its pickup trucks, sport utility vehicles and high-performance cars. The new engines will have aluminum blocks, which are up to 100 pounds lighter than the current cast-iron ones on some GM V-8s, and more efficient technology that injects fuel directly into the combustion chambers.

Factories in Tonawanda and St. Catherines will make the next generation V-8 engines, while the other plants will make engine components.

GM will invest $400 million in the Tonawanda plant, keeping 710 jobs, while it will put $235 million into the Ontario plant, securing about 400 jobs.

The Defiance foundry, which makes engine blocks, will get $115 million to save up to 189 jobs, while 245 jobs at the Bedford parts plant will be secured with a $111 million investment. The Bay City parts factory will see a $32 million investment, keeping over 80 jobs.

GM spokeswoman Kim Carpenter said the company has not determined yet how many of the 1,600 jobs will be new.

Any new jobs likely would be filled by people from a pool of about 4,200 laid-off workers.

The automaker would not give details of the fuel economy improvements or the new engines.

GM said in a statement that it has invested more than $2.3 billion at 22 U.S. and Canadian factories since it emerged from bankruptcy protection last July, restoring or creating more than 9,100 jobs.

Much of Tuesday’s announcement, though, has been planned for years and is part of the normal course of GM’s business. Auto companies routinely spend millions of dollars to update plants as new vehicles are rolled out.

Federal corporate fuel economy standards call for a 35.5 miles-per-gallon fleet average within six years, up nearly 10 mpg from the current standards.

Each auto company will have a different fuel-efficiency target, based on its truck-car mix of vehicles. Automakers that build more small cars will have a higher target than companies with a range of cars and trucks.

GM’s passenger cars will have to hit 32.7 mpg in 2012 and increase to 36.9 mpg by 2016. Honda Motor Co., meanwhile, will need to reach passenger car targets of 33.8 mpg in 2012 and ramp up to 38.3 mpg in 2016.

Automakers also are expanding their portfolio of gas-electric hybrid vehicles and beginning to introduce electric cars and plug-in hybrids.

Consumers can expect improved engines, transmissions and tires, and the use of start-stop technology that halts the engine at stop lights to save fuel. They also can expect cost increases of around $926 per vehicle by 2016, the government said.

But the government says car owners will save more than $3,000 over the lives of their vehicles through better gas mileage.

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