General Motors Co. will invest more than $200-million (U.S.) at its engine plant in St. Catharines, Ont., to make the next generation of V8 engines and install a flexible assembly line, sources said.
An announcement will be made at the factory Tuesday, sources familiar with the company's plans said. The investment in St. Catharines and another $400-million earmarked for a plant in Tonawanda, N.Y., near Buffalo form the bulk of about $850-million the auto maker is spending to upgrade five of its engine and engine components plants in North America.
The St. Catharines plant has already been anointed for an investment to make a fuel-efficient transmission, but getting the nod to continue assembling V8 engines is expected to add some jobs at the plant, which already employs 1,200 people, sources said.
The spending on plants that make engines, transmissions and related parts will preserve 1,600 jobs at the five Canadian and U.S. plants, Bloomberg News quoted sources as saying yesterday.
Kim Carpenter, a spokeswoman at Detroit-based GM, said the company is making announcements at several facilities. She declined to give details.
The announcement comes less than a week after GM told the Canadian, Ontario and U.S. governments that it has repaid the loan portion of more than $60-billion (U.S.) the governments provided it when it tumbled into Chapter 11 bankruptcy protection last year.
The announcement "shows that the support that GM and our members received from both the provincial and federal governments last year in the form of loans is working," said Wayne Gates, president of local 199 of the Canadian Auto Workers union, which represents workers at the engine plant and a nearby GM components factory. "We have protected good manufacturing jobs in Ontario. What we need is that consumers continue to buy General Motors products."
GM has already announced plans to invest at its car assembly plants in Oshawa, Ont., and a crossover utility vehicle in Ingersoll, Ont.
The company has paid back about $8-billion. The rest of the government money is in the form of equity in GM, with the U.S. government holding about 60 per cent and the federal and Ontario governments about 12 per cent.
Repayment of that taxpayer money depends on a successful initial public offering of GM stock, an event that could happen as soon as this year.
GM is boosting its spending on more fuel-efficient engines and transmissions as governments push for reduced emissions and improved fuel economy under stringent new rules that will take effect in the middle of the decade.
"There is no doubt that a major differentiator going forward will be powertrain technology," said Michael Robinet, vice-president at research firm CSM Worldwide in Northville, Mich. "Heavy investment and improved fuel economy will be on every company's agenda."
The U.S. government's Environmental Protection Agency estimates that auto makers will spend as much as $52-billion during the next several years to meet the new targets, which will also be put in place in Canada.
The GM investments will be at facilities Bay City, Mich; Bedford, Ind.; and Defiance, Ohio -- in addition to the St. Catharines and Tonawanda plants.
Chief Executive Officer Ed Whitacre is trying to return GM to profitability as early as this year, a step the company has said is needed before it can make offer its shares for public sale again.
With files from Bloomberg News