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GM to announce major investment in fuel efficient engines

February 18, 2010

General Motors said it will announce a major investment in fuel efficient engines Thursday amid a broader expansion of its US operations following years of painful cuts.

GM will spend millions to upgrade and expand three plants to produce the next generation of its four-cylinder Ecotec engine, the automaker said.

"It's a key engine for a lot of our small and midsized cars," GM spokesman Tom Wilkinson told AFP Wednesday.

GM has shuttered scores of plants and slashed its US workforce by more than half in the past five years as it struggled to restructure its operations in the face of a steady market share loss to Asian rivals.

But the largest US automaker emerged from bankruptcy protection last year with a leaner operation and substantially improved product offerings.

It has been steadily ramping up production as overall demand improves following the industry's worst year in decades.

And the expansion comes at a time when Japanese rival Toyota -- which dethroned GM as the world's biggest automaker in 2008 -- has been forced to halt production and sales of some of its most popular US models as it struggles to cope with a growing number of safety recalls.

"As the market is starting to pick up, we're finding that we're short on some of our most popular vehicles... so we're looking to increase production of those vehicles so we can meet the demand," Wilkinson said.

"It's a good situation to be in to have vehicles that customers are very excited about."

The carmaker, which will not report financial results until the end of next month, is "ahead of all of the major metrics that were part of our plan for the new GM," Wilkinson said.

"We still have a lot of work to do, but we're pleased the plan is working and that we know what we need to do to keep building that momentum."

Wilkinson said further details, such as the number of jobs created and the amount invested at the engine plants, would be announced Thursday.

GM's US production is forecast to reach 650,000 vehicles in the first quarter, a dramatic increase from the 371,000 vehicles built a year earlier.

Worldwide production is forecast to increase to two million vehicles in the first quarter from 1.33 million a year earlier, according to the company.

Its workforce, however, is not expected to expand significantly.

The firm currently employs 46,000 hourly and 24,000 salaried workers in the United States. Global employment totals 204,000 people.

In 2004 -- the year preceding the most recent round of major cuts -- GM employed 111,000 hourly and 39,000 salaried US workers out of 324,000 people worldwide.

GM's employment levels peaked in 1986, with 379,000 hourly and 253,000 salaried US workers and global employment of 876,000 people.


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