General Motors plans to spend $1.4 billion to expand and improve its SUV factory in Arlington to meet strong demand for its vehicles.
The company announced the plan Tuesday during a news conference at the 60-year-old assembly plant, which will get a new paint shop, body shop and general assembly area upgrades. GM said the expansion represents its largest plant investment in the U.S. this year.
Demand for GM’s full-size SUVs has been so strong that the plant can’t make them fast enough. The factory has about 3,800 hourly workers on three shifts making the Chevrolet Tahoe and Suburban, GMC Yukon and the Cadillac Escalade. The plant has basically been running flat-out for the past two years, and additional hiring is expected.
General Motors said the upgrades will take about three years to complete but its existing production schedule will be unaffected.
Sales of the big GM SUVs are up more than 10 percent through June, according to Autodata Corp. GM has sold more than 111,000 of the truck-based vehicles this year as low gas prices have helped shift U.S. buyers away from cars and into SUVs of all sizes. But the boom in SUV sales began even before gas prices fell.
The full-size SUVs also are among GM’s most profitable. Analysts say GM makes more than $10,000 per vehicle. When loaded with options, a Cadillac Escalade, the most expensive of the SUVs, can run more than $90,000.
Arlington Mayor Jeff Williams applauded the plans, saying that the city has benefited from GM’s support and this investment solidifies its commitment to the community.
“This represents the single largest investment in Arlington’s history,” Williams said.
GM did not announce any additional jobs that would be created by the investment, but when the city of Arlington established an investment zone for the plant, officials said as many as 589 jobs could be created.
In April, the Arlington City Council voted to establish an investment zone that allowed the city to offer GM tax incentives for the expansion project.
At the time GM officials said: “GM is developing a business case for potential future investment at Arlington Assembly. An investment would fund facility improvements aimed at strengthening the plant’s manufacturing capability. We cannot share details at this time.”
According to a staff report on the incentive agreement, “the city has proposed a real and business personal property abatement of 80 percent for ten years to include building permit and development fee waivers. The abatement will apply to the added value of the real property physical expansion, estimated at approximately $307 million, as well as the added value of new equipment, estimated at approximately $986 million.
“As a result of the expansion and upgrades, 589 new permanent jobs will be added, for a total of 3,179 jobs.”
In 2012, GM added a $200 million stamping plant at the facility. The Arlington Assembly Plant has been in operation since January 1954. It was the company’s first air-conditioned automobile factory. Arlington Assembly, which switched from car to truck assembly in 1997, is the only facility that builds GM’s award-winning, full-size SUVs – Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon and Cadillac Escalade. The SUVs now in production are all new and redesigned for the 2015 model year. – additional reporting by Robert Francis, Fort Worth Business.